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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): August 15, 2022

 

 

 

Rubicon Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-40910   88-3703651
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

100 West Main Street Suite #610

Lexington, KY

  40507
(Address of principal executive offices)   (Zip Code)

 

(844) 479-1507

(Registrant’s telephone number, including area code)

 

Founder SPAC

11752 Lake Potomac Drive
Potomac, MD, 20854

(Former name or former address, if changed since last report)

 

 

 

Check the appropriate box below if the Form 8-K 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
Class A common stock, par value $0.0001 per share   RBT   New York Stock Exchange
Warrants, each exercisable for one share of Class A common stock at an exercise price of $11.50 per share   RBT WS   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. 

 

 

 

 

 

 

INTRODUCTORY NOTE

 

On August 15, 2022 (the “Closing Date”), Rubicon Technologies, Inc., a Delaware corporation (formerly a Cayman Islands exempted company known as Founder SPAC) (prior to the Closing Date, “Founder” and after the Closing Date, “New Rubicon”), consummated the previously announced business combination (the “Closing”) pursuant to that certain Agreement and Plan of Merger, dated as of December 15, 2021 (the “Merger Agreement”), by and among Founder, Ravenclaw Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Founder (“Merger Sub”), Ravenclaw Merger Sub Corporation 1, a Delaware corporation and wholly owned subsidiary of Founder (“Merger Sub Inc. 1”), Ravenclaw Merger Sub Corporation 2, a Delaware corporation and wholly owned subsidiary of Founder (“Merger Sub Inc. 2”), Ravenclaw Merger Sub Corporation 3, a Delaware corporation and wholly owned subsidiary of Founder (“Merger Sub Inc. 3” and, together with Merger Sub Inc. 1 and Merger Sub Inc. 2, each a “Blocker Merger Sub” and collectively, the “Blocker Merger Subs”), Boom Clover Business Limited, a British Virgin Islands corporation (“Blocker Company 1”), NZSF Frontier Investments Inc., a Delaware corporation (“Blocker Company 2”), PLC Blocker A LLC, a Delaware limited liability company (“Blocker Company 3” and, together with Blocker Company 1 and Blocker Company 2, each a “Blocker Company” and collectively, the “Blocker Companies”), and Rubicon Technologies, LLC, a Delaware limited liability company (“Rubicon”).

 

On the Closing Date, as contemplated by the Merger Agreement and as described in the section entitled “Proposal 2—The Domestication Proposal” beginning on page 105 of the definitive proxy statement/consent solicitation statement/prospectus filed by Founder with the U.S. Securities and Exchange Commission (the “SEC”) on July 6, 2022 (as amended or supplemented, the “Proxy Statement/Consent Solicitation Statement/Prospectus”), Founder changed its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation under the laws of the State of Delaware (the “Domestication”), changing its name to Rubicon Technologies, Inc.

 

As a result of and upon the effective time of the Domestication, among other things, (a) each then-issued and outstanding Class A ordinary share, par value $0.0001 per share, of Founder (“Founder Class A Shares”) converted automatically into one share of Class A common stock, par value $0.0001 per share, of New Rubicon (“Domestication Class A Common Stock”), (b) each then-issued and outstanding Class B ordinary share, par value $0.0001 per share, of Founder (“Founder Class B Shares” and, together with Founder Class A Shares, “Founder Ordinary Shares”), converted automatically into one share of Domestication Class A Common Stock pursuant to the Sponsor Agreement, dated December 15, 2021, by and among Founder, Founder SPAC Sponsor LLC (“Sponsor”), Rubicon, and certain insiders of Founder (the “Sponsor Agreement”), (c) each then-issued and outstanding public warrant of Founder, each representing a right to acquire one Founder Class A Share for $11.50 (a “Founder Public Warrant”), converted automatically, on a one-for-one basis, into a public warrant of New Rubicon (“Domestication Public Warrant”) that represents a right to acquire one share of Domestication Class A Common Stock for $11.50 pursuant to Section 4.5 of the Warrant Agreement (as defined below), (d) each then-issued and outstanding private placement warrant, each representing a right to acquire one Founder Class A Share for $11.50 (a “Founder Private Placement Warrant”), converted automatically, on a one-for-one basis, into a private placement warrant of New Rubicon (“Domestication Private Warrant” and together with the Domestication Public Warrants, the “Warrants”) that represents a right to acquire one share of Domestication Class A Common Stock for $11.50 pursuant to Section 4.5 of the Warrant Agreement, and (e) each then-issued and outstanding unit of Founder, each representing a Founder Class A Share and one-half of a Founder Public Warrant (a “Founder Unit”), that had not been previously separated into the underlying Founder Class A Share and one-half of one Founder Public Warrant upon the request of the holder thereof, separated and automatically converted into one share of Domestication Class A Common Stock and one-half of one Domestication Public Warrant. No fractional Domestication Public Warrants were issued upon separation of the Founder Units. In addition, the certificate of incorporation of New Rubicon (the “Charter”) authorized Class V common stock, par value $0.0001 per share (“Domestication Class V Common Stock” and together with Domestication Class A Common Stock, the “Common Stock”). Domestication Class A Common Stock is entitled to economic rights typical of common stock, as specified in the Charter, and one vote per share, and Domestication Class V Common Stock is entitled to one vote per share with no economic rights.

 

Immediately following the Domestication, Merger Sub merged with and into Rubicon (the “Merger”), with Rubicon surviving the Merger as a wholly owned subsidiary of New Rubicon, whereby the Seventh Amended and Restated Operating Agreement of Rubicon, dated April 27, 2018, as amended, was amended and restated in the form attached hereto as Exhibit 10.9 (the “A&R LLCA”). Immediately following the consummation of the Merger and the effectiveness of the A&R LLCA, a series of sequential two-step mergers among the Blocker Merger Subs, Blocker Companies, and New Rubicon were consummated, such that (i) each Blocker Merger Sub merged with and into its corresponding Blocker Company, with the Blocker Company surviving the applicable merger as a wholly owned subsidiary of New Rubicon, following which (ii) the surviving Blocker Companies merged with and into New Rubicon, with New Rubicon surviving the merger (collectively, the “Blocker Mergers” and, together with the Merger, the “Mergers”) as necessary to effectuate the UP-C transaction structure, pursuant to which, following the Closing, substantially all of the assets and business of New Rubicon were held by Rubicon. The transactions set forth in the Merger Agreement, including the Mergers, constituted a “Business Combination” as contemplated by Founder’s amended and restated memorandum and articles of association.

 

1

 

 

In connection with the Merger, among other things, New Rubicon was issued Class A Units in Rubicon (“Class A Units”) and all preferred units, common units, and incentive units of Rubicon (including such convertible instruments, the “Rubicon Interests”) outstanding as of immediately prior to the Merger were automatically recapitalized into Class A Units and Class B Units of Rubicon (“Class B Units”) as authorized by the A&R LLCA. Following the Blocker Mergers, (a) holders of Rubicon Interests immediately before the Closing, other than the Blocker Companies (the “Blocked Unitholders”), were issued Class B Units (the “Rubicon Continuing Unitholders”), (b) Rubicon Continuing Unitholders were issued a number of shares of Domestication Class V Common Stock equal to the number of Class B Units issued to the Rubicon Continuing Unitholders, (c) Blocked Unitholders were issued shares of Domestication Class A Common Stock (as a result of the Blocker Mergers), (d) following the adoption of the Incentive Plan (as defined below) at the Closing and the effectiveness of a registration statement on Form S-8 to be filed by New Rubicon, holders of phantom units of Rubicon immediately prior to the Closing (“Rubicon Phantom Unitholders”) and those current and former directors, officers and employees of Rubicon entitled to certain cash bonuses (the “Rubicon Management Rollover Holders”) will be issued restricted stock units in New Rubicon (“RSUs”), which shall vest into shares of Domestication Class A Common Stock, and (e) New Rubicon issued 12,100,000 shares of Domestication Class A Common Stock to certain investors (the “PIPE Investors”) pursuant to the Subscription Agreements (as defined below). In addition to the securities issuable in connection with the Mergers, certain Rubicon Management Rollover Holders received one-time aggregate cash payments of approximately $28.9 million.

 

In addition, pursuant to the Merger Agreement, (i) Blocked Unitholders immediately before the Closing have the right to receive a pro rata portion of 1,488,519 shares of Domestication Class A Common Stock (“Earn-Out Class A Shares”), and (ii) Rubicon Continuing Unitholders immediately before the Closing have the right to receive a pro rata portion of 8,900,840 Class B Units (“Earn-Out Units”) and an equivalent number of shares of Domestication Class V Common Stock (“Earn-Out Class V Shares,” and together with the Earn-Out Class A Shares and Earn-Out Units, “Earn-Out Interests”), in each case, depending upon the performance of the Domestication Class A Common Stock during the five (5) year period after the Closing.

 

The material provisions of the Merger Agreement are described in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—The Merger Agreement” beginning on page 80, which description is incorporated by reference herein.

 

PIPE Financing

 

Concurrent with the execution of the Merger Agreement, Founder entered into subscription agreements (the “Subscription Agreements”) with the PIPE Investors pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase, and Founder agreed to issue and sell to the PIPE Investors an aggregate of 11,100,000 shares of Domestication Class A Common Stock for $10.00 per share, for an aggregate purchase price of $111,000,000, prior to or substantially concurrently with the Closing, on the terms and subject to the conditions set forth therein (the “PIPE Financing”). On August 12, 2022, certain of the PIPE Investors increased their commitment amounts by an aggregate of $5.6 million to purchase an aggregate of 560,000 additional shares of Domestication Class A Common Stock on the same terms as their existing Subscription Agreements and new investors entered into Subscription Agreements with Founder to purchase an aggregate of 440,000 shares of Domestication Class A Common Stock for $10.00 per share, for an aggregate purchase price of $4.4 million (collectively, the “Additional PIPE Financing”). At the Closing, New Rubicon issued 12.1 million shares of Domestication Class A Common Stock to the PIPE Investors. The Subscription Agreements contain customary representations and warranties of Founder, on the one hand, and each PIPE Investor, on the other hand, and provide for certain customary registration rights with respect to the shares issued thereunder.

 

A description of the Subscription Agreements is included in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—Certain Related Agreements—Subscription Agreements” beginning on page 85, which description is incorporated herein by reference.

 

Rubicon Equity Investment Agreement

 

On May 25, 2022, Rubicon and the Sponsor entered into the Rubicon Equity Investment Agreement with certain persons and Rubicon equityholders (the “New Equity Holders”) who are affiliated with Andres Chico, a member of the Board (as defined below), and Jose Miguel Enrich, a beneficial owner of greater than 10% of the issued and outstanding Common Stock of New Rubicon (the “Rubicon Equity Investment Agreement”). Pursuant to the Rubicon Equity Investment Agreement, the New Equity Holders previously advanced to Rubicon $8,000,000 and, at Closing, in full satisfaction of the advancements, (a) New Rubicon caused to be issued to the New Equity Holders 880,000 Class B Units pursuant to the Merger Agreement, (b) New Rubicon issued to the New Equity Holders 160,000 shares of Domestication Class A Common Stock, and (c) Sponsor forfeited 160,000 shares of Domestication Class A Common Stock. No interest accrued on any amounts advanced by the New Equity Holders.

 

A description of the Rubicon Equity Investment Agreement is included in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—Interests of Certain Persons in the Business Combination—Rubicon—Rubicon Equity Investment Agreement” beginning on page 99, which description is incorporated herein by reference.

 

2

 

 

Forward Purchase Agreement

 

On August 4, 2022, Founder, Rubicon and ACM ARRT F LLC, a Delaware limited liability company (“ACM Seller”, together with such other parties to which obligations of ACM Seller were novated, the “FPA Sellers”), entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction. The primary purpose of entering into the Forward Purchase Agreement was to help ensure that New Rubicon’s initial listing application with the New York Stock Exchange (“NYSE”) was approved, increasing the likelihood that the Mergers would close. As of the Closing, ACM Seller had purchased an aggregate of 3,982,616 shares of Domestication Class A Stock, of which 666,667 shares were Share Consideration (as defined in the Forward Purchase Agreement), at an average purchase price per share of $10.15. As of the Closing, Vellar Opportunity Fund SPV – Series 2, a FPA Seller, had purchased an aggregate of 3,100,000 shares of Domestication Class A Stock, of which 333,333 shares were Share Consideration, at an average purchase price per share of $10.15. Pursuant to the Forward Purchase Agreement, each of the FPA Sellers waived its redemption rights under Founder’s governing documents in connection with the Closing. Following the Closing, New Rubicon is entitled to certain payments from the FPA Sellers upon the sale of Subject Shares (as defined in the Forward Purchase Agreement) and New Rubicon is obligated to make issuances of shares of Domestication Class A Common Stock upon certain of such sales by the FPA Sellers (the “Reissued Shares”).

 

A description of the Forward Purchase Agreement is included in Founder’s Form 8-K filed with the SEC on August 5, 2022, which description is incorporated herein by reference.

 

Sponsor Forfeiture Agreement

 

On August 15, 2022, prior to the Closing, Founder, Sponsor, and Rubicon entered into a forfeiture agreement (the “Sponsor Forfeiture Agreement”), whereby Sponsor forfeited 1,000,000 shares of Domestication Class A Common Stock (as converted from its Founder Class B Shares) in connection with the Closing.

 

The foregoing description of each of the Merger Agreement, the Subscription Agreements, the Rubicon Equity Investment Agreement, the Forward Purchase Agreement, the Sponsor Agreement and the Sponsor Forfeiture Agreement is a summary only and is not complete and is subject to and qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1, the Subscription Agreements, a copy of the form of which is attached hereto as Exhibit 10.7, the Rubicon Equity Investment Agreement, a copy of which is attached hereto as Exhibit 10.14, the Forward Purchase Agreement, a copy of which is attached hereto as Exhibit 10.18, and the Sponsor Forfeiture Agreement, a copy of which is attached hereto as Exhibit 10.16, as applicable, each of which is incorporated herein by reference.

 

3

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC

 

In connection with the Closing, New Rubicon and the Rubicon Continuing Unitholders entered into the A&R LLCA. Pursuant to the A&R LLCA, New Rubicon serves as managing member of Rubicon; as sole manager, New Rubicon is generally able to control the day-to-day business affairs and decision-making of Rubicon without the approval of any other member.

 

The A&R LLCA, among other things, provides Class B Unit holders with a right, from time to time, to elect to surrender Class B Units (an “Elective Exchange”) in exchange for (a) shares of Domestication Class A Common Stock, (b) cash, or (c) a combination of cash and Domestication Class A Common Stock, on the terms and subject to the conditions set forth in the A&R LLCA and the Policy Regarding Exchanges set forth as Annex E thereto. Upon the exchange of a Class B Unit, one share of Domestication Class V Common Stock held by such Class B Unit holder will be automatically cancelled. Holders may make an Elective Exchange on a quarterly exchange date set by Rubicon, or prior to (i) certain extraordinary transactions (e.g., merger, consolidation) involving Rubicon or New Rubicon or (ii) an Applicable Sale or Termination Transaction (each as defined in the A&R LLCA). At least two business days before an exchange date, New Rubicon will give written notice of its intended form of exchange consideration; if it does not timely deliver such notice, New Rubicon will be deemed to have elected to settle the exchange with shares of Domestication Class A Common Stock.

 

Beginning on the date on which the aggregate interest of holders of Class B Units (other than the Class A Units and Class B Units held directly or indirectly by New Rubicon) is less than fifteen (15) percent, Rubicon shall have the right, but not the obligation, to redeem all (but not less than all) outstanding Class B Units. Class B Units may be redeemed, at Rubicon’s election, for either shares of Domestication Class A Common Stock, cash of an equivalent value, or a combination thereof, in each case subject to certain adjustments made pursuant to and in accordance with the terms of the A&R LLCA.

 

A description of the A&R LLCA is included in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—Certain Related Agreements—Eighth Amended and Restated Limited Liability Company Agreement of Rubicon” beginning on page 89, which description is incorporated herein by reference.

 

The foregoing description of the A&R LLCA does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the A&R LLCA, a copy of which is attached hereto as Exhibit 10.9 and incorporated herein by reference.

 

Tax Receivable Agreement

 

Concurrent with the Closing, New Rubicon entered into a tax receivable agreement (the “Tax Receivable Agreement” or “TRA”) with Rubicon, the Rubicon Continuing Unitholders and Blocked Unitholders (the “TRA Holders”), and a designated TRA representative. Pursuant to the Tax Receivable Agreement, among other things, New Rubicon is required to pay to the TRA Holders 85% of the amount of the net cash tax savings, if any, that New Rubicon realizes (or, under certain circumstances, is deemed to realize) as a result of (i) increases in tax basis (and utilization of certain other tax benefits) resulting from Class B Unit future exchanges, (ii) certain favorable tax attributes (such as net operating losses attributable to pre-merger tax periods) New Rubicon acquired in the Blocker Mergers and (iii) any payments New Rubicon makes to the TRA Holders under the Tax Receivable Agreement (including tax benefits related to imputed interest). New Rubicon will retain the benefit of the remaining 15% of these net cash tax savings, if any.

 

The term of the Tax Receivable Agreement commenced upon the completion of the Business Combination (as defined below) and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or have expired, unless New Rubicon exercises its right to terminate the Tax Receivable Agreement (or the Tax Receivable Agreement is terminated due to a change in control or New Rubicon’s breach of a material obligation thereunder), in which case New Rubicon will be required to make the termination payment specified in the Tax Receivable Agreement.

 

A description of the Tax Receivable Agreement is included in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—Certain Related Agreements—Tax Receivable Agreement” beginning on page 87, which description is incorporated herein by reference.

 

The foregoing description of the Tax Receivable Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the Tax Receivable Agreement, a copy of which is attached hereto as Exhibit 10.10 and incorporated herein by reference.

 

4

 

 

A&R Registration Rights Agreement

 

Concurrent with the Closing, Founder and the Sponsor entered into an amended and restated registration rights agreement (the “A&R Registration Rights Agreement”) with Rubicon and certain Rubicon equity holders (collectively, the “Legacy Rubicon Equityholders” and, together with the Sponsor and any persons who thereafter become party to the A&R Registration Rights Agreement, the “Holders”). Pursuant to the A&R Registration Rights Agreement, New Rubicon will file within 30 days after the Closing Date, and will use commercially reasonable efforts to cause to be declared effective as soon as practicable thereafter, a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) registering for resale (i) all outstanding shares of Domestication Class A Common Stock held by the Holders immediately following the Closing, (ii) all shares of Domestication Class A Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security held directly or indirectly by a Holder immediately following the Closing, (iii) any warrants or shares of Domestication Class A Common Stock that may be acquired by Holders upon the exercise of a warrant or other right to acquire Domestication Class A Common Stock held by a Holder immediately following the Closing, (iv) any shares of Domestication Class A Common Stock or warrants to purchase Domestication Class A Common Stock otherwise acquired or owned by a Holder following the date of the A&R Registration Rights Agreement to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of New Rubicon, and (v) any other equity security of New Rubicon or its subsidiaries issued or issuable with respect to any of the foregoing pursuant to a stock dividend or stock split or in connection with a recapitalization, merger, reorganization or similar transaction (all such securities, collectively, “Registrable Securities”). New Rubicon is required to maintain a continuously effective registration statement until such time as there are no longer any Registrable Securities outstanding, and to use its commercially reasonable efforts to as promptly as reasonably practicable cause a registration statement to regain effectiveness in the event that such registration statement ceases to be effective for any reason at any time while Registrable Securities are still outstanding. At any time that a registration statement is effective, any one or more Holders may request to sell all or a portion of its Registrable Securities in an underwritten offering that is registered pursuant to the registration statement; provided in each case that New Rubicon will only be obligated to effect an underwritten offering if such offering will include Registrable Securities proposed to be sold by the demanding Holders with a total offering price reasonably expected to exceed, in the aggregate, $35 million. The Legacy Rubicon Equityholders and the Sponsor may each demand not more than two (2) underwritten shelf takedowns in any 12-month period. The Holders also have certain customary “piggyback” registration rights with respect to registrations initiated by New Rubicon. New Rubicon will bear the expenses incurred in connection with the filing of any registration statements pursuant to the A&R Registration Rights Agreement.

 

The foregoing description of the A&R Registration Rights Agreement is not complete and is subject to and qualified in its entirety by reference to the complete text of the A&R Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

 

Equity Incentive Plan

 

On August 1, 2022, the board of directors of Founder approved the Rubicon Technologies, Inc. 2022 Equity Incentive Plan (the “Incentive Plan”). On August 2, 2022, Founder’s shareholders approved the Incentive Plan at the Extraordinary Meeting (as defined below) and on August 15, 2022, the newly constituted board of directors of New Rubicon (the “Board”) ratified the Incentive Plan. The purpose of the Incentive Plan is to promote and closely align the interests of employees, officers, non-employee directors and other service providers of New Rubicon and its stockholders by providing stock-based compensation and other performance-based compensation. The Incentive Plan provides for the grant of options, stock appreciation rights, RSUs, restricted stock and other stock-based awards, any of which may be performance-based, and for incentive bonuses, which may be paid in cash, Domestication Class A Common Stock or a combination thereof, as determined by the Committee (as defined in the Incentive Plan). No awards were granted under the Incentive Plan prior to its approval by Founder’s shareholders.

 

In addition, certain RSU grants, and their terms and conditions, are expected to be approved and issued pursuant to the Incentive Plan upon the effectiveness of a registration statement to filed by New Rubicon on Form S-8.

 

A description of the Incentive Plan is set forth in the section of the Proxy Statement/Consent Solicitation Statement/Prospectus entitled “Proposal 6—The Share Plan Proposal” beginning on page 122, which description is incorporated herein by reference.

 

The foregoing description of the Incentive Plan is not complete and is subject to and qualified in its entirety by reference to the complete text of the Incentive Plan, a copy of which is attached hereto as Exhibit 10.4 and incorporated herein by reference.

 

5

 

 

Indemnification Agreements

 

New Rubicon has entered into indemnification agreements with each of its directors and officers (collectively, the “Indemnitees” and, the “Indemnification Agreements”). The Indemnification Agreements provide for certain indemnification and advancement of expenses by New Rubicon in connection with actions or proceedings arising out of the Indemnitees’ service as directors or officers of New Rubicon or service to other entities at New Rubicon’s request, on the terms and subject to the conditions set forth therein.

 

The foregoing description of the Indemnification Agreements is not complete and is subject to and qualified in its entirety by reference to the complete text of the Indemnification Agreements, the form of which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

 

Warrant Agreement

 

Concurrent with the consummation of Founder’s initial public offering, Founder entered into a Warrant Agreement, dated as of October 14, 2021 (as amended by the Warrant Agreement Amendment (as defined below), the “Warrant Agreement”), with Continental Stock Transfer & Trust Company (“Continental”). Pursuant to the Warrant Agreement, among other things, New Rubicon is required to, as soon as practicable after Closing, but in no event later than 15 business days after Closing, use its best efforts to file a registration statement for (i) the resale of the Domestication Private Warrants and (ii) the shares of Domestication Class A Common Stock underlying the Warrants, and to use its best efforts to have such registration statement declared effective no later than 60 business days after Closing. New Rubicon has agreed to keep such registration statement effective until the expiration of the Warrants.

 

On August 15, 2022, in connection with the Closing, Continental and New Rubicon amended the Warrant Agreement to, among other things, reflect the change in name and the Domestication (the “Warrant Agreement Amendment”).

 

The foregoing descriptions of the Warrant Agreement and Warrant Agreement Amendment are not complete and are subject to and qualified in their entirety by reference to the complete text of the Warrant Agreement and Warrant Agreement Amendment, as applicable, which are attached hereto as Exhibits 4.4 and 4.5, respectively, and incorporated herein by reference.

 

Sponsor Forfeiture Agreement

 

The disclosure set forth in the “Introductory Note” above regarding the Sponsor Forfeiture Agreement is incorporated into this Item 1.01 by reference.

 

Additional PIPE Financing

 

The disclosure set forth in the “Introductory Note” above regarding the Additional PIPE Financing is incorporated into this Item 1.01 by reference.

 

6

 

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The disclosure set forth in the “Introductory Note” above, including with respect to the Mergers, is incorporated into this Item 2.01 by reference.

 

Each of the proposals included in the Proxy Statement/Consent Solicitation Statement/Prospectus was approved by Founder’s shareholders at an extraordinary general meeting of shareholders held on August 2, 2022 (the “Extraordinary Meeting”).

 

As of the Closing Date, and immediately following the consummation of the transactions contemplated by the Merger Agreement (the “Business Combination”), New Rubicon had the following issued and outstanding securities:

 

  46,300,005 shares of Domestication Class A Common Stock (inclusive of issuances pursuant to the Merger Agreement, Rubicon Equity Investment Agreement, PIPE Financing, and Additional PIPE Financing);
     
  114,411,906 shares of Domestication Class V Common Stock;
     
  15,812,476 Domestication Public Warrants, each exercisable for one share of Domestication Class A Common Stock at a price of $11.50 per share; and
     
  14,204,375 Domestication Private Warrants, each exercisable for one share of Domestication Class A Common Stock at a price of $11.50 per share.

 

The above figures do not include the (a) 114,411,906 issued and outstanding Class B Units which may be exchanged for an equivalent number of Domestication Class A Common Stock pursuant to the A&R LLCA, (b) 4,265,971 shares of Domestication Class V Common Stock (and an equivalent number of Class B Units) issuable by New Rubicon pursuant to the Merger Agreement upon receipt by New Rubicon of the required documentation set forth in the Merger Agreement, including a letter of transmittal, (c) 1,488,519 Earn-Out Class A Shares, (d) 8,900,840 Earn-Out Class V Shares, and (e) 8,900,840 Earn-Out Units which may be exchanged for an equivalent number of shares of Domestication Class A Common Stock pursuant to the A&R LLCA. The Earn-Out Interests and their vesting conditions and terms are described in the section entitled “Proposal 1—The Business Combination Proposal—The Merger Agreement—Earn-Out Consideration” beginning on page 81 of the Proxy Statement/Consent Solicitation Statement/Prospectus, which description is incorporated herein by reference.

 

7

 

 

FORM 10 INFORMATION

 

Prior to the Closing, Founder was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the Closing, New Rubicon became a holding company whose only material assets consist of equity interests in Rubicon.

 

Cautionary Note Regarding Forward-Looking Statements

 

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and 21E of the Exchange Act, including statements regarding the anticipated benefits of the Business Combination and the financial condition, results of operations, and prospects of New Rubicon. Forward-looking statements appear in a number of places in this Current Report on Form 8-K including, without limitation, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. You should understand that the following important factors, in addition to those factors described elsewhere in this Current Report on Form 8-K, could affect the future results of New Rubicon and could cause those results or other outcomes to differ materially from those expressed or implied in such forward-looking statements, including New Rubicon’s ability to:

 

access, collect and use personal data about consumers;

 

execute its business strategy, including monetization of services provided and expansions in and into existing and new lines of business;

 

anticipate the impact of the coronavirus disease 2019 (“COVID-19”) pandemic and its effect on business and financial conditions;

 

manage risks associated with operational changes in response to the COVID-19 pandemic;

 

realize the benefits expected from the Business Combination;

 

anticipate the uncertainties inherent in the development of new business lines and business strategies;

 

retain and hire necessary employees;

 

increase brand awareness;

 

attract, train and retain effective officers, key employees or directors;

 

upgrade and maintain information technology systems;

 

acquire and protect intellectual property;

 

meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

 

effectively respond to general economic and business conditions;

  

maintain the listing of New Rubicon’s securities on the NYSE or an inability to have New Rubicon’s securities listed on another national securities exchange;

 

obtain additional capital, including use of the debt market;

 

enhance future operating and financial results;

 

anticipate rapid technological changes;

 

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comply with laws and regulations applicable to its business, including laws and regulations related to data privacy and insurance operations;

 

stay abreast of modified or new laws and regulations applying to its business;

 

anticipate the impact of, and respond to, new accounting standards;

 

anticipate the rise in interest rates and other inflationary pressures which increase the cost of capital;

 

anticipate the significance and timing of contractual obligations;

 

maintain key strategic relationships with partners and distributors;

 

respond to uncertainties associated with product and service development and market acceptance;

 

manage to finance operations on an economically viable basis;

 

anticipate the impact of new U.S. federal income tax law, including the impact on deferred tax assets;

 

successfully defend litigation; and

 

successfully deploy the proceeds from the Business Combination.

 

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Current Report on Form 8-K are more fully described under the heading “Risk Factors” and elsewhere in this Current Report on Form 8-K. Forward-looking statements are not guarantees of performance and speak only as of the date hereof. The forward-looking statements are based on the current and reasonable expectations of New Rubicon’s management but are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statements. There can be no assurance that future developments will be those that have been anticipated or that New Rubicon will achieve or realize these plans, intentions or expectations.

 

All forward-looking statements attributable to New Rubicon or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. New Rubicon undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

In addition, statements of belief and similar statements reflect the beliefs and opinions of New Rubicon on the relevant subject. These statements are based upon information available to New Rubicon as of the date of this Current Report on Form 8-K, and while New Rubicon believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that New Rubicon has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

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Business and Facilities

 

The information set forth in the section of the Proxy Statement/Consent Solicitation Statement/Prospectus entitled “Information About Rubicon” beginning on page 162, including the information regarding the properties used in Rubicon’s business included in the subsection thereof entitled “Information About Rubicon—Facilities” on page 176, and in the section of the Proxy Statement/Consent Solicitation Statement/Prospectus entitled “Information About Founder” beginning on page 151 is incorporated herein by reference.

 

Risk Factors

 

Investing in New Rubicon’s securities involves substantial risks. Before you make a decision to buy New Rubicon’s securities, in addition to the risks and uncertainties discussed below you should carefully consider the specific risks and other information set forth in this Current Report on Form 8-K, including “Cautionary Note Regarding Forward-Looking Statements,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere in this Current Report on Form 8-K. If any of these risks actually occur, it may materially harm New Rubicon’s business, financial condition, liquidity and results of operations. As a result, the market price of New Rubicon’s securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described in this Current Report on Form 8-K (or any amendment thereto) are not the only risks and uncertainties that New Rubicon faces. Additional risks and uncertainties not presently known to New Rubicon or that New Rubicon currently believes to be immaterial may become material and adversely affect its business.

 

The issuances of additional shares of Domestication Class A Common Stock pursuant to certain of New Rubicon’s contracts and arrangements may result in dilution of holders of Domestication Class A Common Stock and have a negative impact on the market price of the Domestication Class A Common Stock.

 

Pursuant to the Forward Purchase Agreement, New Rubicon may issue up to $19.95 million of Reissued Shares for no additional consideration. The timing and frequency in which New Rubicon is obligated to issued Reissued Shares is solely dependent on the FPA Sellers and their decision to sell Subject Shares and at what price. Therefore, New Rubicon cannot reasonably predict the amount and frequency in which Reissued Shares will be issued pursuant to the Forward Purchase Agreement, if any. As a result, the issuance of these shares will be below the current trading price of the Domestication Class A Common Stock.

 

Pursuant to certain deferred fee arrangements entered into with certain of New Rubicon’s advisors in connection with the Business Combination, New Rubicon may issue an aggregate of approximately $23.1 million of shares of Domestication Class A Common Stock in satisfaction of the outstanding amounts owed thereunder pursuant to the terms therein (the “Deferred Fee Arrangements”). Under these arrangements, at New Rubicon’s election, New Rubicon may pay such amounts in cash and/or equity within four to six months following the Closing. New Rubicon may not elect to pay such obligations in equity until October 14, 2022 (60 days following Closing), and any shares issued upon such election shall be issued at the ten trading-day volume-weighted average price prior to any such election. The timing, frequency, and the price at which New Rubicon issues shares of Domestication Class A Common Stock are subject to market prices and management’s decision to repay such amount in equity, if at all. Any shares of Domestication Class A Common Stock issued pursuant to these arrangements will need to be registered for resale on a Form S-1 registration statement.

 

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As of August 15, 2022, there were 160,711,911 shares of Common Stock outstanding. Assuming (a) that the full amounts set forth above are paid in Domestication Class A Common Stock and (b) the 10-day volume-weighted average price at which New Rubicon issues such shares is $10.00, such additional issuances would represent in the aggregate approximately 4.3 million additional shares of Domestication Class A Common Stock or approximately 2.6% of the total number of shares of Common Stock outstanding at Closing, after giving effect to such issuances. If the 10 day volume-weighted average price is $5.00, such additional issuances would represent in the aggregate approximately 8.6 million additional shares of Domestication Class A Common Stock or approximately 5.1% of the total number of shares of Common Stock outstanding at Closing, after giving effect to such issuances.

 

If and when New Rubicon does issue securities, such recipients, upon effectiveness of a Form S-1 registration statement registering such securities for resale, may resell all, some or none of such shares in their discretion and at different prices subject to the terms of the applicable agreement. As a result, investors who purchase shares from such recipients at different times will likely pay different prices for those shares, and so may experience different levels of dilution (and in some cases substantial dilution) and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase as a result of future sales made by New Rubicon to such aforementioned parties or others at prices lower than the prices such investors paid for their shares. In addition, if New Rubicon issues a substantial number of shares to such parties, or if investors expect that New Rubicon will do so, the actual sales of shares or the mere existence of an arrangement with such parties may adversely affect the price of New Rubicon’s securities or make it more difficult for New Rubicon to sell equity or equity-related securities in the future at a desirable time and price, or at all.

 

The issuance, if any, of Domestication Class A Common Stock would not affect the rights or privileges of New Rubicon’s existing stockholders, except that the economic and voting interests of existing stockholders would be diluted. Although the number of shares of Domestication Class A Common Stock that existing stockholders own would not decrease as a result of these additional issuances, the shares of Domestication Class A Common Stock owned by existing stockholders would represent a smaller percentage of the total outstanding shares of Domestication Class A Common Stock after any such issuance.

 

A significant portion of the total outstanding shares of Domestication Class A Common Stock (or shares of Domestication Class A Common Stock that may be issued in the future pursuant to an exchange or redemption of Class B Units) are subject to lock-up restrictions, but may be sold into the market in the near future. This could cause the market price of New Rubicon’s securities to drop significantly.

 

Pursuant to the Sponsor Agreement, the Sponsor and each Founder insider agreed not to transfer any Founder Class B Shares or Founder Private Placement Warrants (or any shares of Domestication Class A Common Stock issuable upon conversion or exercise thereof) until the earlier of (i) February 11, 2023 (180 days after the Closing Date) and (ii) the date after the Closing on which New Rubicon completes a liquidation, merger, or similar transaction that results in all of New Rubicon’s stockholders having the right to exchange their shares of Domestication Class A Common Stock for cash, securities or other property. Sponsor holds 6,746,250 shares of Domestication Class A Common Stock (after accounting for certain forfeitures in connection with the Closing) and 12,623,125 Domestication Private Warrants (exercisable into 12,623,125 shares of Domestication Class A Common Stock).

 

Pursuant to the those certain lock-up agreements Founder entered into with certain holders of Rubicon Interests (the “Lock-Up Agreements”), each holder agreed to certain transfer restrictions with respect to its Domestication Class A Common Stock and/or Class B Units received as transaction consideration pursuant to the Merger Agreement, until the earlier of (i) February 11, 2023 (180 days after the Closing Date) and (ii) the date after the Closing on which New Rubicon completes a liquidation, merger, or similar transaction that results in all of New Rubicon’s stockholders having the right to exchange their equity holdings for cash, securities or other property. The holders of Rubicon Interests further agreed pursuant to the Lock-Up Agreements not to exchange Class B Units for Domestication Class A Common Stock during this restricted period. As of the Closing Date, there were approximately 138.5 million shares of Domestication Class A Common Stock (or Class B Units otherwise exchangeable for shares of Domestication Class A Common Stock) subject to these restrictions.

 

In addition to the Sponsor Agreement and Lock-Up Agreements, New Rubicon entered into the following agreements whereby it issued or has agreed to issue unregistered securities that require an effective registration statement on Form S-1 for the resale thereof:

 

Pursuant to the Subscription Agreements, New Rubicon issued 12.1 million shares of Domestication Class A Common Stock.

 

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Pursuant to the Rubicon Equity Investment Agreement, New Rubicon issued 160,000 shares of Domestication Class A Common Stock to the New Equity Holders.

 

Pursuant to the Forward Purchase Agreement, New Rubicon may issue up to $19.95 million of shares of Domestication Class A Common Stock to the FPA Sellers as Reissued Shares.

 

Pursuant to the Deferred Fee Arrangements, New Rubicon may issue up to $23.1 million of shares of Domestication Class A Common Stock.

 

It is the intention of New Rubicon to file a registration statement on Form S-1 that registers for resale the shares of Domestication Class A Common Stock issued to the PIPE Investors and the New Equity Holders within 10 days following the Closing. In the event that New Rubicon issues shares pursuant to the Forward Purchase Agreement or any of the Deferred Fee Agreements, it expects to register such securities for resale on Form S-1. Once these shares are registered for resale, they can be sold in the public market upon issuance, subject to Rule 144 limitations applicable to affiliates and vesting restrictions.

 

Additional risks associated with New Rubicon’s business, operations and other matters are described in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Risk Factors” beginning on page 39, which is incorporated herein by reference.

 

Financial Information

 

Unaudited Consolidated Financial Statements

 

The unaudited condensed financial statements as of and for the three and six months ended June 30, 2022 and 2021, and the related notes thereto beginning on page 5 of Founder’s Quarterly Report on Form 10-Q, filed with the SEC on August 12, 2022 (the “Form 10-Q”), are incorporated herein by reference. These unaudited consolidated financial statements should be read in conjunction with the historical audited financial statements of Founder from April 26, 2021 (inception) through December 31, 2021 and the related notes included in the Proxy Statement/Consent Solicitation Statement/Prospectus beginning on page F-2, which are incorporated herein by reference.

 

The unaudited consolidated financial statements of Rubicon as of and for the three and six months ended June 30, 2022 and 2021 are set forth in Exhibit 99.2 hereto and are incorporated by reference herein. These unaudited consolidated financial statements should be read in conjunction with the historical audited financial statements of Rubicon for the years ended December 31, 2021 and 2020 and the related notes included in the Proxy Statement/Consent Solicitation Statement/Prospectus beginning on page F-36, which are incorporated herein by reference.

 

Unaudited Pro Forma Condensed Combined Financial Information

 

The information set forth in Exhibit 99.4 to this Current Report on Form 8-K is incorporated by reference herein.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Managements’ discussion and analysis of the financial condition and results of operations prior to the Mergers is included in (a) Rubicon’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Exhibit 99.3 hereto and incorporated herein by reference and (b) Founder’s Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 17 of the Form 10-Q and incorporated herein by reference.

 

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Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information known to New Rubicon regarding beneficial ownership of shares of Common Stock as of August 15, 2022 by:

 

  each person or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) who is known by New Rubicon to be the beneficial owner of more than five percent (5%) of the outstanding shares of Common Stock;

 

  each of New Rubicon’s Named Executive Officers (as defined below) and directors; and

 

all current executive officers and directors as a group.

 

Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, New Rubicon believes that the persons and entities named in the table below possess sole voting and investment power with respect to all shares of Common Stock that they beneficially own, subject to applicable community property laws. Shares of Common Stock subject to options or Warrants that are exercisable within 60 days of the table date are deemed to be outstanding and beneficially owned by the persons holding those options or Warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of such persons. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person. The beneficial ownership percentages set forth in the table below are based on 160,711,911 shares of Common Stock issued and outstanding as of August 15, 2022.

 

Name and Address of Beneficial Owner(1)   Class A
Common Stock
    Class V
Common Stock
    Voting Power and Implied Ownership(2)  
Directors and Named Executive Officers                        
Nate Morris(3)     -       22,917,675       14.3 %
Michael Heller     -       -       0.0 %
Phil Rodoni              1,336,769       0.8 %
Osman Ahmed     -       -       0.0 %
Jack Selby     -       -       0.0 %
Ambassador Paula J. Dobriansky     -       24,493       0.0 %
Brent Callinicos     -       314,579       0.2 %
Barry Caldwell     -       -       0.0 %
Coddy Johnson     -       -       0.0 %
Andres Chico(4)     -       -       0.0 %
Paula Henderson     -       -       0.0 %
All Directors and Executive Officers as a Group (18 Individuals)     -       24,878,389       15.5 %
                         
Five Percent Holders                        
Founder SPAC Sponsor LLC(5)     19,369,375       -       11.2 %
MBI Holdings LP.(6)     740,000       10,513,171       7.0 %
GFAPCH FO, S.C.(7)     -       17,084,267       10.6 %
Jose Miguel Enrich(8)     1,180,000       27,597,438       17.9 %
Guardians of New Zealand Superannuation(9)     22,912,903       -       14.3 %
RGH, Inc.(10)     -       22,917,675       14.3 %

 

 

(1)Unless otherwise noted, the business address of each person is 100 West Main Street Suite #610 Lexington, KY 40507.
(2)Voting Power and Implied Ownership is calculated based on 46,300,005 shares of Domestication Class A Common Stock and 114,411,906 shares of Domestication Class V Common Stock outstanding as of August 15, 2022.

 

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(3)Represents securities held by RGH Inc., as described in note 10. Figures do not include the RSUs expected to be issued to such holder pursuant to the Merger Agreement and the Morris Employment Agreement, in each case to be issued to such holder upon the filing and effectiveness of a Form S-8 registration statement following the consummation of the Business Combination. Such filing is expected to occur no sooner than 60 days following the date hereof.
(4)Does not include any shares indirectly owned by Mr. Chico as a result of his pecuniary interests in MBI Holdings LP and GFAPCH FO, S.C, as described in notes 6 and 7, respectively.
(5)Represents (a) 6,746,250 shares of Domestication Class A Common Stock and (b) 12,623,125 shares of Domestication Class A Common Stock that underly the 12,623,125 Domestication Private Warrants that are exercisable within 60 days from the date hereof. Manpreet Singh has voting and dispositive power over the securities held by Sponsor and therefore may be deemed to be a beneficial owner thereof. The business address of Mr. Singh and Sponsor is 11752 Lake Potomac Drive, Potomac, MD 20854.
(6)Represents (a) 10,513,712 shares of Domestication Class V Common Stock and equivalent number of Class B Units and (b) 740,000 shares of Domestication Class A Common Stock. Jose Miguel Enrich is the general partner of MBI Holdings LP (“MBI”), and therefore, Mr. Enrich has voting and dispositive control over the securities of and may be deemed to beneficially own the securities held by MBI. Mr. Enrich disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. The business address of each of MBI and Mr. Enrich is 781 Crandon Blvd 902, Key Biscayne FL 33149.
(7)Represents (a) 55,897,164 shares of Domestication Class V Common Stock and equivalent number of Class B Units held by RUBCN Holdings LP (“RUBCN Holdings”), (b) 4,055,591 shares of Domestication Class V Common Stock and equivalent number of Class B Units held by RUBCN IV LP (“RUBCN IV”), and (c) 7,131,512 shares of Domestication Class V Common Stock and equivalent number of Class B Units held by RUBCN Holdings V LP (“RUBCN Holdings V”). GFAPCH FO, S.C, a Mexican corporation (“Ontario GP”), is the general partner of each of RUBCN Holdings, RUBCN IV, and RUBCN Holdings V. Mr. Enrich is the sole director of Ontario GP, and therefore, Mr. Enrich has voting and dispositive control over the securities of and may be deemed to beneficially own the securities held by RUBCN Holdings, RUBCN IV, and RUBCN Holdings V. Mr. Enrich disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. The business address of each of RUBCN Holdings, RUBCN IV, RUBCN Holdings V, Ontario GP and Mr. Enrich is 781 Crandon Blvd 902, Key Biscayne FL 33149.
(8)Mr. Enrich, as referenced in notes 6 and 7 above, has voting and dispositive control over the securities of and may be deemed to beneficially own the securities held directly and indirectly by MBI and Ontario GP. In addition to such interests described in notes 6 and 7, Mr. Enrich may be deemed to beneficially own the following securities: (a) 140,000 shares of Domestication Class A Common Stock held by Bolis Holdings LP (“Bolis LP”), (b) 150,000 shares of Domestication Class A Common Stock held by DGR Holdings LP (“DGR LP”), and (c) 150,000 shares of Domestication Class A Common Stock held by Pequeno Holdings LP (“Pequeno LP”). Bolis Holdings LLC (“Bolis LLC”) is the general partner of Bolis LP. Pequeno Holdings LLC (“Pequeno LLC”) is the general partner of Pequeno LP. DGR Holdings LLC (“DGR LLC”) is the general partner of DGR LP. Mr. Enrich is the sole director of each of Bolis LLC, Pequeno LLC and DGR LLC, and has voting and dispositive control over such securities and may be deemed to beneficially own such securities held by Bolis LP, Pequeno LP, and DGR LP. Mr. Enrich disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. The business address of each of Mr. Enrich, MBI, Ontario GP, Bolis LP, Pequeno LP, DGR LP, Bolis LLC, Pequeno LLC, and DGR LLC is 781 Crandon Blvd 902, Key Biscayne FL 33149.
(9)Guardians of New Zealand Superannuation is a New Zealand autonomous crown entity (“Guardians”). Matthew Whineray is the chief executive officer of Guardians and has voting and dispositive control over the securities held by Guardians. Therefore, Mr. Whineray may be deemed to beneficially own such securities held by Guardians. The business address of Mr. Whineray and Guardians is Level 12, 21 Queen Street, Auckland 1010, New Zealand.
(10)Nate Morris is a director and the chief executive officer of RGH, Inc. and has investment control of the securities held by RGH, Inc. Accordingly, Mr. Morris may be deemed to have beneficial ownership of such securities. Mr. Morris disclaims all beneficial ownership of these securities except to the extent of his pecuniary interest therein. The business address of each of Mr. Morris and RGH, Inc. is 191 Peachtree St., N.E., 34th Floor, Atlanta, GA 20202, Attn: Scott A. Augustine.

 

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Information about Directors and Executive Officers

 

New Rubicon’s directors and executive officers are as follows:

 

Name   Age   Position
Nate Morris   41   Chairman and Chief Executive Officer
Phil Rodoni   50   Chief Technology Officer
Michael Heller   60   Chief Administrative Officer
Jevan Anderson   53   Chief Financial Officer
Renaud de Viel Castel   44   Chief Operations Officer
Michael Allegretti   43   Chief Strategy Officer
William Meyer   39   General Counsel
David Rachelson   41   Chief Sustainability Officer
Dan Sampson   46   Chief Marketing & Communications Officer
Tom Owston   36   Interim Chief Commercial Officer
Osman Ahmed   36   Director
Jack Selby   48   Director
Ambassador Paula J. Dobriansky   66   Director
Brent Callinicos   56   Director
Barry Caldwell   62   Director
Coddy Johnson   46   Director
Andres Chico   35   Director
Paula Henderson   50   Director

 

Information with respect to New Rubicon’s directors and executive officers immediately after the Closing, including biographical information regarding these individuals, is set forth in the Proxy Statement/Consent Solicitation Statement/Prospectus in the sections entitled “Proposal 5—The Directors Proposal” beginning on page 118, and “Management of New Rubicon After the Business Combination” beginning on page 204, which information is incorporated herein by reference.

 

Resignations and Appointments

 

Other than Mr. Ahmed and Mr. Selby, each of Founder’s directors, Hassan Ahmed, Rob Theis, Steve Papa and Allen Salmasi, prior to the Closing resigned from their respective position as a director of Founder, in each case effective as of the effective time on the Closing Date.

 

Effective as of the Closing, Mr. Morris, Mr. Chico, Mr. Johnson, Ms. Henderson, Ambassador Dobriansky, Mr. Callinicos, Mr. Caldwell, Mr. Ahmed, and Mr. Selby were elected to serve on the Board until their respective successors are duly elected and qualified.

 

Following the Closing, the size of the Board increased to nine (9) directors. Additionally, the Board is divided into three classes designated as Class I, Class II and Class III. Class I directors, consisting of Jack Selby, Barry Caldwell, and Paula Henderson, will initially serve for a term expiring at the first annual meeting of stockholders following the Closing Date, which is expected to be held in 2023. Class II directors, consisting of Coddy Johnson, Osman Ahmed, and Paula Dobriansky, will initially serve for a term expiring at the second annual meeting of stockholders following the Closing Date, which is expected to be held in 2024. Class III directors, consisting of Andres Chico, Brent Callinicos, and Nate Morris, will initially serve for a term expiring at the third annual meeting of stockholders following the Closing Date, which is expected to be held in 2025. At each annual meeting of stockholders, directors will be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting of the stockholders. There is no limit on the number of terms a director may serve on the Board.

 

Messrs. Ahmed and Singh, officers of Founder and/or its subsidiaries prior to the Closing, resigned from all positions held as an officer of Founder or its subsidiaries, in each case effective as of the effective time on the Closing Date.

 

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Effective as of the Closing, Mr. Morris was appointed to serve as New Rubicon’s Chief Executive Officer, Mr. Anderson was appointed to serve as New Rubicon’s Chief Financial Officer, Mr. Rodoni was appointed to serve as New Rubicon’s Chief Technology Officer, Mr. Heller was appointed as New Rubicon’s Chief Administrative Officer, Mr. de Viel Castel was appointed as New Rubicon’s Chief Operations Officer, Mr. Allegretti was appointed as New Rubicon’s Chief Strategy Officer, Mr. Meyer was appointed as New Rubicon’s General Counsel, Mr. Rachelson was appointed as New Rubicon’s Chief Sustainability Officer, Mr. Sampson was appointed as New Rubicon’s Chief Marketing & Communications Officer, and Mr. Owston was appointed as New Rubicon’s Interim Chief Commercial Officer.

 

Director Independence

 

NYSE listing rules require that a majority of the board of directors of a company listed on NYSE be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. The NYSE listing rules also include certain bright line independence requirements. The Board has determined that each of Ms. Henderson, Mr. Johnson, Ambassador Dobriansky, Mr. Caldwell, Mr. Callinicos, Mr. Ahmed, and Mr. Selby are “independent” as defined under NYSE listing rules. In making these determinations, the Board considered the current and prior relationships that each non-employee director had with Rubicon and has with New Rubicon and all other facts and circumstances the Board deemed relevant in determining independence, including each non-employee director’s beneficial ownership of Common Stock and the transactions involving them described below in the section entitled “Certain Relationships and Related Party Transactions.”

 

The NYSE and SEC also have certain specific independence requirements applicable to members of committees of a listed company’s board of directors. The NYSE listing rules require that, subject to specified exceptions, a listed company’s audit, compensation and nominating and governance committees be comprised entirely of independent directors. In order to be considered to be independent for purposes of Exchange Act Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.

 

Committees of the Board of Directors

 

The standing committees of the Board consist of an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and a Corporate Citizenship Committee. Each committee operates under a charter that has been approved by the Board and that is available on New Rubicon’s website at https://investors.rubicon.com. The committees have the composition and responsibilities described below.

 

Audit Committee

 

The Audit Committee consists of Brent Callinicos, Osman Ahmed, and Barry Caldwell, each of whom are independent directors under NYSE listing standards and Rule 10A-3 of the Exchange Act and are “financially literate” as defined under NYSE listing standards and interpreted by the Board using its business judgment. Mr. Callinicos serves as chairman of the Audit Committee. The Board has determined that Mr. Callinicos qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

 

The primary role of the Audit Committee is to exercise primary financial oversight on behalf of the Board. New Rubicon’s management team is responsible for preparing financial statements, and New Rubicon’s independent registered public accounting firm is responsible for auditing those financial statements. The Audit Committee is directly responsible for the selection, engagement, compensation, retention and oversight of New Rubicon’s independent registered public accounting firm and for the review of any proposed related persons transactions. The Audit Committee is also responsible for the review of any proposed related persons transactions. The Audit Committee has established a procedure whereby complaints or concerns regarding accounting, internal controls or auditing matters may be submitted anonymously to the Audit Committee by email.

 

Compensation Committee

 

The Compensation Committee consists of Brent Callinicos, Paula Dobriansky, and Paula Henderson, each of whom is an independent director under NYSE listing standards. Ambassador Dobriansky serves as chairman of the Compensation Committee. The Compensation Committee is responsible for approving the compensation payable to the executive officers of New Rubicon, and administering the Incentive Plan. The Compensation Committee acts on behalf of the Board to establish the compensation of the chief executive officer and in conjunction with the Board to establish the compensation of executive officers of New Rubicon (other than the chief executive officer) and to provide oversight of New Rubicon’s overall compensation programs and philosophy.

 

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Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee consists of Paula Dobriansky, Coddy Johnson, and Paula Henderson, each of whom is an independent director under NYSE’s listing standards. Ms. Henderson serves as the chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assists the Board by identifying and recommending individuals qualified to become members of the Board. The Nominating and Corporate Governance Committee is responsible for evaluating the composition, size and governance of the Board and its committees and making recommendations regarding future planning and the appointment of directors to the committees; establishing a policy for considering stockholder nominees to the Board; reviewing the corporate governance principles and making recommendations to the Board regarding possible changes; and reviewing and monitoring compliance with New Rubicon’s Code of Business Conduct and Ethics.

 

Corporate Citizenship Committee

 

The Corporate Citizenship Committee consists of Coddy Johnson, Barry Caldwell, and Jack Selby, each of whom is an independent director under NYSE’s listing standards. Mr. Johnson serves as the chair of the Corporate Citizenship Committee. The Corporate Citizenship Committee assists the Board in its oversight of New Rubicon’s policies, programs and related risks that concern key sustainability initiatives and engagement, and public policy matters, including public issues of significance to New Rubicon and its stakeholders that may affect New Rubicon’s business, strategy, operations, performance or reputation, including charitable contributions, maintaining safe and secure communities, and corporate social responsibility.

 

Compensation Committee Interlocks and Insider Participation

 

The Compensation Committee is composed of Brent Callinicos, Paula Dobriansky, and Paula Henderson. None of New Rubicon’s executive officers currently serves, or has served during the last completed fiscal year, as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on the Board.

 

Code of Business Conduct and Ethics

 

New Rubicon has adopted a Code of Business Conduct and Ethics for its directors, officers, employees and certain affiliates in accordance with applicable federal securities laws, a copy of which is available on New Rubicon’s website at https://investors.rubicon.com. New Rubicon will make a printed copy of the Code of Business Conduct and Ethics available to any shareholder who so requests. Requests for a printed copy may be directed to: Rubicon, 100 W Main Street, Suite 610, Lexington, Kentucky 40507, Attention: Investor Relations.

 

If New Rubicon amends or grants a waiver of one or more of the provisions of its Code of Business Conduct and Ethics, New Rubicon intends to satisfy the requirements under Item 5.05 of Form 8-K regarding the disclosure of amendments to or waivers of provisions of its Code of Business Conduct and Ethics that apply to New Rubicon’s principal executive officer, principal financial officer and principal accounting officer by posting the required information on New Rubicon’s website at https://investors.rubicon.com. The information on this website is not part of this Current Report on Form 8-K.

 

Corporate Governance Principles

 

The Board has adopted Principles of Corporate Governance in accordance with the corporate governance rules of the NYSE that serve as a flexible framework within which the Board and its committees operate. These guidelines cover a number of areas including Board membership criteria and director qualifications, director responsibilities, executive sessions, committee responsibilities and assignments, director access to management and independent advisors, stockholder engagement, director compensation, director orientation and continuing education, Board and committee performance evaluations and management succession planning. A copy of the Principles of Corporate Governance is available on New Rubicon’s website at https://investors.rubicon.com.

 

Director Compensation

 

Information relating to director compensation following the Business Combination is described in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Management of New Rubicon After the Business Combination—New Rubicon Officer and Director Compensation Following the Business Combination” beginning on page 208, which information is incorporated herein by reference.

 

Incentive Plan

 

The Incentive Plan was approved by Founder’s shareholders at the Extraordinary Meeting. A description of the Incentive Plan is set forth in the section of the Proxy Statement/Consent Solicitation Statement/Prospectus entitled “Proposal 6—The Share Plan Proposal” beginning on page 122 and is incorporated herein by reference. A copy of the complete text of the Incentive Plan is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.

 

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Executive and Director Compensation of Founder

 

None of Founder’s executive officers or directors have received any cash compensation for services rendered to Founder. The Sponsor and Founder’s executive officers and directors, or their respective affiliates were reimbursed for any out-of-pocket expenses incurred in connection with activities on Founder’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Prior to the Closing, Founder’s audit committee reviewed on a quarterly basis all payments that were made by Founder to the Sponsor and Founder’s executive officers or directors, or their affiliates. Any such payments prior to the Closing were made using funds held outside Founder’s trust account. Other than quarterly audit committee review of such reimbursements, Founder did not have any additional controls in place governing Founder’s reimbursement payments to its directors and executive officers for their out-of-pocket expenses incurred in connection with activities on Founder’s behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, was paid by Founder to the Sponsor or Founder officers, or their respective affiliates, prior to the Closing. Founder was not party to any agreements with its executive officers and directors that provide for benefits upon termination of employment.

 

Executive and Director Compensation of New Rubicon

 

As an emerging growth company, New Rubicon has opted to comply with the executive compensation rules applicable to “smaller reporting companies,” as such term is defined under the Exchange Act, when detailing the executive compensation of New Rubicon’s executives. This section discusses the material elements of compensation awarded to, earned by or paid to the principal executive officer of Rubicon and the two next most highly compensated executive officers of Rubicon for the fiscal year ended December 31, 2021. These individuals are referred to as New Rubicon’s “Named Executive Officers” or “NEOs.”

 

Summary Compensation Table

 

The compensation reported in this summary compensation table below is not necessarily indicative of how New Rubicon will compensate its Named Executive Officers in the future. New Rubicon expects that it will continue to review, evaluate and modify its compensation framework as a result of becoming a publicly-traded company and New Rubicon’s compensation program could vary significantly from its historical practices.

 

Name and Principal Position  Year  

Salary

($)

  

Bonus

($)(1)

   Option Awards ($)  

All Other Compensation

($)(2)

   Total ($) 
Nate Morris  2021   $686,159   $390,332       $15,913   $1,092,404 
Chief Executive Officer  2020   $545,748   $297,183       $11,438   $854,369 
                              
Philip Rodoni  2021   $582,495   $305,810       $8,930   $897,235 
Chief Technology Officer  2020   $490,772   $205,019   $197,880(3)  $6,846   $900,517 
                              
Michael Heller  2021   $471,471   $247,522       $21,221   $740,214 
Chief Administrative Officer  2020   $440,607   $116,056   $2,517(3)  $16,268   $575,448 

 

 
(1)Amounts in this column include discretionary annual bonuses, as described under “Narrative Disclosure to the Summary Compensation Table—Annual Cash Bonuses” below.

(2)Amounts in this column include payments of premiums for long-term and short-term disability and additional life insurance and Rubicon matching contributions under its 401(k) plan.

(3)Represents the grant date fair value of incentive units granted on April 16, 2020 in accordance with FASB Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), which was $4.08 per incentive unit. For more information regarding the incentive units, see “Narrative Disclosure to the Summary Compensation Table—Long-Term Equity Compensation” below.

 

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Narrative Disclosure to the Summary Compensation Table

 

The compensation described in the narrative disclosure below is not necessarily indicative of how New Rubicon will compensate its Named Executive Officers in the future.

 

Principal Objectives of New Rubicon’s Compensation Program for Named Executive Officers

 

Historically, Rubicon’s executive compensation program has reflected its growth and development-oriented corporate culture. To support this culture, the following objectives have guided Rubicon and will guide New Rubicon’s decisions with respect to the compensation provided to its NEOs:

 

attract, retain and incentivize highly effective executives who share New Rubicon’s values and philosophy;

 

align the interests of New Rubicon’s NEOs with the interests of New Rubicon’s interest holders; and

 

reward New Rubicon’s NEOs for creating value for New Rubicon’s interest holders in the long-term.

 

Employment Agreements

 

Each of Messrs. Morris, Rodoni and Heller entered into employment agreements with Rubicon. Mr. Morris entered into an amended and restated employment agreement with Rubicon (formerly known as Rubicon Global Holdings, LLC) effective as of February 9, 2021, which was further amended as of April 21, 2022 and August 10, 2022 (as amended from time to time, the “Morris Employment Agreement”). Mr. Rodoni entered into an employment agreement with Rubicon, dated as of November 17, 2016 (as amended from time to time, the “Rodoni Employment Agreement”). Mr. Heller entered into an employment agreement with Rubicon, dated as of November 17, 2016 (as amended from time to time, the “Heller Employment Agreement” and, together with the Morris Employment Agreement and Rodoni Employment Agreement, the “Employment Agreements”).

 

In addition to standard terms relating to base salary, annual cash bonus, and benefits eligibility, the Employment Agreements provide for severance in the event of certain terminations of employment, as described under “Additional Narrative Disclosure—Potential Payments Upon Termination or Change in Control—Severance Under Employment Agreements” below. The Employment Agreements also contain special performance bonuses and other benefits in connection with certain sale or other transactions, which are described under “Additional Narrative Disclosure—Potential Payments Upon Termination or Change in Control—Sale and IPO Events under Employment Agreements” below.

 

Pursuant to the Employment Agreements, each NEO is subject to customary confidentiality, intellectual property, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants extend for 24 months following the NEO’s termination of employment.

 

Base Salary

 

Each NEO receives a base salary to compensate them for the satisfactory performance of services rendered to New Rubicon. Pursuant to the Employment Agreements, each NEO is entitled to at least a 15% increase in base salary each year, which may be further adjusted upward by the Compensation Committee from time to time. The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Base salaries for the NEOs have generally been set at levels deemed necessary to attract and retain individuals with superior talent and were originally established in the Employment Agreements. As of December 31, 2021, the NEO’s base salaries were as follows: (i) Mr. Morris, $686,159, (ii) Mr. Rodoni, $582,495, and (iii) Mr. Heller, $471,471. The base salaries received by each NEO for 2021 are set forth in the “Summary Compensation Table” above.

 

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Annual Cash Bonuses

 

Pursuant to the Employment Agreements, the NEOs have the opportunity to earn discretionary annual performance-based cash bonuses, based upon the achievement of key performance indicators, as determined by the Compensation Committee, and other pre-established factors, such as leadership and adherence to New Rubicon’s mission and values, capital fundraising, recruiting talent, managing New Rubicon’s business, and New Rubicon’s achievement of adjusted gross profit goals established by the Compensation Committee. Mr. Morris’s annual target bonus is 100% of his base salary, and each of Messrs. Rodoni and Heller have an annual target bonus of 50% of his base salary.

 

The Compensation Committee retains ultimate discretion over all bonus payouts, and no annual bonuses are paid unless approved by the Compensation Committee. Annual cash bonus awards for 2021 are set forth in the “Summary Compensation Table” above.

 

Long-Term Equity Compensation

 

Prior to Business Combination

 

Prior to the consummation of the Business Combination, Rubicon maintained a Profits Participation Plan (the “Incentive Unit Plan”) and a Unit Appreciation Rights Plan (the “Phantom Unit Plan”). Each of the NEOs, other than Mr. Morris, previously received grants of profits interests (“denominated as “incentive units”) under the Incentive Unit Plan in 2015, 2016, 2017, 2018 and 2020; however, no NEO has received a grant of unit appreciation rights (denominated as “phantom units”) under the Phantom Unit Plan. Information regarding the incentive units granted to the NEOs is set forth in the “Outstanding Equity Awards at 2021 Fiscal Year End Table” below. No incentive units were granted to NEOs during 2021. The incentive units attributable to Mr. Heller in the “Summary Compensation Table” above and the “Outstanding Equity Awards at 2021 Fiscal Year End Table” below were granted to Coachcash Holdings, LLC, but are attributed to Mr. Heller due to his family’s beneficial interest in the ownership of Coachcash Holdings, LLC. As of the consummation of the Business Combination, the Phantom Unit Plan and Incentive Unit Plan were no longer in effect.

 

The incentive units generally vest over a four-year period, with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting in equal monthly installments over the next 36 months. Any unvested incentive units are forfeited upon the termination of the NEO’s employment. The incentive units were also subject to accelerated vesting in connection with certain events, as described under “Additional Narrative Disclosure—Potential Payments Upon Termination or Change in Control—Incentive Units” below. However, in connection with the consummation of the Business Combination, all outstanding incentive units were fully accelerated and converted into Class B Units and Domestication Class V Common Stock issuable pursuant to the Merger Agreement.

 

Following the Business Combination

 

In connection with the Business Combination, New Rubicon adopted the Incentive Plan to enhance New Rubicon’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities.

 

Under the 2022 amendment to the Morris Employment Agreement, Mr. Morris is entitled to a grant of 4,821,357 RSUs pursuant to the Incentive Plan, which represents 3% of the issued and outstanding shares of New Rubicon immediately following the consummation of the Business Combination (the “Time-Based Grant”). The Time-Based Grant vests ratably on the first three anniversaries of the consummation of the Business Combination. Under the 2022 amendment to the Morris Employment Agreement, Mr. Morris is entitled to a grant of 2,410,679 RSUs pursuant to the Incentive Plan, which represents 1.5% of the issued and outstanding shares of New Rubicon immediately following the consummation of the Business Combination (the “Performance-Based Grant” and together with the Time-Based Grant, the “Founder RSU Grants”). The Performance-Based Grant will be subject to performance-based vesting established by the Compensation Committee. The Founder RSU Grants are subject to accelerated vesting in connection with certain events, as described under “Additional Narrative Disclosure—Potential Payments Upon Termination or Change in Control—Severance Under Employment Agreements” below. The Founder RSU Grants will be issued as soon as reasonably practicable after the filing and effectiveness of the Form S-8 registration statement for the Incentive Plan.

 

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Outstanding Equity Awards at 2021 Fiscal Year-End Table

 

The following table shows all outstanding equity awards held by the NEOs as of December 31, 2021, which consisted solely of incentive units in Rubicon.

 

      Option Awards (1)
Name  Grant Date 

Number of Securities Underlying Unexercised Options

(#) Exercisable (2)

  

Number of Securities Underlying Unexercised Options

(#) Unexercisable (3)

   Option
Exercise Price
  Option
Expiration Date
Nate Morris      0    0   N/A  N/A
                    
Philip Rodoni                   
Award 1  June 28, 2015   163,841    0   N/A  N/A
Award 2  July 24, 2015   70,217    0   N/A  N/A
Award 3  February 12, 2016   58,515    0   N/A  N/A
Award 4  July 25, 2017   41,725    0   N/A  N/A
Award 5  December 11, 2017   66,520    0   N/A  N/A
Award 6  October 15, 2018   40,082    0   N/A  N/A
Award 7  April 16, 2020   20,205    28,295   N/A  N/A
                    
Michael Heller                   
Award 1  June 28, 2015   175,544    0   N/A  N/A
Award 2  July 24, 2015   140,435    0   N/A  N/A
Award 3  February 12, 2016   90,000    0   N/A  N/A
Award 4  July 25, 2017   70,574    0   N/A  N/A
Award 5  December 11, 2017   94,826    0   N/A  N/A
Award 6  October 15, 2018   78,849    0   N/A  N/A
Award 7  April 16, 2020   258    359   N/A  N/A

 

 
(1)The incentive units do not require the payment of an exercise price, but are economically similar to options or stock appreciation rights because they have no value for tax purposes as of the grant date and will obtain value only as the value of the underlying value of the security rises above its grant date value (referred to as the “distribution threshold”). The distribution threshold for these incentive units ranges from $54,900,000 to $468,122,000.

(2)Amounts in this column represent vested incentive units as of December 31, 2021.

(3)Amounts in this column represent unvested incentive units as of December 31, 2021. These incentive units began vesting as to 25% of the first anniversary of the grant date and in equal monthly installments for the following 36 months.

 

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Additional Narrative Disclosure

 

Retirement, Health and Welfare Benefits

 

Each NEO is eligible to participate in employee benefit plans and programs, including medical and dental benefits, flexible spending accounts, long-term care benefits, and short- and long-term disability and life insurance, to the same extent as New Rubicon’s other full-time employees, subject to the terms and eligibility requirements of those plans. The NEOs are also eligible to participate in a 401(k) defined contribution plan, subject to limits imposed by the Internal Revenue Code, to the same extent as New Rubicon’s other full-time employees. New Rubicon matches up to 50% of the first 4% of contributions made by participants in the 401(k).

 

Potential Payments Upon Termination or Change in Control

 

Severance Under Employment Agreements

 

Under the Morris Employment Agreement, if Mr. Morris is terminated without “Cause” or if he resigns with “Good Reason,” he is eligible to receive: (a) a lump sum payment of 18 months of base salary, (b) a pro-rated annual bonus based on a target of 100% of base salary, (c) COBRA continuation coverage for up to 18 months, (d) continued eligibility to receive any special performance bonus upon a subsequent “Sale Event” or “IPO” (described under “—Sale or IPO Events Under Employment Agreements” below), and (e) pursuant to the 2022 amendment to the Morris Employment Agreement, accelerated vesting of his Founder RSU Grants, with the Performance-Based Grant remaining subject to achievement of the applicable performance goals. In addition, pursuant to the 2022 amendment to the Morris Employment Agreement, the Founder RSU Grants will also accelerate upon a change of control (as defined in the Incentive Plan) whereby Mr. Morris ceases to be the Chief Executive Officer of the surviving entity and upon Mr. Morris’s death or disability, with the Performance-Based Grant remaining subject to achievement of the applicable performance goals.

 

As used in the Morris Employment Agreement:

 

“Cause” generally includes (i) willful engagement in dishonesty, illegal conduct or gross misconduct which is materially injurious to New Rubicon or its affiliates, (ii) embezzlement, misappropriation or fraud, (iii) conviction of, or plea of guilty or nolo contendere to, a felony or crime involving dishonesty, (iv) the willful unauthorized disclosure of confidential information, or (v) violation of confidentiality, non-solicit or non-compete provisions.

 

“Good Reason” generally includes (i) a reduction in base salary or annual performance bonus, (ii) a relocation of the principal place of employment, (iii) New Rubicon’s material breach of or failure to obtain the assumption of the Morris Employment Agreement, (iv) a failure to nominate Mr. Morris for election to the board of directors, (v) a material, adverse change in position, title, authority, duties or reporting responsibilities or the reporting structure applicable to Mr. Morris, subject to standard notice and cure periods.

 

Under the Rodoni Employment Agreement and the Heller Employment Agreement, if Mr. Rodoni or Mr. Heller is terminated without “Cause,” if he resigns with “Good Reason” or if his termination is as a result of his disability, he is eligible to receive: (a) 1.5 times the sum of his base salary and target bonus, payable in installments over 18 months, (b) COBRA continuation coverage for up to 18 months, and (c) continued eligibility to receive any special performance bonus upon a subsequent “Sale Event” or “IPO” (described under “—Sale or IPO Events Under Employment Agreements” below). In addition, if Mr. Rodoni’s or Mr. Heller’s termination without Cause or resignation with Good Reason occurs within 24 months following a Sale Event or IPO, he will also receive a lump sum equal to his base salary and his annual performance bonus at 50% of base salary, in each case, for the remainder of the 24-month period.

 

As used in the Rodoni Employment Agreement and the Heller Employment Agreement:

 

“Cause” generally includes (i) conviction of, or plea of guilty or nolo contendere to, a felony, (ii) willful misconduct or gross negligence in the conduct of his duties that is injurious to New Rubicon or its affiliates, following written notice and a 30-day cure period, (iii) willful failure to abide by reasonable and lawful instructions of the board of directors, following written notice and a 30-day cure period or (iv) violation of confidentiality, non-solicit or non-compete provisions.

 

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“Good Reason” generally includes (i) a reduction in base salary, (ii) a material reduction in benefits, (iii) reduction or adverse change of position, title, duties or reporting responsibilities, or (iv) New Rubicon’s material breach of the Employment Agreement, subject to standard notice and cure periods.

 

Sale or IPO Events Under Employment Agreements

 

Each of the NEOs is eligible to receive certain bonuses under the Employment Agreements in connection with the consummation of a “Sale Event” and/or “IPO” as more fully described below. For purposes of the Employment Agreements:

 

“IPO” generally means a traditional initial public offering of Rubicon or its successor.

 

“Sale Event” generally includes (i) the transfer of all or substantially all of Rubicon’s assets, (ii) a consolidation, merger, acquisition, or other transaction in which the holders of the voting power of Rubicon immediately prior to such transaction hold less than a majority in voting power of Rubicon or the surviving company immediately following such transaction, or (iii) a grant of an exclusive license to all or substantially all of the intellectual property that constitutes an effective disposition of such intellectual property. In addition, a Sale Event includes a transaction pursuant to which a special purpose acquisition company merges with or otherwise acquires Rubicon or its operating subsidiaries. The Business Combination was considered a Sale Event for purposes of the Employment Agreements.

 

Morris Employment Agreement

 

Under the Morris Employment Agreement, Mr. Morris is eligible for two bonuses: (a) a special performance bonus equal to 2% of the transaction value upon a Sale Event or IPO prior to February 9, 2023 that has a transaction value in excess of $1.2 billion (which increases to 4% if the transaction value exceeds $1.5 billion and to 6% if the transaction value exceeds $1.85 billion) and (b) a retention bonus equal to 100% of his base salary upon a Sale Event. In the event of a termination of employment prior to the Sale Event or IPO other than a termination for Cause or a resignation without Good Reason, Mr. Morris remains eligible to receive the special performance bonus. In addition, in the event of Mr. Morris’s death or disability between the notification of the Sale Event and its consummation, Mr. Morris would receive a pro-rata portion of the retention bonus.

 

In connection with the Business Combination and in satisfaction of the special performance bonus and the retention bonus, in accordance with the August 2022 amendment to the Morris Employment Agreement, Mr. Morris (i) received $20 million in cash and (ii) following effectiveness of a Form S-8 registration statement, will receive (A) 3,561,469 RSUs plus (B) a number of RSUs having a grant date value $5,000,000, in each case, which vest on the date that is six months following the consummation of the Business Combination.

 

Rodoni Employment Agreement

 

Under the Rodoni Employment Agreement, Mr. Rodoni is eligible for three bonuses: (a) a special performance bonus of $6,500,000 (or $7,475,000 if paid in equity rather than cash) upon a Sale Event or IPO, grossed up for any state, federal and payroll taxes that may be due as a result of such bonus, (b) a retention bonus of 100% of his base salary as of December 31, 2021 ($582,495) upon a Sale Event, and (c) a post-sale retention bonus of two times his base salary as of December 31, 2021 ($1,164,990) if Mr. Rodoni remains employed following a Sale Event or IPO. In the event of Mr. Rodoni’s death or disability prior to a Sale Event, Mr. Rodoni would receive a pro-rata portion of the retention bonus.

 

In connection with the Business Combination and in satisfaction of the special performance bonus, the retention bonus and the post-sale retention bonus, Mr. Rodoni (i) received approximately $1.75 million in cash and (ii) following effectiveness of a Form S-8 registration statement, will receive 1,578,669 RSUs which vest on the date that is six months following the consummation of the Business Combination.

 

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Heller Employment Agreement

 

Under the Heller Employment Agreement, Mr. Heller is eligible for four bonuses: (a) a special performance bonus of $2,725,000 upon a Sale Event or IPO with an enterprise value of $1 billion (which is increased to $4,725,000 if the enterprise value exceeds $1.5 billion), grossed up for any state, federal and payroll taxes that may be due as a result of such bonus, (b) a retention bonus of 100% of his base salary as of December 31, 2021 ($471,471) upon a Sale Event, (c) a post-sale retention bonus of two times his base salary as of December 31, 2021 ($942,943) if Mr. Heller remains employed following a Sale Event or IPO, and (d) an additional bonus of $1,719,284 upon a Sale Event or IPO, grossed up for any state, federal and payroll taxes that may be due as a result of such bonus. In the event of Mr. Heller’s death or disability prior to a Sale Event, Mr. Heller would receive a pro-rata portion of the retention bonus.

 

In connection with the Business Combination and in satisfaction of the special performance bonus, the retention bonus, the post-sale retention bonus and the additional bonus, Mr. Heller (i) received approximately $1.41 million in cash and (ii) following effectiveness of a Form S-8 registration statement, will receive 1,173,822 RSUs which vest on the date that is six months following the consummation of the Business Combination.

 

Incentive Units

 

The incentive units vest in full upon a “Change of Control.” Under the Incentive Unit Plan, “Change of Control” generally includes (i) a sale of 50% of the equity securities of Rubicon to a third party, (ii) a merger or consolidation of Rubicon resulting in the existing Rubicon owners holding less than 50% of the equity securities of the surviving company, or (iii) a sale of all or substantially all of the assets of Rubicon to a third party. Pursuant to a joint written consent of the board of managers of Rubicon and a super-majority of the holders of incentive units, effective April 26, 2022, “Change of Control” under the Incentive Unit Plan was amended to specifically include the Business Combination.

 

Director Compensation

 

The table set forth below details the compensation paid to directors of Rubicon for fiscal year 2021.

 

Name 

Fees Earned or Paid in Cash

($)

  

Option Awards

($)(1)

   Total ($) 
Brent Callinicos            
Andres Chico            
Ambassador Paula J. Dobriansky      $95,130(2)  $95,130 
Stephen Goldsmith            
Steve Koonin            
Elizabeth Montoya            
Lane Moore            
Michael A. Nutter            
Oscar Salazar            
Nicholas Walrod            
Bob Wickham            

 

 
(1)Amounts in this column represent the aggregate grant date fair value of options granted during fiscal 2021, calculated in accordance with FASB ASC Topic 718. For additional information regarding the assumptions underlying this calculation, please read Note 10 to Rubicon’s consolidated financial statements for the fiscal year ended December 31, 2021.

(2)Represents 10,500 incentive units granted on June 10, 2021, all of which remained unvested as of December 31, 2021. 25% vested on June 10, 2022 and the remainder vest in equal monthly installments for the following 36 months. For more information regarding the incentive units, see “Narrative Disclosure to the Summary Compensation Table—Long-Term Equity Compensation—Prior to Business Combination” above.

 

24

 

 

Other than an award of 10,500 incentive units made to Ambassador Dobriansky on June 10, 2021, no other compensation was provided by Rubicon to its non-employee directors for the year ended December 31, 2021. In connection with the Business Combination, Ambassador Dobriansky’s incentive units were accelerated and converted into the right to receive consideration pursuant to the Merger Agreement.

 

Rubicon has historically reimbursed its non-employee directors’ travel expenses for travel to and from board meetings. Mr. Morris and Ms. Montoya were the only employee directors of Rubicon for the year ended December 31, 2021 and received no additional compensation for their service as directors. The compensation received by Mr. Morris as an employee of Rubicon is set forth under “Summary Compensation Table” above.

 

Following the Business Combination, the Board adopted a director compensation policy, pursuant to which New Rubicon’s non-employee directors will receive the following:

 

  Annual cash retainer of $75,000 for service on the Board;

 

  Additional annual cash retainers of $25,000 for service as the chair of the Audit Committee, the Compensation Committee, the Corporate Citizenship Committee or the Nominating and Corporate Governance Committee;

 

  Additional annual cash retainers of $25,000 (per committee) for service as a member of the Audit Committee, the Compensation Committee, the Corporate Citizenship Committee or the Nominating and Corporate Governance Committee;
     
  Initial equity grant of RSUs under the Incentive Plan with a value of approximately $500,000; and

 

  Annual equity grant of RSUs under the Incentive Plan with a value of approximately $250,000 in connection with New Rubicon’s annual meetings.

 

The director compensation policy also provides each director with reimbursement for reasonable travel and miscellaneous expenses incurred in attending meetings and activities of the Board and its committees. In accordance with the director compensation policy, each non-employee director will receive their initial RSU grant in connection with New Rubicon’s filing of a Form S-8 registration statement for the Incentive Plan.

 

Certain Relationships and Related Party Transactions

 

The Board has adopted a written policy regarding the review and approval or disapproval by the Audit Committee of transactions between New Rubicon or any of its subsidiaries and any related person (defined to include New Rubicon’s executive officers, directors or director nominees, any stockholder beneficially owning in excess of 5% of Common Stock or securities exchangeable for Common Stock, and any immediate family member of any of the foregoing persons) in which one or more of such related persons has a direct or indirect interest (each a “Related Party”). In approving or rejecting any such transaction, the Audit Committee will consider the relevant facts and circumstances available and deemed relevant to the Audit Committee. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote on approval or disapproval of the transaction.

 

Certain relationships and related party transactions of New Rubicon and Rubicon are described in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Certain Relationships and Related Transactions” beginning on page 213, which description is incorporated herein by reference.

 

Certain Related Parties entered into Subscription Agreements upon the signing of the Merger Agreement, whereby at Closing, Guardians of New Zealand Superannuation (a greater than 5% beneficial owner of Common Stock) was issued 3,300,000 shares of Domestication Class A Common Stock at a per share purchase price of $10.00 per share, and MBI Holdings LP, an entity beneficially owned by Jose Miguel Enrich (a greater than 5% beneficial owner of Common Stock), was issued 660,000 shares of Domestication Class A Common Stock at a per share purchase price of $10.00 per share. On August 12, 2022, Bolis Holdings LP, DRG Holdings LP, and Pequeno Holdings LP, entities controlled by Jose Miguel Enrich, entered into Subscription Agreements for $1.4 million, $1.5 million and $1.5 million, respectively, for the purchase of Domestication Class A Common Stock at a per share price of $10.00 on substantially similar terms as the other PIPE Investors. At the Closing, Bolis Holdings LP, DRG Holdings LP, and Pequeno Holdings LP were issued 140,000, 150,000, and 150,000 shares of Domestication Class A Common Stock, respectively.

 

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The information set forth in the Introductory Note under the heading “Rubicon Equity Investment Agreement” is incorporated herein by reference.

 

The information set forth in “Item 1.01. Entry Into a Material Definitive Agreement” under the headings “Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC”, “Tax Receivable Agreement”, “A&R Registration Rights Agreement”, and “Indemnification Agreements” is incorporated herein by reference.

 

Certain of the Related Parties received Class B Units (and an equivalent number of Domestication Class V Common Stock) as merger consideration for their prior interests in Rubicon. Persons receiving Class B Units entered into the A&R LLCA and TRA with New Rubicon and Rubicon at Closing. Related Parties to the A&R LLCA and TRA include Messrs. Rodoni (Chief Technology Officer), Anderson (Chief Financial Officer), Meyer (General Counsel), Callinicos (Director) and Owston (Interim Chief Commercial Officer), Amb. Dobriansky (Director), RGH, Inc. (greater than 5% beneficial owner), MBI Holdings LP (greater than 5% beneficial owner), RUBCN Holdings LP (controlled by a greater than 5% beneficial owner), RUBCN IV LP (controlled by a greater than 5% beneficial owner), and RUBCN Holdings V LP (controlled by a greater than 5% beneficial owner).

 

Related Parties to the A&R Registration Rights Agreement include Sponsor (greater than 5% beneficial owner), RGH, Inc., MBI Holdings LP, RUBCN Holdings LP, RUBCN IV LP, RUBCN Holdings V LP, GFAPCH FO, S.C., Jose Miguel Enrich, Guardians of New Zealand Superannuation, and Messrs. Morris (Chairman and Chief Executive Officer), Rodoni, Heller (Chief Administrative Officer), Anderson, de Viel Castel (Chief Operations Officer), Allegretti (Chief Strategy Officer), Meyer, Rachelson (Chief Sustainability Officer), Sampson (Chief Marketing & Communications Officer), Owston, and Chico (Director).

 

On July 19, 2022, the board of directors of Rubicon unanimously approved term loans from certain of its members, affiliates and officers in an aggregate amount of $4,650,000 (each an “Insider Loan”). The Insider Loans had a maturity date of the earlier of the Closing Date or August 15, 2022. In addition to a ten percent interest rate, each Insider Loan had a loan fee (the “Loan Fee”) equal to fifteen percent of the principal amount of the loan, less all accrued interest thereunder. Phil Rodoni, the Chief Technology Officer of Rubicon, entered into an Insider Loan with Rubicon for $1,100,000, which, inclusive of all interest and the Loan Fee, was repaid at Closing by New Rubicon for $1,265,000. Michael Heller, the Chief Administrative Officer of Rubicon, entered into an Insider Loan with Rubicon for $400,000, which, inclusive of all interest and the Loan Fee, was repaid at Closing by New Rubicon for $460,000. David Rachelson, the Chief Sustainability Officer of Rubicon, entered into an Insider Loan with Rubicon for $150,000, which, inclusive of all interest and the Loan Fee, was repaid at Closing by New Rubicon for $172,500. DGR Compound Inc., an entity controlled by Andres Chico, a director of Rubicon, entered into an Insider Loan with Rubicon for $1,000,000, which, inclusive of all interest and the Loan Fee, was repaid at Closing by New Rubicon for $1,150,000. Bolis Holdings LP and Pequeno Compound Inc., entities controlled by Jose Miguel Enrich, a greater than 5% beneficial owner of New Rubicon, entered into Insider Loans with Rubicon for an aggregate amount of $2,000,000, which, inclusive of all interest and the Loan Fee, were repaid at Closing by New Rubicon for $2,300,000. A copy of the form of Insider Loan is filed as Exhibit 10.15 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Legal Proceedings

 

In the ordinary course of business, New Rubicon is or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on New Rubicon’s consolidated results of operations, cash flows or financial position.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Market Information and Holders

 

On August 16, 2022, the Domestication Class A Common Stock and Domestication Public Warrants began trading on the NYSE under the symbols “RBT” and “RBT WS”, respectively. As of the Closing Date and following the completion of the Business Combination, New Rubicon had approximately 46,300,005 shares of Domestication Class A Common Stock issued and outstanding held of record by 22 holders, approximately 114,411,906 shares of Domestication Class V Common Stock issued and outstanding held of record by 160 holders, and approximately 30,016,851 Warrants outstanding held of record by 3 holders. Such numbers do not include Depository Trust Company participants or beneficial owners holding shares through nominee names.

 

Dividends

 

New Rubicon has not paid any cash dividends on shares of its Common Stock to date. The payment of any dividends is within the Board’s discretion. It is the present intention of the Board to retain all earnings, if any, for use in New Rubicon’s business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.

 

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Recent Sales of Unregistered Securities

 

The disclosure set forth in the “Introductory Note” above is incorporated herein by reference.

 

The Common Stock and Warrants issued in connection with the sales below were not registered under the Securities Act, and were issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act.

 

On April 27, 2021, the Sponsor purchased 7,906,250 Founder Class B Shares for $25,000 in the aggregate. On August 15, 2022, the 7,906,260 Founder Class B Shares converted into 7,906,250 shares of Domestication Class A Common Stock, and thereafter, the Sponsor forfeited 160,000 shares of Domestication Class A Common Stock pursuant to the Rubicon Equity Investment Agreement and 1,000,000 shares of Domestication Class A Common Stock pursuant to the Sponsor Forfeiture Agreement.

 

On October 19, 2021, the Sponsor and Jefferies LLC purchased an aggregate of 14,204,375 Founder Private Placement Warrants for an aggregate purchase price of $14,204,375. On August 15, 2022, the 14,204,375 Founder Private Placement Warrants converted into 14,204,375 Domestication Private Warrants.

 

On the Closing Date, pursuant to the Subscription Agreements, the PIPE Investors purchased 12,100,000 shares of Domestication Class A Common Stock at a price of $10.00 per share, or $121,000,000 in the aggregate.

 

On the Closing Date, pursuant to the Rubicon Equity Investment Agreement, Rubicon issued 160,000 shares of Domestication Class A Common Stock in partial satisfaction of a $8,000,000 advance by the New Equity Holders.

 

Description of Registrant’s Securities

 

Capital Stock

 

Authorized and Outstanding Stock

 

The Charter authorizes the issuance of 975,000,000 shares of capital stock, consisting of (i) 690,000,000 shares of Class A common stock, par value $0.0001 per share, (ii) 275,000,000 shares of Class V common stock, par value $0.0001 per share, and (ii) 10,000,000 shares of preferred stock, par value $0.0001 per share.

 

Common Stock

 

The Charter authorizes two classes of common stock, Class A common stock and Class V common stock, each with a par value of $0.0001. As of August 15, 2022, there were 46,300,005 shares of Domestication Class A Common Stock issued and outstanding and 114,411,906 shares of Domestication Class V Common Stock issued and outstanding.

 

Pursuant to the A&R LLCA, Class B Units are exchangeable into an equivalent number of shares of Domestication Class A Common Stock, subject to certain limitations and adjustments, at the election of the holder thereof or pursuant to a mandatory redemption at the election of New Rubicon (as managing member of Rubicon). Upon the exchange of any Class B Units, New Rubicon will retire an equivalent number of shares of Domestication Class V Common Stock held by such holder of exchanged Class B Units.

 

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Preferred Stock

 

The Charter provides that up to 10,000,000 shares of preferred stock may be issued from time to time in one or more series. The Board is authorized to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board is able, without stockholder approval, to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the Domestication Class A Common Stock and Domestication Class V Common Stock and could have anti-takeover effects. The Board’s ability to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of New Rubicon or the removal of existing management. New Rubicon has no preferred stock outstanding at the date hereof. Although New Rubicon does not currently intend to issue any shares of preferred stock, New Rubicon cannot assure you that New Rubicon will not do so in the future.

 

Dividends and Other Distributions

 

Under the Charter, holders of Domestication Class A Common Stock are entitled to receive ratable dividends, if any, as may be declared from time to time by the Board out of legally available assets or funds. There are no current plans to pay cash dividends on Domestication Class A Common Stock for the foreseeable future. In the event of New Rubicon’s liquidation, dissolution or winding up, holders of Domestication Class A Common Stock will be entitled to share ratably in all assets remaining after payment of or provision for any liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. Domestication Class V Common Stock has no economic rights and shares of Domestication Class V Common Stock are not entitled to receive any assets upon dissolution, liquidation or winding up of New Rubicon, nor can such shares participate in any dividends or distributions of New Rubicon.

 

New Rubicon is a holding company with no material assets other than its interest in Rubicon. New Rubicon intends to cause Rubicon to make distributions to holders of Class A Units and Class B Units in amounts such that the total cash distributions from Rubicon to the holders are sufficient to enable each holder to pay all applicable taxes on taxable income allocable to such holder and other obligations under the Tax Receivable Agreement as well as any cash dividends declared by New Rubicon.

 

The A&R LLCA generally provides that pro rata cash tax distributions will be made to holders of Class A Units and Class B Units (including New Rubicon) at certain assumed tax rates. New Rubicon anticipates that the distributions New Rubicon will receive from Rubicon may, in certain periods, exceed its actual tax liabilities and obligations to make payments under the Tax Receivable Agreement. The Board, in its sole discretion, will make any determination from time to time with respect to the use of any such excess cash so accumulated, which may include, among other uses, to pay dividends on the Domestication Class A Common Stock. New Rubicon will have no obligation to distribute such cash (or other available cash other than any declared dividend) to stockholders. New Rubicon also expects, if necessary, to undertake ameliorative actions, which may include pro rata or non-pro rata reclassifications, combinations, subdivisions or adjustments of outstanding Class A Units pursuant to the A&R LLCA, to maintain one-for-one parity between Class A Units held by New Rubicon and shares of Domestication Class A Common Stock.

 

Voting Power

 

Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, under the Charter, the holders of Domestication Class A Common Stock and Domestication Class V Common Stock possess all voting power for the election of directors and all other matters requiring stockholder action and are entitled to one vote per share on matters to be voted on by stockholders. Holders of Domestication Class A Common Stock and Domestication Class V Common Stock shall at all times vote together as one class on all matters submitted to a vote of the holders of Domestication Class A Common Stock and Domestication Class V Common Stock under the Charter. Under the Charter, directors are elected by a plurality voting standard, whereby stockholders may not give more than one vote per share towards any one director nominee. There are no cumulative voting rights.

 

Preemptive or Other Rights

 

The Charter does not provide for any preemptive or other similar rights.

 

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Limitations on Liability and Indemnification of Officers and Directors

 

The Charter and Bylaws (as defined below) limit the liability of directors, and provide for the indemnification of current and former officers and directors, in each case, to the fullest extent permitted by Delaware law.

 

New Rubicon has entered into agreements with its officers and directors to provide contractual indemnification in addition to the indemnification provided for in the Charter and Bylaws. The Charter and Bylaws also permit New Rubicon to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions.

 

In connection with the Closing, Founder purchased a tail policy with respect to liability coverage for the benefit of former Founder officers and directors. New Rubicon will maintain such tail policy for a period of no less than six (6) years following the Closing.

 

These provisions may discourage stockholders from bringing a lawsuit against New Rubicon’s directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit New Rubicon and its stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent New Rubicon pays the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

 

New Rubicon believes that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

 

Exclusive Forum

 

The Charter provides that, unless New Rubicon selects or consents in writing to the selection of an alternative forum, to the fullest extent permitted by the applicable law: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (b) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of the foregoing, “internal corporate claims” means claims, including claims in the right of New Rubicon that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the Delaware General Corporation Law (“DGCL”) confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring any interest in any shares of Domestication Class A Common Stock or Domestication Class V Common Stock will be deemed to have notice of and consented to the provisions of this provision.

 

Certain Anti-Takeover Provisions of Delaware Law; New Rubicon’s Certificate of Incorporation and Bylaws

 

The Charter and Bylaws contain, and the DGCL contains, provisions, as summarized in the following paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of the Board. These provisions are intended to avoid costly takeover battles, reduce New Rubicon’s vulnerability to a hostile change of control and enhance the Board’s ability to maximize stockholder value in connection with any unsolicited offer to acquire New Rubicon. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of New Rubicon by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of Domestication Class A Common Stock held by stockholders.

 

Delaware Law

 

New Rubicon is governed by the provisions of Section 203 of the DGCL. Section 203 generally prohibits a publicly held Delaware corporation from engaging in a “business combination” with any “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation’s voting stock. These provisions may have the effect of delaying, deferring or preventing changes in control of New Rubicon not approved in advance by the Board.

 

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Special Meetings

 

The Charter provides that special meetings of the stockholders may be called only by or at the direction of the Board, the Chairman of the Board or the Chief Executive Officer. The Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of New Rubicon.

 

Advance Notice of Director Nominations and New Business

 

The Bylaws state that in order for a stockholder to propose nominations of candidates to be elected as directors or any other proper business to be considered by stockholders at the annual meeting, such stockholder must, among other things, provide notice thereof in writing to the secretary at the principal executive offices of New Rubicon within the time periods set forth in the Bylaws. Such notice must contain, among other things, certain information about the stockholder giving the notice (and the beneficial owner, if any, on whose behalf the nomination or proposal is made) and certain information about any nominee or other proposed business. Stockholder proposals of business other than director nominations cannot be submitted in connection with special meetings of stockholders.

 

The Bylaws allow the presiding officer at a meeting of stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if such rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of New Rubicon.

 

Supermajority Voting for Amendments to Governing Documents

 

Certain amendments to the Charter require the affirmative vote of at least 6623% of the voting power of all shares of Common Stock then outstanding. The Charter provides that the Board is expressly authorized to adopt, amend or repeal the Bylaws and that stockholders may amend certain provisions of the Bylaws only with the approval of at least 6623% of the voting power of all shares of Common Stock then outstanding. These provisions make it more difficult for stockholders to change the Charter or Bylaws and may, therefore, defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to amend the Charter or Bylaws or otherwise attempting to influence or obtain control of New Rubicon.

 

No Cumulative Voting

 

The DGCL provides that a stockholder’s right to vote cumulatively in the election of directors does not exist unless the certificate of incorporation specifically provides otherwise. The Charter does not provide for cumulative voting. The prohibition on cumulative voting has the effect of making it more difficult for stockholders to change the composition of the Board.

 

Classified Board of Directors

 

The Charter provides that the Board is divided into three classes of directors, with the classes to be as nearly equal in number as possible, designated Class I, Class II and Class III. The terms of Class I, Class II and Class III directors end at New Rubicon’s 2023, 2024 and 2025 annual meetings of stockholders, respectively. Directors of each class the term of which shall then expire shall be elected to hold office for a three-year term. The Charter provides that the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the Board. The classification of directors has the effect of making it more difficult for stockholders to change the composition of the Board and requiring a longer time period to do so. As a result, in most circumstances, a person can gain control of the Board only by successfully engaging in a proxy contest at two or more meetings of stockholders at which directors are elected.

 

Removal of Directors; Vacancies

 

The Charter and Bylaws provide that, so long as the Board is classified, directors may be removed only for cause and only upon the affirmative vote of holders of at least 6623% of the voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. Therefore, because stockholders cannot call a special meeting of stockholders, as discussed above, stockholders may only submit a stockholder proposal for the purpose of removing a director at an annual meeting. The Charter and Bylaws provide that vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled only by a majority of the directors then in office or by a sole remaining director. Therefore, while stockholders may remove a director, stockholders are not able to elect new directors to fill any resulting vacancies that may be created as a result of such removal.

 

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Stockholder Action by Written Consent

 

The DGCL permits any action required to be taken at any annual or special meeting of the stockholders to be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock entitled to vote thereon were present and voted, unless the certificate of incorporation provides otherwise. The Charter and Bylaws preclude stockholder action by written consent. This prohibition, combined with the fact that stockholders cannot call a special meeting, as discussed above, means that stockholders are limited in the manner in which they can bring proposals and nominations for stockholder consideration, making it more difficult to effect change in New Rubicon’s governing documents and the Board.

 

Warrants

 

As of the Closing Date, there were 30,016,851 Warrants outstanding, consisting of 15,812,476 Domestication Public Warrants and 14,204,375 Domestication Private Warrants. Each whole Warrant entitles the registered holder to purchase one share of Domestication Class A Common Stock at a price of $11.50 per share, subject to adjustment as set forth in the Warrant Agreement.

 

A Warrant does not entitle the registered holder thereof to any of the rights of a stockholder of New Rubicon, including, without limitation, the right to receive dividends or any voting rights, until such Warrant is exercised for shares of Domestication Class A Common Stock. New Rubicon will at all times reserve and keep available a sufficient number of authorized but unissued shares of Domestication Class A Common Stock to permit the exercise in full of all outstanding Warrants.

 

Warrant Exercise

 

The Warrants will become exercisable on September 14, 2022 (30 days after the consummation of the Business Combination) and will expire at 5:00 p.m., New York City time on August 15, 2027 (the fifth anniversary of the completion of the Business Combination) or earlier upon redemption or liquidation.

 

The Warrants may be exercised on or before the expiration date upon surrender of the warrant certificate at the office of the warrant agent, with the subscription form duly executed, and by paying in full the exercise price and all applicable taxes due for the number of Warrants being exercised. No fractional shares will be issued upon exercise of the Warrants. If, by reason of any adjustment made pursuant to the Warrant Agreement, a holder would be entitled, upon the exercise of a Warrant, to receive a fractional interest in a share, New Rubicon will, upon such exercise, round up to the nearest whole number of shares of Domestication Class A Common Stock to be issued to the Warrant holder.

 

No Warrant will be exercisable for cash, and New Rubicon will not be obligated to issue Domestication Class A Common Stock upon exercise of a Warrant unless the shares of Domestication Class A Common Stock issuable upon exercise of such Warrant have been registered, qualified, or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrant. In the event that the foregoing condition is not met, the holder of such Warrant will not be entitled to exercise such Warrant for cash and such Warrant may have no value and expire worthless. Notwithstanding the foregoing, in no event will New Rubicon be required to net cash settle any Warrant.

 

New Rubicon has agreed that as soon as practicable, but in no event later than September 6, 2022 (15 business days after the Closing), New Rubicon will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Domestication Class A Common Stock issuable upon exercise of the Warrants, and to use best efforts to take such action as is necessary to register or qualify such shares for sale under applicable blue sky laws to the extent an exemption is not available. New Rubicon has agreed to use best efforts to cause such registration statement to become effective and to maintain the effectiveness of such registration statement until the expiration of the Warrants. If such registration statement has not been declared effective by November 9, 2022 (the 60th business day following the Closing), Warrant holders will have the right, until such time as such registration statement is declared effective by the SEC, and during any other period when New Rubicon fails to maintain an effective registration statement covering the Domestication Class A Common Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis” pursuant to an available exemption from registration under the Securities Act.

 

A holder of a Warrant may notify New Rubicon in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (the “maximum percentage”) of the shares of Domestication Class A Common Stock outstanding immediately after giving effect to such exercise. The holder of a Warrant may by written notice increase or decrease the maximum percentage applicable to such holder, on the terms and subject to the conditions set forth in the Warrant Agreement.

 

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Redemption

 

New Rubicon may, at its option, redeem not less than all of the outstanding Warrants at any time during the exercise period, at a price of $0.01 per Warrant:

 

  upon not less than 30 days’ prior written notice of redemption to each Warrant holder,
     
  provided that the last reported sale price of the Domestication Class A Common Stock equals or exceeds $18.00 per share on each of 20 trading days within a 30 trading day period commencing after the Warrants become exercisable and ending on the third trading day prior to the notice of redemption to Warrant holders, and
     
  provided that there is an effective registration statement with respect to the Domestication Class A Common Stock underlying such Warrants, and a current prospectus relating thereto, available throughout the 30-day redemption or New Rubicon has elected to require the exercise of the Warrants on a “cashless basis.”

 

In accordance with the Warrant Agreement, in the event that New Rubicon elects to redeem the outstanding Warrants as set forth above, New Rubicon will fix a date for the redemption (the “Redemption Date”). Notice of redemption will be mailed by first class mail, postage prepaid, not less than 30 days prior to the Redemption Date to the registered holders of the Warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided above will be conclusively presumed to have been duly given whether or not the registered holder received such notice.

 

The Warrants may be exercised for cash at any time after notice of redemption is given by New Rubicon and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Warrants will have no further rights, except to receive the redemption price for such holder’s Warrants upon surrender thereof.

 

If New Rubicon calls the Warrants for redemption as described above, New Rubicon’s management will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the Warrants for that number of shares of Domestication Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Domestication Class A Common Stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” by (y) the fair market value. The “fair market value” shall mean the volume-weighted average trading price of the Domestication Class A Common Stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the Warrant holders.

 

Private Warrants

 

The Domestication Private Warrants are identical to the Domestication Public Warrants in all material respects, except that (i) the Domestication Private Warrants issued to Jefferies will not be exercisable after October 19, 2026 (five years after the commencement of sales of Founder’s public offering) in accordance with FINRA Rule 5110(g)(8), and (ii) the Domestication Private Warrants held by Sponsor and certain insiders of Founder are subject to certain additional transfer restrictions set forth in the Sponsor Agreement. See the section above entitled “Certain Relationships and Related Party Transactions.”

 

Indemnification of Directors and Officers

 

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K under the section entitled “Indemnification Agreements” is incorporated herein by reference.

 

Further information about the indemnification of New Rubicon’s directors and officers is included in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Limitations on Liability and Indemnification of Officers and Directors” beginning on page 219, which is incorporated herein by reference.

 

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Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

 

Prior to the consummation of the Business Combination, the Founder Units, Founder Class A Shares and Founder Public Warrants were listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols, “FOUNU”, “FOUN” and “FOUNW”, respectively. On the Closing Date, all of the issued and outstanding Founder Units separated into their component securities and the Founder Units, Founder Public Warrants and Founder Class A Shares ceased trading on Nasdaq.

 

In connection with the Business Combination, the Domestication Class A Common Stock and Domestication Public Warrants were approved for listing on NYSE. The Domestication Class A Common Stock and Domestication Public Warrants began trading on NYSE under the symbols “RBT” and “RBT WS” on August 16, 2022.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The descriptions of the Subscription Agreements and the Rubicon Equity Investment Agreement set forth above under “Introductory Note” of this Current Report on Form 8-K are incorporated herein by reference. The information regarding unregistered sales of equity securities set forth under “Item 2.01 Completion of Acquisition or Disposition of Assets—Recent Sales of Unregistered Securities” in this Current Report on Form 8-K is incorporated herein by reference.

 

In connection with the Closing, pursuant to the Merger Agreement, New Rubicon issued 114,411,906 Class B Units to certain former holders of Rubicon Interests (and reserved an additional 4,265,971 Class B Units for issuance to certain former holders of Rubicon Interests upon completion and delivery of certain letter of transmittal documents required pursuant the Merger Agreement). In addition, pursuant to the Merger Agreement, such holders are also entitled to receive a pro rata portion of up to 8,900,840 Earn-Out Units and an equivalent number of shares of Domestication Class V Common Stock, in each case, to be issued by New Rubicon depending upon the performance of the Domestication Class A Common Stock during the five (5) year period following the Closing. Class B Units (including such units issued as Earn-Out Units) may be exchanged for an equivalent number of Domestication Class A Common Stock pursuant to the A&R LLCA. As a result, New Rubicon will issue up to 127,578,717 shares of Domestication Class A Common Stock (inclusive of Earn-Out Units), subject to adjustment for stock splits, stock dividends, reclassifications or similar transactions, in exchange for Class B Units, along with the cancellation of an equal number of shares of Domestication Class V Common Stock, and if not issued in registered transactions, such shares will be issued in reliance upon the exemptions set forth in Sections 3(a)(9) and 4(a)(2) of the Securities Act.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

On the Closing Date, concurrently with the Domestication, Founder filed the certificate of incorporation of New Rubicon with the Secretary of State of the State of Delaware. The material terms of the Charter and the general effects on the rights of holders of New Rubicon’s capital stock are described in the sections of the Proxy Statement/Consent Solicitation Statement/Prospectus entitled “Proposal 3—The Charter Proposal” beginning on page 108, which information is incorporated herein by reference. A copy of the Charter is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.

 

In addition, upon the Closing, pursuant to the terms of the Merger Agreement, New Rubicon adopted bylaws (the “Bylaws”). A copy of the Bylaws is filed as Exhibit 3.3 to this Current Report on Form 8-K and is incorporated herein by reference.

 

33

 

 

Item 5.01 Changes in Control of the Registrant

 

The information set forth above under “Introductory Note” and in the section entitled “Security Ownership of Certain Beneficial Owners and Management” in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Incentive Plan

 

The information set forth under the heading “Equity Incentive Plan” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Directors and Executive Officers

 

The information regarding New Rubicon’s directors and executive officers and the compensation that will be paid to them set forth under the heading “Information about Directors and Executive Officers” in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

The information regarding Founder’s directors and executive officers and their resignations in connection with the Closing set forth under the heading “Resignations and Appointments” in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.05 Amendments to the Registrant’s Code of Ethics

 

On August 15, 2022, the Board adopted a Code of Business Conduct and Ethics (the “Code”) applicable to all directors, officers, employees, and certain affiliates of New Rubicon. Among other things, the Code establishes certain guidelines and principles relating to ethics, conflicts of interest, corporate opportunities, confidentiality, compliance with laws, insider trading, anti-corruption and bribery, books and records, data security, external communications and political contributions, internal reporting and compliance procedures.

 

The foregoing description of the Code is not complete and is qualified in its entirety by reference to the complete text of Code, a copy of which is attached hereto as Exhibit 14.1 and is incorporated herein by reference.

 

Item 5.06 Change in Shell Company Status

 

As a result of the Mergers, which fulfilled the definition of a business combination as required by the amended and restated memorandum and articles of association of Founder, dated October 14, 2021, Founder ceased to be a shell company (as defined in Rule 12b-2 of the Exchange Act) as of the Closing Date. The material terms of the Mergers are described in the Proxy Statement/Consent Solicitation Statement/Prospectus in the section entitled “Proposal 1—The Business Combination Proposal—The Merger Agreement” beginning on page 80, which description is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure.

 

On August 15, 2022, New Rubicon issued a press release announcing the consummation of the Business Combination, which is included in this Current Report on Form 8-K as Exhibit 99.1.

 

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Item 9.01 Financial Statements and Exhibits

 

(a) Financial Statements of Business Acquired

 

The audited financial statements of Founder as of December 31, 2021 and for the period from April 26, 2021 (inception) through December 31, 2021 and the related notes beginning on page F-3 of the Proxy Statement/Consent Solicitation Statement/Prospectus are incorporated herein by reference. The unaudited condensed financial statements as of and for the three and six months ended June 30, 2022 and 2021, and the related notes thereto beginning on page 5 of the Form 10-Q, are incorporated herein by reference.

 

The audited consolidated financial statements of Rubicon as of December 31, 2021 and 2020 and for the years ended December 31, 2021 and 2020 and the related notes beginning on page F-37 of the Proxy Statement/Consent Solicitation Statement/Prospectus are incorporated herein by reference. The unaudited consolidated financial statements of Rubicon as of and for the three and six months ended June 30, 2022 and 2021 are set forth in Exhibit 99.2 hereto and are incorporated by reference herein.

 

(b) Pro Forma Financial Information

 

The unaudited pro forma condensed combined balance sheet as of June 30, 2022 and the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 and the year ended December 31, 2021 is set forth in Exhibit 99.4 hereto and is incorporated by reference herein.

 

(d) Exhibits

 

        Incorporated by Reference
Exhibit   Description   Schedule/
Form
  File Number   Exhibits   Filing Date
2.1#   Merger Agreement, dated as of December 15, 2021, by and among Founder, Merger Sub, the Blocker Companies, the Blocker Merger Subs and Rubicon.   Form 8-K   001-40910   2.1   December 17, 2021
3.1   Second Amended and Restated Memorandum and Articles of Association of Founder.   Form 8-K   001-40910   3.1   October 20, 2021
3.2   Certificate of Incorporation of Rubicon Technologies, Inc.                
3.3   Bylaws of Rubicon Technologies, Inc.                
4.3   Specimen Warrant Certificate of Founder.   Form S-1/A   333-258158   4.3   October 12, 2021
4.4   Warrant Agreement, dated October 14, 2021, by and between Founder and Continental Stock Transfer & Trust Company, as warrant agent.   Form 8-K   001-40910   4.1   October 20, 2021
4.5   Amendment of Warrant Agreement, dated August 15, 2022, by and between Rubicon Technologies, Inc. and Continental Stock Transfer & Trust Company, as warrant agent.                
4.6   Specimen Class A Common Stock Certificate of Rubicon Technologies, Inc.   Form S-4/A   333-262465   4.5   June 24, 2022

 

35

 

 

10.1   Letter Agreement, dated October 14, 2021, by and among Founder, its executive officers, its directors and Sponsor.   Form 8-K   001-40910   10.1   October 20, 2021
10.2*   Indemnity Agreements, dated October 14, 2021, by and among Founder and its directors and officers.   Form S-1/A   333-258158   10.4   October 12, 2021
10.3*   Form of Indemnification Agreement of Rubicon Technologies, Inc.                
10.4*   Rubicon Technologies, Inc. 2022 Equity Incentive Plan.                
10.5#   Amended and Restated Registration Rights Agreement, dated as of August 15, 2022, by and among Founder, Sponsor, Rubicon, and certain equityholders of Rubicon.                
10.6   Form of Lock-Up Agreement, by and among Founder, Rubicon and certain equityholders of Rubicon.   Form 8-K   001-40910   10.4   December 17, 2021
10.7   Form of Subscription Agreement by and among Founder and the subscriber parties thereto.   Form 8-K   001-40910   10.3   December 17, 2021
10.8   Sponsor Agreement by and among Founder, Rubicon, Sponsor, and certain insiders of Founder.   Form 8-K   001-40910   10.1   December 17, 2021
10.9#   Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC.                
10.10#   Tax Receivable Agreement, dated August 15, 2022, by and among New Rubicon, Rubicon, the TRA Representative, and certain former equityholders of Rubicon.                
10.11*   Amended and Restated Employment Agreement, by and between Nate Morris and Rubicon Global Holdings, LLC, effective as of February 9, 2021, as amended on April 26, 2022 and August 10, 2022.                
10.12*   Employment Agreement, by and between Phil Rodoni and Rubicon Global Holdings, LLC, dated as of November 17, 2016, as amended on April 20, 2019, April 16, 2020, August 4, 2020, January 3, 2021, February 3, 2021, and November 30, 2021.   Form S-4/A   333-262465   10.19   May 12, 2022
10.13*   Employment Agreement, by and between Michael Heller and Rubicon Global Holdings, LLC, dated as of November 17, 2016, as amended on July 11, 2018, January 5, 2019, April 16, 2020, September 17, 2020, January 3, 2021, and February 3, 2021.   Form S-4/A   333-262465   10.20   June 10, 2022
10.14   Rubicon Equity Investment Agreement, dated May 25, 2022, by and among Rubicon, Founder, Sponsor, MBI Holdings LP, David Manuel Gutiérrez Muguerza, Raul Manuel Gutiérrez Muguerza, and Sergio Manuel Gutiérrez Muguerza.   Form S-4/A   333-262465   10.21   June 24, 2022
10.15   Form of Insider Loan, dated July 19, 2022, by and between Rubicon and each of those certain members, affiliates, directors and officers of Rubicon.                
10.16   Sponsor Forfeiture Agreement, dated August 15, 2022, by and among Founder, Sponsor and Rubicon.                
10.17   Underwriting Agreement, dated October 14, 2021, by and between Founder and Jefferies LLC, as representative of the underwriters.   Form 8-K   001-40910   1.1   October 19, 2021
10.18   Forward Purchase Agreement, dated August 4, 2022, by and among ACM ARRT F LLC, Founder, and Rubicon.   Form 8-K   001-40910   10.1   August 5, 2022

 

36

 

 

10.19#   Fourth Amendment to Loan and Security Agreement, dated April 26, 2022, by and among Rubicon Global, LLC, RiverRoad Waste Solutions, Inc., Rubicon, Cleanco LLC, Charter Waste Management, Inc. and Pathlight Capital LP.                
10.20#   Loan and Security Agreement, dated December 21, 2021, by and among Rubicon Global, LLC, RiverRoad Waste Solutions, Inc., Rubicon, Cleanco LLC, Charter Waste Management, Inc., Rubicon Technologies International, Inc., the lenders thereto, and Mizzen Capital, LP.                
10.21#   Fifth Amendment to Loan and Security Agreement, dated April 26, 2022, by and among the lenders thereto, Eclipse Business Capital LLC, Rubicon Global, LLC, RiverRoad Waste Solutions, Inc., Rubicon, Cleanco LLC, and Charter Waste Management, Inc.                
14.1   Code of Business Conduct and Ethics of Rubicon Technologies, Inc.                
21.1   List of Subsidiaries of New Rubicon.   Form S-4/A   333-262465   21.1   May 12, 2022
99.1   Press Release issued by Rubicon Technologies, Inc. on August 15, 2022.                
99.2   Unaudited consolidated financial statements of Rubicon as of and for the three and six months ended June 30, 2022 and the year ended December 31, 2021.                
99.3   Rubicon’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.                
99.4   Unaudited pro forma condensed combined balance sheet as of June 30, 2022 and the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 and the year ended December 31, 2021.                
104   Cover Page Interactive Data File (formatted as Inline XBRL).                

 

 

* Indicates management contract or compensatory plan or arrangement.
# Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

 

37

 

 

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.

 

  Rubicon Technologies, Inc.
       
  By: /s/ Nate Morris
    Name: Nate Morris
    Title: Chief Executive Officer

 

Date: August 19, 2022

 

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Exhibit 3.2

 

CERTIFICATE OF INCORPORATION

 

OF

 

RUBICON TECHNOLOGIES, INC.

 

(a Delaware corporation)

 

August 15, 2022

 

ARTICLE I
NAME

 

The name of the Corporation is Rubicon Technologies, Inc.

 

ARTICLE II
AGENT

 

The address of the Corporation’s registered office in the State of Delaware is 838 Walker Road, Suite 21-2, Dover, Delaware 19904, Kent County. The name of its registered agent at such address is Registered Agent Solutions, Inc.

 

ARTICLE III
PURPOSE

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

 

ARTICLE IV
STOCK

 

Section 4.1 Authorized Stock. The total number of shares that the Corporation shall have authority to issue is 975,000,000 shares, of which 690,000,000 shares shall be designated as Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), 275,000,000 shares shall be designated as Class V Common Stock, par value $0.0001 per share (the “Class V Common Stock” and, together with the Class A Common Stock, the “Common Stock”) and 10,000,000 shares shall be designated as preferred stock, par value $0.0001 per share (the “Preferred Stock”).

 

 

 

 

Section 4.2 Common Stock.

 

(a) Voting Rights. Except as otherwise expressly provided herein or as required by the DGCL, the holders of shares of Class A Common Stock, as such, and Class V Common Stock, as such, shall vote together as one class on all matters (including the election of directors) submitted to a vote of the stockholders of the Corporation. Except as otherwise expressly provided herein or required by the DGCL, each holder of Class A Common Stock shall be entitled to one vote for each share of Class A Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote and each holder of Class V Common Stock shall be entitled to one vote for each share of Class V Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation, including any certificate of designations relating to any series of Preferred Stock (each hereinafter referred to as a “Preferred Stock Designation”), that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Preferred Stock Designation).

 

(b) Dividends. Subject to the rights of the holders of any outstanding series of Preferred Stock, the holders of shares of Class A Common Stock shall be entitled to receive any dividends to the extent permitted by law when, as and if declared by the board of directors of the Corporation (the “Board”). Except as otherwise provided under this Certificate of Incorporation, dividends and other distributions shall not be declared or paid in respect of Class V Common Stock.

 

(c) Liquidation. Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights of the holders of any outstanding series of Preferred Stock, the holders of shares of Class A Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them. Holders of shares of Class V Common Stock shall not be entitled to receive any assets upon dissolution, liquidation or winding up of the Corporation.

 

Section 4.3 Preferred Stock. The Preferred Stock may be issued from time to time in one or more series. Subject to limitations prescribed by law and the provisions of this Article (including any Preferred Stock Designation), the Board is hereby authorized to provide by resolution and by causing the filing of a Preferred Stock Designation for the issuance of the shares of Preferred Stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of each such series.

 

Section 4.4 No Class Vote on Changes in Authorized Number of Shares of Stock. Subject to the rights of the holders of any outstanding series of Preferred Stock, the number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of at least a majority of the voting power of the stock outstanding and entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.

 

Section 4.5 No Redemption; Cancellation. The Common Stock is not redeemable. One share of Class V Common Stock will be automatically cancelled upon the exchange of a Class B Unit (as defined herein) for a share of Class A Common Stock (or payment of the cash equivalent in respect thereof) on and subject to the terms and conditions contemplated by the Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC (“Rubicon LLC”), as the same may be amended, modified, supplemented and/or restated from time to time (the “LLC Agreement”).

 

2

 

 

Section 4.6 No Preemptive, Subscription or Conversion Rights. No holder of shares of Common Stock, solely by virtue of such holder’s status as such, shall be entitled to preemptive, subscription or conversion rights.

 

Section 4.7 Exchange.

 

(a) Rubicon LLC has issued units designated as “Class A Units” (each, a “Class A Unit”) and “Class B Units” (each, a “Class B Unit”) pursuant to the terms and subject to the conditions of the LLC Agreement. Each holder of Class B Units is referred to herein as a “Class B Holder.”

 

(b) Pursuant to and subject to the terms of the LLC Agreement, each Class B Holder has the right to surrender a Class B Unit to Rubicon LLC (at which point one share of Class V Common Stock held by such Class B Holder will be automatically cancelled pursuant to Section 4.5 of this Certificate of Incorporation), in exchange for the issuance of one fully paid and nonassessable share of Class A Common Stock (or payment of the cash equivalent in respect thereof) on and subject to the terms and conditions set forth herein and in the LLC Agreement.

 

Section 4.8 Retirement of Class V Common Stock. If any outstanding share of Class V Common Stock shall cease to be held by a concurrent holder of a Class B Unit (including a transferee of a Class B Unit), such share shall automatically and without further action on the part of the Corporation or any holder of Class V Common Stock be transferred to the Corporation and upon such transfer shall be automatically retired and shall thereupon be restored to the status of an authorized but unissued share of Class V Common Stock of the Corporation.

 

Section 4.9 Further Issuances of Class V Common Stock. No shares of Class V Common Stock shall be issued at any time after the filing and effectiveness of this Certificate of Incorporation except to a Class B Holder in a number necessary to maintain a one-to- one ratio between the number of Class B Units and the number of shares of Class V Common Stock outstanding.

 

Section 4.10 Reservation of Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of effecting Exchanges (as defined in the LLC Agreement), such number of shares of Class A Common Stock as shall be deliverable under the LLC Agreement to effect any such Exchanges.

 

Section 4.11 Protective Provisions. Until such time as no shares of Class V Common Stock (such number to be adjusted to account for any division (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise), combination (by reverse stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Class V Common Stock into a greater or lesser number of shares occurring after the original filing of this Certificate of Incorporation) remain outstanding, the Corporation will not, whether by merger, consolidation or otherwise, amend, alter, repeal or waive Section 4.7, Section 4.10, this Section 4.11 or Section 4.12 (or adopt any provision inconsistent therewith), without first obtaining the approval of the holders of a majority of the then-outstanding shares of Class V Common Stock, voting as a separate class, in addition to any other vote required by the DGCL, this Certificate of Incorporation or the Corporation’s Bylaws, as the same may be amended or restated from time to time (the “Bylaws”).

 

3

 

 

Section 4.12 Reclassifications, Mergers and Other Transactions.

 

(a) If the Corporation in any manner subdivides, combines or reclassifies the outstanding shares of Class A Common Stock or Class V Common Stock, the outstanding shares of the other such class shall, concurrently therewith, be subdivided, combined or reclassified in the same proportion and manner such that the same proportionate equity ownership between the holders of outstanding Class A Common Stock and Class V Common Stock on the record date for such subdivision, combination or reclassification is preserved, unless different treatment of the shares of each such class is approved by (i) the holders of a majority of the outstanding Class A Common Stock and (ii) the holders of a majority of the outstanding Class V Common Stock, each of (i) and (ii) voting as separate classes. In the event of any such subdivision, combination or reclassification, the Corporation shall cause Rubicon LLC to make corresponding changes to the Class A Units and Class B Units to give effect to such subdivision, combination or reclassification.

 

(b) The Corporation shall not consolidate, merge, combine or consummate any other transaction in which shares of Class A Common Stock are exchanged for or converted into other stock or securities, or the right to receive cash and/or any other property, unless in connection with any such consolidation, merger, combination or other transaction each share of Class V Common Stock together with one Class B Unit shall be entitled to be exchanged for or converted into the same kind and amount of stock or securities, cash and/or any other property, as the case may be, it would have been entitled to had it been exchanged into Class A Common Stock pursuant to the LLC Agreement immediately before such consolidation, merger, combination or other transaction (assuming for purposes of this determination that the Class B Holder was entitled to make such exchange). The consideration for each share of Class V Common Stock together with one Class B Unit shall be deemed to satisfy the immediately preceding sentence, so long as any differences in the kind and amount of stock or securities, cash and/or any other property are intended (as determined by the Board in good faith) to maintain the relative voting power of each share of Class V Common Stock relative to each share of Class A Common Stock; provided, further, that the foregoing provisions of this Section 4.12(b) shall not apply to any action or transaction (including any consolidation, merger or combination) approved by (A) the holders of a majority of the outstanding Class A Common Stock and (B) the holders of a majority of the outstanding Class V Common Stock, each of (A) and (B) voting as separate classes.

 

ARTICLE V
BOARD OF DIRECTORS

 

Section 5.1 Number. Except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), the Board shall consist of such number of directors as shall be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the total number of directors then authorized.

 

4

 

 

Section 5.2 Classification.

 

(a) Except as may be otherwise provided with respect to directors elected by the holders of any series of Preferred Stock provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation) (the “Preferred Stock Directors”), the Board shall be divided into three classes, as nearly equal in number as possible, designated Class I, Class II and Class III. Class I directors shall initially serve until the first annual meeting of stockholders following the initial effectiveness of this Section 5.2; Class II directors shall initially serve until the second annual meeting of stockholders following the initial effectiveness of this Section 5.2; and Class III directors shall initially serve until the third annual meeting of stockholders following the initial effectiveness of this Section 5.2. Commencing with the first annual meeting of stockholders following the initial effectiveness of this Section 5.2, directors of each class the term of which shall then expire shall be elected to hold office for a three-year term and until the election and qualification of their respective successors in office. In case of any increase or decrease, from time to time, in the number of directors (other than Preferred Stock Directors), the number of directors in each class shall be apportioned as nearly equal as possible. The Board is authorized to assign members of the Board already in office to Class I, Class II or Class III, with such assignment becoming effective as of the initial effectiveness of this Section 5.2.

 

(b) Subject to the rights of the holders of any outstanding series of Preferred Stock, and unless otherwise required by law, newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum, or by the sole remaining director. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

 

(c) Any director, or the entire Board, may be removed from office at any time, but only for cause and only by the affirmative vote of at least 66⅔% of the voting power of the stock outstanding and entitled to vote thereon.

 

(d) During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), and upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such number of directors that the holders of any series of Preferred Stock have a right to elect, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions; and (ii) each Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to said provisions, the terms of office of all Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such Preferred Stock Director shall cease to be qualified as a director and shall cease to be a director) and the total authorized number of directors of the Corporation shall be automatically reduced accordingly.

 

5

 

 

Section 5.3 Powers. Except as otherwise required by the DGCL or as provided in this Certificate of Incorporation (including any Preferred Stock Designation), the business and affairs of the Corporation shall be managed by or under the direction of the Board.

 

Section 5.4 Election; Annual Meeting of Stockholders.

 

(a) Ballot Not Required. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.

 

(b) Notice. Advance notice of nominations for the election of directors, and of business other than nominations to be proposed by stockholders for consideration at a meeting of stockholders of the Corporation, shall be given in the manner and to the extent provided in or contemplated by the Bylaws.

 

(c) Annual Meeting. The annual meeting of stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, either within or without the State of Delaware, on such date, and at such time as the Board shall fix.

 

ARTICLE VI
STOCKHOLDER ACTION

 

Section 6.1 No Action Without Meeting. Except with respect to actions required or permitted to be taken solely by holders of Preferred Stock pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), no action that is required or permitted to be taken by the stockholders of the Corporation may be effected by consent of stockholders in lieu of a meeting of stockholders.

 

Section 6.2 Special Meetings. Except as otherwise required by law, and except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any Preferred Stock Designation), a special meeting of the stockholders of the Corporation may be called at any time only by the Board, the Chairman of the Board, or the Chief Executive Officer. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the Board.

 

ARTICLE VII
EXISTENCE

 

The Corporation shall have perpetual existence.

 

6

 

 

ARTICLE VIII
CORPORATE OPPORTUNITY

 

Section 8.1 General. In recognition and anticipation that members of the Board who are not employees of the Corporation (“Non-Employee Directors”) and their respective Affiliates and Affiliated Entities (each as defined below) may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Article VIII are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve any of the Non-Employee Directors or their respective Affiliates and Affiliated Entities and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.

 

Section 8.2 No Duty to Refrain, Communicate or Offer. No Non-Employee Director or his or her Affiliates or Affiliated Entities (collectively, the “Identified Persons” and each, individually, an “Identified Person”) shall, to the fullest extent permitted by applicable law, have any duty to refrain from directly or indirectly: (a) engaging in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates has historically engaged, now engages or proposes to engage at any time; or (b) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by applicable law, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by applicable law, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in Section 8.3 hereof. Subject to Section 8.3 hereof, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by applicable law, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder, director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person (as defined below).

 

Section 8.3 Offers Presented Solely in Capacity as Director or Officer. Subject to Section 8.4 hereof, the Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director if such opportunity is expressly offered or presented to such Non-Employee Director solely in his or her capacity as a director or officer of the Corporation, and the provisions of Section 8.2 hereof shall not apply to any such corporate opportunity.

 

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Section 8.4 Matters Not Deemed Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this Article, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that: (a) the Corporation is neither financially or legally able, nor contractually permitted, to undertake; (b) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation; (c) is one in which the Corporation has no interest or reasonable expectancy; or (d) is one presented to any Person for the benefit of a member of the Board or such member’s Affiliate or Affiliated Entity over which such member of the Board has no direct or indirect influence or control, including, but not limited to, a blind trust.

 

Section 8.5 Certain Definitions. For purposes of this Article:

 

(a) “Affiliate” means: (i) when used in reference to the Corporation, any Person that, directly or indirectly, is controlled by the Corporation; and (ii) when used in reference to a member of the Board, any Person that, directly or indirectly, is controlled by such member of the Board (other than the Corporation and any entity that is controlled by the Corporation);

 

(b) “Affiliated Entity” when used in reference to a member of the Board, means: (i) any Person of which a Non-Employee Director serves as an officer, director, employee, agent or other representative (other than the Corporation and any entity that is controlled by the Corporation); (ii) any direct or indirect partner, stockholder, member, manager or other representative of such Person; or (iii) any person controlling, controlled by or under common control with any of the foregoing, including any investment fund or vehicle under common management; and

 

(c) “Person” means any individual and any corporation, partnership, unincorporated association or other entity.

 

Section 8.6 Notice and Consent. To the fullest extent permitted by applicable law, any Person purchasing or otherwise acquiring or holding any interest in shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article.

 

Section 8.7 Amendments; Non-Exclusivity. Neither the alteration, amendment, addition to or repeal of this Article, nor the adoption of any provision of this Certificate of Incorporation (including any Preferred Stock Designation) inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such alteration, amendment, addition, repeal or adoption. This Article shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Certificate of Incorporation, the Bylaws, any indemnification agreement between such Person and the Corporation or any of its subsidiaries, or applicable law.

 

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ARTICLE IX
AMENDMENT

 

Section 9.1 Amendment of Certificate of Incorporation. The Corporation reserves the right, at any time and from time to time, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation (including any Preferred Stock Designation), and to add or insert other provisions authorized by the laws of the State of Delaware at the time in force, in the manner now or hereafter prescribed by the laws of the State of Delaware. All powers, preferences and rights of any nature conferred upon stockholders, directors or any other persons by and pursuant to this Certificate of Incorporation (including any Preferred Stock Designation) in its present form or as hereafter amended are granted subject to this reservation; provided, however, that except as otherwise provided in this Certificate of Incorporation (including any provision of a Preferred Stock Designation that provides for a greater or lesser vote) and in addition to any other vote required by law, the affirmative vote of at least 66⅔% of the voting power of the stock outstanding and entitled to vote thereon, voting together as a single class, shall be required to adopt, amend or repeal, or adopt any provision inconsistent with, Articles V, VI, IX, and X of this Certificate of Incorporation.

 

Section 9.2 Amendment of Bylaws. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, but subject to the terms of any series of Preferred Stock then outstanding, the Board is expressly authorized to adopt, amend or repeal the Bylaws. Except as otherwise provided in this Certificate of Incorporation (including the terms of any Preferred Stock Designation that require an additional vote) or the Bylaws, and in addition to any requirements of law, the affirmative vote of at least 66⅔% of the voting power of the stock outstanding and entitled to vote thereon, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal, or adopt any provision inconsistent with, any provision of the Bylaws.

 

ARTICLE X
LIABILITY OF DIRECTORS

 

Section 10.1 No Personal Liability. To the fullest extent permitted by the DGCL as the same exists or as may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

 

Section 10.2 Amendment or Repeal. Any amendment, repeal or elimination of this Article, or the adoption of any provision of the Certificate of Incorporation inconsistent with this Article, shall not affect its application with respect to an act or omission by a director occurring before such amendment, adoption, repeal or elimination.

 

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ARTICLE XI
FORUM FOR ADJUDICATION OF DISPUTES

 

Section 11.1 Forum. Unless the Corporation, in writing, selects or consents to the selection of an alternative forum: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims (as defined below), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (b) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of this Article, “internal corporate claims” means claims, including claims in the right of the Corporation that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. Any individual or entity purchasing or otherwise acquiring or holding any interest in shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article.

 

Section 11.2 Enforceability. If any provision of this Article shall be held to be invalid, illegal or unenforceable as applied to any individual, entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Article (including, without limitation, each portion of any sentence of this Article containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other individuals or entities or circumstances shall not in any way be affected or impaired thereby.

 

ARTICLE XII
SOLE INCORPORATOR

 

The name and mailing address of the Sole Incorporator is as follows:

 

Name Address
Osman Ahmed 60 W 23rd St, Apt 630
New York, NY 10010

 

ARTICLE XIII
EFFECTIVENESS

 

This Certificate of Incorporation shall be effective at 10:15 a.m. Eastern Time on August 15, 2022.

 

[The remainder of this page has been intentionally left blank.]

 

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I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the DGCL, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 15th day of August, 2022.

 

  RUBICON TECHNOLOGIES, INC.
     
  By: /s/ Osman Ahmed
  Name: Osman Ahmed
  Title: Sole Incorporator

 

Signature Page to Certificate of Incorporation

 

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Exhibit 3.3

 

BYLAWS

OF

RUBICON TECHNOLOGIES, INC.

 

(a Delaware corporation)

 

Article I
CORPORATE OFFICES

 

Section 1.1 Registered Office. The registered office of Rubicon Technologies, Inc. (the “Corporation”) shall be fixed in the certificate of incorporation of the Corporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”).

 

Section 1.2 Other Offices. The Corporation may also have an office or offices, and keep the books and records of the Corporation, except as otherwise required by law, at such other place or places, either within or without the State of Delaware, as the Corporation may from time to time determine or the business of the Corporation may require.

 

Article II
MEETINGS OF STOCKHOLDERS

 

Section 2.1 Annual Meeting. The annual meeting of stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, either within or without the State of Delaware, on such date, and at such time as the board of directors of the Corporation (the “Board of Directors”) shall fix. The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

 

Section 2.2 Special Meeting. Special meetings of stockholders may be called only in the manner set forth in the Certificate of Incorporation, including any certificate of designations relating to any series of Preferred Stock (each hereinafter referred to as a “Preferred Stock Designation”). The Board of Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of Directors. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the Board of Directors.

 

Section 2.3 Notice of Stockholders’ Meetings.

 

(a) Whenever stockholders are required or permitted to take any action at a meeting, notice of the place, if any, date and time of the meeting of stockholders, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for determining the stockholders entitled to notice of the meeting), the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting and, if the meeting is to be held solely by means of remote communications, the means for accessing the list of stockholders contemplated by Section 2.5 of these Bylaws, shall be given. The notice shall be given not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided by law, the Certificate of Incorporation (including any Preferred Stock Designation) or these Bylaws. In the case of a special meeting, the purpose or purposes for which the meeting is called also shall be set forth in the notice.

 

 

 

 

(b) Except as otherwise required by law, notice may be given in writing directed to a stockholder’s mailing address as it appears on the records of the Corporation and shall be given: (i) if mailed, when notice is deposited in the U.S. mail, postage prepaid; and (ii) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address.

 

(c) So long as the Corporation is subject to the Securities and Exchange Commission’s proxy rules set forth in Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), notice shall be given in the manner required by such rules. To the extent permitted by such rules, notice may be given by electronic transmission directed to the stockholder’s electronic mail address, and if so given, shall be given when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by Section 232(e) of the General Corporation Law of the State of Delaware, as amended (the “DGCL”). If notice is given by electronic mail, such notice shall comply with the applicable provisions of Sections 232(a) and 232(d) of the DGCL.

 

(d) Notice may be given by other forms of electronic transmission with the consent of a stockholder in the manner permitted by Section 232(b) of the DGCL and shall be deemed given as provided therein.

 

(e) An affidavit that notice has been given, executed by the Secretary of the Corporation (the “Secretary”), Assistant Secretary or any transfer agent or other agent of the Corporation, shall be prima facie evidence of the facts stated in the notice in the absence of fraud. Notice shall be deemed to have been given to all stockholders who share an address if notice is given in accordance with the “householding” rules set forth in Rule 14a-3(e) under the Exchange Act and Section 233 of the DGCL.

 

(f) When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the place, if any, date and time thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 7.6(a), and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

 

Section 2.4 Organization.

 

(a) Unless otherwise determined by the Board of Directors, meetings of stockholders shall be presided over by the Chairman of the Board of Directors (the “Chairman”), or in his or her absence, by the Chief Executive Officer of the Corporation (the “Chief Executive Officer”) or, in his or her absence, by another person designated by the Board of Directors. The Secretary, or in his or her absence, an Assistant Secretary, or in the absence of the Secretary and all Assistant Secretaries, a person whom the chairman of the meeting shall appoint, shall act as secretary of the meeting and keep a record of the proceedings thereof.

 

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(b) The date and time of the opening and the closing of the polls for each matter upon which the stockholders shall vote at a meeting of stockholders shall be announced at the meeting. The Board of Directors may adopt such rules and regulations for the conduct of any meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the authority to adopt and enforce such rules and regulations for the conduct of any meeting of stockholders and the safety of those in attendance as, in the judgment of the chairman, are necessary, appropriate or convenient for the conduct of the meeting. Rules and regulations for the conduct of meetings of stockholders, whether adopted by the Board of Directors or by the chairman of the meeting, may include, without limitation, establishing: (i) an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies and such other persons as the chairman of the meeting shall permit; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v) limitations on the time allotted for consideration of each agenda item and for questions and comments by participants; (vi) regulations for the opening and closing of the polls for balloting and matters which are to be voted on by ballot (if any); and (vii) procedures (if any) requiring attendees to provide the Corporation advance notice of their intent to attend the meeting. Subject to any rules and regulations adopted by the Board of Directors, the chairman of the meeting may convene and, for any or no reason, from time to time, adjourn and/or recess any meeting of stockholders pursuant to Section 2.7. The chairman of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power to declare that a nomination or other business was not properly brought before the meeting if the facts warrant (including if a determination is made, pursuant to Section 2.10(c)(i) of these Bylaws, that a nomination or other business was not made or proposed, as the case may be, in accordance with Section 2.10 of these Bylaws), and if such chairman should so declare, such nomination shall be disregarded or such other business shall not be transacted.

 

Section 2.5 List of Stockholders. The Corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, that if the record date for determining the stockholders entitled to vote is less than 10 days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date. Such list shall be arranged in alphabetical order and shall show the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing in this Section 2.5 shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting; or (b) during ordinary business hours at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Except as otherwise required by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.5 or to vote in person or by proxy at any meeting of stockholders.

 

Section 2.6 Quorum. Except as otherwise required by law, the Certificate of Incorporation (including any Preferred Stock Designation) or these Bylaws, at any meeting of stockholders, a majority of the voting power of the stock outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or series or classes or series is required, a majority of the voting power of the stock of such class or series or classes or series outstanding and entitled to vote on that matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. If a quorum is not present or represented at any meeting of stockholders, then the chairman of the meeting, or a majority of the voting power of the stock present in person or represented by proxy at the meeting and entitled to vote thereon, shall have power to adjourn or recess the meeting from time to time in accordance with Section 2.7, until a quorum is present or represented. Subject to applicable law, if a quorum initially is present at any meeting of stockholders, the stockholders may continue to transact business until adjournment or recess, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, but if a quorum is not present at least initially, no business other than adjournment or recess may be transacted.

 

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Section 2.7 Adjourned or Recessed Meeting. Any annual or special meeting of stockholders, whether or not a quorum is present, may be adjourned or recessed for any or no reason from time to time by the chairman of the meeting, subject to any rules and regulations adopted by the Board of Directors pursuant to Section 2.4(b). Any such meeting may be adjourned for any or no reason (and may be recessed if a quorum is not present or represented) from time to time by a majority of the voting power of the stock present in person or represented by proxy at the meeting and entitled to vote thereon. At any such adjourned or recessed meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called.

 

Section 2.8 Voting; Proxies.

 

(a) Except as otherwise required by law or the Certificate of Incorporation (including any Preferred Stock Designation), each holder of stock of the Corporation entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of such stock held of record by such holder that has voting power upon the subject matter in question.

 

(b) Except as otherwise required by law, the Certificate of Incorporation (including any Preferred Stock Designation), these Bylaws or any law, rule or regulation applicable to the Corporation or its securities, at each meeting of stockholders at which a quorum is present, all corporate actions to be taken by vote of the stockholders shall be authorized by the affirmative vote of at least a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on the subject matter, and where a separate vote by a class or series or classes or series is required, if a quorum of such class or series or classes or series is present, such act shall be authorized by the affirmative vote of at least a majority of the voting power of the stock of such class or series or classes or series present in person or represented by proxy and entitled to vote on the subject matter. Voting at meetings of stockholders need not be by written ballot.

 

(c) Every stockholder entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more persons authorized to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or an executed new proxy bearing a later date.

 

Section 2.9 Submission of Information by Director Nominees.

 

(a) To be eligible to be a nominee for election or re-election as a director of the Corporation, a person must deliver to the Secretary at the principal executive offices of the Corporation the following information:

 

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(i) a written representation and agreement, which shall be signed by such person and pursuant to which such person shall represent and agree that such person: (A) consents to serving as a director if elected and to being named in the Corporation’s proxy statement and form of proxy as a nominee, and currently intends to serve as a director for the full term for which such person is standing for election; (B) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity: (1) as to how the person, if elected as a director, will act or vote on any issue or question that has not been disclosed to the Corporation; or (2) that could limit or interfere with the person’s ability to comply, if elected as a director, with such person’s fiduciary duties under applicable law; (C) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director or nominee that has not been disclosed to the Corporation; and (D) if elected as a director, will comply with all of the Corporation’s corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines, and any other Corporation policies and guidelines applicable to directors (which will be promptly provided following a request therefor); and

 

(ii) all completed and signed questionnaires prepared by the Corporation (including those questionnaires required of the Corporation’s directors and any other questionnaire the Corporation determines is necessary or advisable to assess whether a nominee will satisfy any qualifications or requirements imposed by the Certificate of Incorporation or these Bylaws, any law, rule, regulation or listing standard that may be applicable to the Corporation, and the Corporation’s corporate governance policies and guidelines) (all of the foregoing, “Questionnaires”). The Questionnaires will be promptly provided following a request therefor.

 

(b) A nominee for election or re-election as a director of the Corporation shall also provide to the Corporation such other information as it may reasonably request. The Corporation may request such additional information as necessary to permit the Corporation to determine the eligibility of such person to serve as a director of the Corporation, including information relevant to a determination whether such person can be considered an independent director.

 

(c) Notwithstanding any other provision of these Bylaws, if a stockholder has submitted notice of an intent to nominate a candidate for election or re-election as a director pursuant to Section 2.10, the Questionnaires described in Section 2.9(a)(ii) above and the additional information described in Section 2.9(b) above shall be considered timely if provided to the Corporation promptly upon request by the Corporation, but in any event within five business days after such request, and all information provided pursuant to this Section 2.9 shall be deemed part of the stockholder’s notice submitted pursuant to Section 2.10.

 

Section 2.10 Notice of Stockholder Business and Nominations.

 

(a) Annual Meeting.

 

(i) Nominations of persons for election to the Board of Directors and the proposal of business other than nominations to be considered by the stockholders may be made at an annual meeting of stockholders only: (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto); (B) by or at the direction of the Board of Directors (or any authorized committee thereof); or (C) by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.10(a) is delivered to the Secretary, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.10(a). For the avoidance of doubt, the foregoing clause (C) shall be the exclusive means for a stockholder to make nominations or propose other business at an annual meeting of stockholders (other than a proposal included in the Corporation’s proxy statement pursuant to and in compliance with Rule 14a-8 under the Exchange Act).

 

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(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of the foregoing paragraph, the stockholder must have given timely notice thereof in writing to the Secretary and, in the case of business other than nominations, such business must be a proper subject for stockholder action. To be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business (as defined in Section 2.10(c)(ii) below) on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 30 days after such anniversary date, or if no annual meeting was held or deemed to have been held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the date on which public announcement (as defined in Section 2.10(c)(ii) below) of the date of such meeting is first made by the Corporation. In no event shall an adjournment or recess of an annual meeting, or a postponement of an annual meeting for which notice of the meeting has already been given to stockholders or a public announcement of the meeting date has already been made, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. The number of nominees a stockholder may nominate for election at the annual meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of the beneficial owner) shall not exceed the number of directors to be elected at such annual meeting. For purposes of this Section 2.10, the 2022 annual meeting of stockholders shall be deemed to have been held on June 1, 2022. Such stockholder’s notice shall set forth:

 

(A) as to each person whom the stockholder proposes to nominate for election or re-election as a director: (1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act; and (2) the information required to be submitted by nominees pursuant to ‎Section 2.9(a) above;

 

(B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any substantial interest (within the meaning of Item 5 of Schedule 14A under the Exchange Act) in such business of such stockholder and the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), if any, on whose behalf the proposal is made;

 

(C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made or the other business is proposed:

 

(1) the name and address of such stockholder, as they appear on the Corporation’s books, and the name and address of such beneficial owner;

 

(2) the class or series and number of shares of stock of the Corporation which are owned of record by such stockholder and such beneficial owner as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the Corporation owned of record by the stockholder and such beneficial owner as of the record date for the meeting; and

 

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(3) a representation that the stockholder (or a qualified representative of the stockholder) intends to appear at the meeting to make such nomination or propose such business;

 

(D) as to the stockholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination is made or the other business is proposed, as to such beneficial owner, and if such stockholder or beneficial owner is an entity, as to each director, executive, managing member or control person of such entity (any such individual or control person, a “control person”):

 

(1) the class or series and number of shares of stock of the Corporation which are beneficially owned (as defined in Section 2.10(c)(ii) below) by such stockholder or beneficial owner and by any control person as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the Corporation beneficially owned by such stockholder or beneficial owner and by any control person as of the record date for the meeting;

 

(2) a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such stockholder, beneficial owner or control person and any other person, including, without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable) and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting;

 

(3) a description of any agreement, arrangement or understanding (including, without limitation, any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder, beneficial owner or control person, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class or series of the Corporation’s stock, or maintain, increase or decrease the voting power of the stockholder, beneficial owner or control person with respect to securities of the Corporation, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting; and

 

(4) a representation whether the stockholder or the beneficial owner, if any, will engage in a solicitation with respect to the nomination or other business and, if so, the name of each participant in such solicitation (as defined in Item 4 of Schedule 14A under the Exchange Act) and whether such person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of shares representing at least 50% of the voting power of the stock entitled to vote generally in the election of directors in the case of a nomination, or holders of at least the percentage of the Corporation’s stock required to approve or adopt the business to be proposed in the case of other business.

 

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(iii) Notwithstanding anything in Section 2.10(a)(ii) above or Section 2.10(b) below to the contrary, if the record date for determining the stockholders entitled to vote at any meeting of stockholders is different from the record date for determining the stockholders entitled to notice of the meeting, a stockholder’s notice required by this Section 2.10 shall set forth a representation that the stockholder will notify the Corporation in writing within five business days after the record date for determining the stockholders entitled to vote at the meeting, or by the opening of business on the date of the meeting (whichever is earlier), of the information required under clauses (ii)(C)(2) and (ii)(D)(1)-(3) of this Section 2.10(a), and such information when provided to the Corporation shall be current as of the record date for determining the stockholders entitled to vote at the meeting.

 

(iv) This Section 2.10(a) shall not apply to a proposal proposed to be made by a stockholder if the stockholder has notified the Corporation of his or her intention to present the proposal at an annual or special meeting only pursuant to and in compliance with Rule 14a-8 under the Exchange Act and such proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such meeting.

 

(v) Notwithstanding anything in this Section 2.10(a) to the contrary, in the event that the number of directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for directors or specifying the size of the increased Board of Directors made by the Corporation at least 10 days prior to the last day a stockholder may deliver a notice in accordance with Section 2.10(a)(ii) above, a stockholder’s notice required by this Section 2.10(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

 

(b) Special Meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting: (i) by or at the direction of the Board of Directors (or any authorized committee thereof); or (ii) provided that one or more directors are to be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.10(b) is delivered to the Secretary, who is entitled to vote at the meeting and upon such election and who delivers notice thereof in writing setting forth the information required by Section 2.10(a) above and provides the additional information required by Section 2.9 above. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the notice required by this Section 2.10(b) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the date on which public announcement of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting is first made by the Corporation. The number of nominees a stockholder may nominate for election at the special meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such special meeting. In no event shall an adjournment, recess or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

 

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(c) General.

 

(i) Except as otherwise required by law, only such persons who are nominated in accordance with the procedures set forth in this Section 2.10 shall be eligible to be elected at any meeting of stockholders of the Corporation to serve as directors and only such other business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.10. Except as otherwise required by law, each of the Chairman, the Board of Directors or the chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.10 (including whether a stockholder or beneficial owner solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in compliance with such stockholder’s representation as required by clause (a)(ii)(D)(4) of this Section 2.10). If any proposed nomination or other business is not in compliance with this Section 2.10, then except as otherwise required by law, the chairman of the meeting shall have the power to declare that such nomination shall be disregarded or that such other business shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.10, unless otherwise required by law, or otherwise determined by the Chairman, the Board of Directors or the chairman of the meeting, if the stockholder does not provide the information required under Section 2.9 or clauses (a)(ii)(C)(2) and (a)(ii)(D)(1)-(3) of this Section 2.10 to the Corporation within the time frames specified herein, any such nomination shall be disregarded and any such other business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. Notwithstanding the foregoing provisions of this Section 2.10, unless otherwise required by law, or otherwise determined by the Chairman, the Board of Directors or the chairman of the meeting, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or other business (whether pursuant to the requirements of these Bylaws or in accordance with Rule 14a-8 under the Exchange Act), such nomination shall be disregarded and such other business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. To be considered a qualified representative of a stockholder pursuant to the preceding sentence, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting (and in any event not fewer than five days before the meeting) stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.

 

(ii) For purposes of this Section 2.10, the “close of business” shall mean 6:00 p.m. local time at the principal executive offices of the Corporation on any calendar day, whether or not the day is a business day, and a “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. For purposes of clause (a)(ii)(D)(1) of this Section 2.10, shares shall be treated as “beneficially owned” by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing): (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both); (B) the right to vote such shares, alone or in concert with others; and/or (C) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.

 

(iii) Nothing in this Section 2.10 shall be deemed to affect any rights of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation (including any Preferred Stock Designation).

 

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Section 2.11 Inspectors of Election. Before any meeting of stockholders, the Corporation may, and shall if required by law, appoint one or more inspectors of election to act at the meeting and make a written report thereof. Inspectors may be employees of the Corporation. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting may, and shall if required by law, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Inspectors need not be stockholders. No director or nominee for the office of director at an election shall be appointed as an inspector at such election.

 

Such inspectors shall:

 

(a) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the validity of proxies and ballots;

 

(b) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors;

 

(c) count and tabulate all votes and ballots; and

 

(d) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots.

 

Section 2.12 Meetings by Remote Communications. The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the DGCL. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication: (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

 

Section 2.13 Delivery to the Corporation. Whenever this Article II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), the Corporation shall not be required to accept delivery of such document or information unless the document or information is in writing exclusively (and not in an electronic transmission) and delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested.

 

Article III
DIRECTORS

 

Section 3.1 Powers. Except as otherwise required by the DGCL or as provided in the Certificate of Incorporation (including any Preferred Stock Designation), the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities these Bylaws expressly confer upon it, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation (including any Preferred Stock Designation) or these Bylaws required to be exercised or done by the stockholders.

 

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Section 3.2 Number and Election. Except as otherwise provided for or fixed pursuant to the Certificate of Incorporation (including any Preferred Stock Designation), the Board of Directors shall consist of such number of directors as shall be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the total number of directors then authorized. At any meeting of stockholders at which directors are to be elected, directors shall be elected by a plurality of the votes cast. Directors need not be stockholders unless so required by the Certificate of Incorporation (including any Preferred Stock Designation) or these Bylaws, wherein other qualifications for directors may be prescribed.

 

Section 3.3 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any outstanding series of Preferred Stock, and unless otherwise required by law or provided for or fixed pursuant to the Certificate of Incorporation, newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum, or by the sole remaining director. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

 

Section 3.4 Resignations and Removal.

 

(a) Any director may resign at any time upon notice given in writing or by electronic transmission to the Board of Directors, the Chairman or the Secretary. Such resignation shall take effect upon delivery, unless the resignation specifies a later effective date or time or an effective date or time determined upon the happening of an event or events. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

(b) Directors of the Corporation may be removed from office only in the manner provided in and to the extent permitted in the Certificate of Incorporation.

 

Section 3.5 Regular Meetings. Regular meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware, on such date or dates and at such time or times, as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.

 

Section 3.6 Special Meetings. Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman, the Chief Executive Officer or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place, within or without the State of Delaware, date and time of such meetings. Notice of each such meeting shall be given to each director, if by mail, addressed to such director at his or her residence or usual place of business, at least five days before the day on which such meeting is to be held, or shall be sent to such director by electronic transmission, or be delivered personally or by telephone, in each case at least 24 hours prior to the time set for such meeting. A notice of special meeting need not state the purpose of such meeting, and, unless indicated in the notice thereof, any and all business may be transacted at a special meeting.

 

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Section 3.7 Remote Participation in Meetings. Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.

 

Section 3.8 Quorum and Voting. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, a majority of the total number of directors then authorized shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the vote of a majority of the directors present at a duly held meeting at which a quorum is present shall be the act of the Board of Directors. The chairman of the meeting or a majority of the directors present may adjourn the meeting to another time and place whether or not a quorum is present. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called.

 

Section 3.9 Board of Directors Action by Written Consent Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or any committee thereof, may be taken without a meeting, provided that all members of the Board of Directors or committee, as the case may be, consent in writing or by electronic transmission to such action. After an action is taken, the consent or consents relating thereto shall be filed with the minutes or proceedings of the Board of Directors or committee in the same paper or electronic form as the minutes are maintained. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action shall be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.

 

Section 3.10 Chairman of the Board of Directors. The Chairman shall preside at meetings of stockholders (unless otherwise determined by the Board of Directors) and at meetings of directors and shall perform such other duties as the Board of Directors may from time to time determine. If the Chairman is not present at a meeting of the Board of Directors, another director chosen by the Board of Directors shall preside.

 

Section 3.11 Rules and Regulations. The Board of Directors shall adopt such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation or these Bylaws for the conduct of its meetings and management of the affairs of the Corporation as the Board of Directors shall deem proper.

 

Section 3.12 Fees and Compensation of Directors. Unless otherwise restricted by the Certificate of Incorporation, directors may receive such compensation, if any, for their services on the Board of Directors and its committees, and such reimbursement of expenses, as may be fixed or determined by resolution of the Board of Directors.

 

Section 3.13 Emergency Bylaws. This Section 3.13 shall be operative during any emergency condition as contemplated by Section 110 of the DGCL (an “Emergency”), notwithstanding any different or conflicting provisions in these Bylaws, the Certificate of Incorporation or the DGCL. In the event of any Emergency, or other similar emergency condition, the director or directors in attendance at a meeting of the Board of Directors or a standing committee thereof shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board of Directors as they shall deem necessary and appropriate. Except as the Board of Directors may otherwise determine, during any Emergency, the Corporation and its directors and officers, may exercise any authority and take any action or measure contemplated by Section 110 of the DGCL.

 

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Article IV
COMMITTEES

 

Section 4.1 Committees of the Board of Directors. The Board of Directors may designate one or more committees, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent permitted by law and provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval; or (b) adopting, amending or repealing any bylaw of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors.

 

Section 4.2 Meetings and Action of Committees. Unless the Board of Directors provides otherwise by resolution, any committee of the Board of Directors may adopt, alter and repeal such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation or these Bylaws for the conduct of its meetings as such committee may deem proper. A majority of the directors then serving on a committee shall constitute a quorum for the transaction of business by the committee except as otherwise required by law, the Certificate of Incorporation or these Bylaws, and except as otherwise provided in a resolution of the Board of Directors; provided, however, that in no case shall a quorum be less than one-third of the directors then serving on the committee. Unless the Certificate of Incorporation, these Bylaws or a resolution of the Board of Directors requires a greater number, the vote of a majority of the members of a committee present at a meeting at which a quorum is present shall be the act of the committee.

 

Article V
OFFICERS

 

Section 5.1 Officers. The officers of the Corporation shall consist of a Chief Executive Officer and Secretary. The Board of Directors, in its sole discretion, may also elect one or more Presidents, Chief Financial Officers, Vice Presidents, Treasurers, Controllers, Assistant Secretaries, Assistant Treasurers (or officers with similar titles) and such other officers as the Board of Directors may from time to time determine, each to have such authority, functions or duties as set forth in these Bylaws or as determined by the Board of Directors. Each officer shall be elected by the Board of Directors and shall hold office for such term as may be prescribed by the Board of Directors and until such person’s successor shall have been duly elected and qualified, or until such person’s earlier death, disqualification, resignation or removal. Any number of offices may be held by the same person; provided, however, that no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Certificate of Incorporation or these Bylaws to be executed, acknowledged or verified by two or more officers. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.

 

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Section 5.2 Compensation. The salaries of the officers of the Corporation and the manner and time of the payment of such salaries shall be fixed and determined by the Board of Directors or by a duly authorized officer and may be altered by the Board of Directors or by a duly authorized officer from time to time as it deems appropriate, subject to the rights, if any, of such officers under any contract of employment.

 

Section 5.3 Removal, Resignation and Vacancies. Any officer of the Corporation may be removed, with or without cause, by the Board of Directors or by a duly authorized officer, without prejudice to the rights, if any, of such officer under any contract to which he or she is a party. Any officer may resign at any time upon notice given in writing or by electronic transmission to the Corporation, without prejudice to the rights, if any, of the Corporation under any contract to which such officer is a party. If any vacancy occurs in any office of the Corporation, the Board of Directors may elect a successor to fill such vacancy for the remainder of the unexpired term and until a successor shall have been duly elected and qualified.

 

Section 5.4 Chief Executive Officer. The Chief Executive Officer shall have general supervision and direction of the business and affairs of the Corporation, shall be responsible for corporate policy and strategy, and shall report directly to the Board of Directors. Unless otherwise provided in these Bylaws or determined by the Board of Directors, all other officers of the Corporation shall report directly to the Chief Executive Officer or as otherwise determined by the Chief Executive Officer. The Chief Executive Officer shall, if present and in the absence of the Chairman, preside at meetings of the stockholders.

 

Section 5.5 President. The President shall be the chief operating officer of the Corporation, with general responsibility for the management and control of the operations of the Corporation. The President shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors or the Chief Executive Officer may from time to time determine.

 

Section 5.6 Chief Financial Officer. The Chief Financial Officer shall exercise all the powers and perform the duties of the office of the chief financial officer and in general have overall supervision of the financial operations of the Corporation. The Chief Financial Officer shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer or the President may from time to time determine.

 

Section 5.7 Vice Presidents. Each Vice President shall have such powers and duties as shall be prescribed by his or her superior officer, the Chief Executive Officer or the President. A Vice President shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer, the President or another duly authorized officer may from time to time determine.

 

Section 5.8 Treasurer. The Treasurer shall supervise and be responsible for all the funds and securities of the Corporation, the deposit of all monies and other valuables to the credit of the Corporation in depositories of the Corporation, borrowings and compliance with the provisions of all indentures, agreements and instruments governing such borrowings to which the Corporation is a party, the disbursement of funds of the Corporation and the investment of its funds, and in general shall perform all of the duties incident to the office of the Treasurer. The Treasurer shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer, the President or the Chief Financial Officer may from time to time determine.

 

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Section 5.9 Controller. The Controller shall be the chief accounting officer of the Corporation. The Controller shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer may from time to time determine.

 

Section 5.10 Secretary. The powers and duties of the Secretary are: (i) to act as Secretary at all meetings of the Board of Directors, of the committees of the Board of Directors and of the stockholders and to record the proceedings of such meetings in a book or books to be kept for that purpose; (ii) to see that all notices required to be given by the Corporation are duly given and served; (iii) to act as custodian of the seal of the Corporation and affix the seal or cause it to be affixed to all certificates of stock of the Corporation and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these Bylaws; (iv) to have charge of the books, records and papers of the Corporation and see that the reports, statements and other documents required by law to be kept and filed are properly kept and filed; and (v) to perform all of the duties incident to the office of Secretary. The Secretary shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer or the President may from time to time determine.

 

Section 5.11 Additional Matters. The Chief Executive Officer and the Chief Financial Officer of the Corporation shall have the authority to designate employees of the Corporation to have the title of Vice President, Assistant Vice President, Assistant Treasurer or Assistant Secretary. Any employee so designated shall have the powers and duties determined by the officer making such designation.

 

Section 5.12 Checks; Drafts; Evidences of Indebtedness. From time to time, the Board of Directors shall determine the method, and designate (or authorize officers of the Corporation to designate) the person or persons who shall have authority, to sign or endorse all checks, drafts, other orders for payment of money and notes, bonds, debentures or other evidences of indebtedness that are issued in the name of or payable by the Corporation, and only the persons so authorized shall sign or endorse such instruments.

 

Section 5.13 Corporate Contracts and Instruments; How Executed. Except as otherwise provided in these Bylaws, the Board of Directors may determine the method and designate (or authorize officers of the Corporation to designate) the person or persons who shall have authority to enter into any contract or execute any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. Unless so authorized, or within the power incident to a person’s office or other position with the Corporation, no person shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

Section 5.14 Signature Authority. Unless otherwise determined by the Board of Directors or otherwise provided by law or these Bylaws, contracts, evidences of indebtedness and other instruments or documents of the Corporation may be executed, signed or endorsed by any duly appointed officer of the Corporation, the Treasurer, the Secretary or the Controller, in each case only with regard to such instruments or documents that pertain to or relate to such person’s duties or business functions.

 

Section 5.15 Action with Respect to Securities of Other Corporations or Entities. The Chief Executive Officer or any other officer of the Corporation authorized by the Board of Directors or the Chief Executive Officer is authorized to vote, represent, and exercise on behalf of the Corporation all rights incident to any and all shares or other equity interests of any other corporation or entity or corporations or entities, standing in the name of the Corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by the person having such authority.

 

Section 5.16 Delegation. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding the foregoing provisions of this Article V.

 

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Article VI
INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

 

Section 6.1 Right to Indemnification.

 

(a) Each person who was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, judicial, administrative or legislative hearing, or any other threatened, pending or completed proceeding, whether brought by or in the right of the Corporation or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative or other nature (hereinafter a “Proceeding”), by reason of the fact that he or she is or was a director or an officer (which means, for purposes of this Article VI, any individual designated by the Board of Directors as an officer for purposes of Section 16 of the Exchange Act) of the Corporation or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “Indemnitee”), or by reason of anything done or not done by him or her in any such capacity, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes, penalties and amounts paid in settlement by or on behalf of the Indemnitee) actually and reasonably incurred by such Indemnitee in connection therewith, all on the terms and conditions set forth in these Bylaws; provided, however, that, except as otherwise required by law or provided in Section 6.4 with respect to suits to enforce rights under this Article VI, the Corporation shall indemnify any such Indemnitee in connection with a Proceeding, or part thereof, voluntarily initiated by such Indemnitee (including claims and counterclaims, whether such counterclaims are asserted by: (i) such Indemnitee; or (ii) the Corporation in a Proceeding initiated by such Indemnitee) only if such Proceeding, or part thereof, was authorized or ratified by the Board of Directors or the Board of Directors otherwise determines that indemnification or advancement of expenses is appropriate.

 

(b) To receive indemnification under this Article VI, an Indemnitee shall submit a written request to the Secretary. Such request shall include documentation or information that is necessary to determine the entitlement of the Indemnitee to indemnification and that is reasonably available to the Indemnitee. Upon receipt by the Secretary of such a written request, unless indemnification is required by Section 6.3, the entitlement of the Indemnitee to indemnification shall be determined by the following person or persons who shall be empowered to make such determination, as selected by the Board of Directors (except with respect to clause (v) of this Section 6.1(b)): (i) the Board of Directors by a majority vote of the directors who are not parties to such Proceeding, whether or not such majority constitutes a quorum; (ii) a committee of such directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum; (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee; (iv) the stockholders of the Corporation; or (v) in the event that a Change of Control (as defined below) has occurred, by independent legal counsel (to be mutually agreed upon by the Corporation and the Indemnitee, with such agreement not to be unreasonably withheld) in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee. The determination of entitlement to indemnification shall be made and, unless a contrary determination is made, such indemnification shall be paid in full by the Corporation not later than 60 days after receipt by the Secretary of a written request for indemnification. For purposes of this Section 6.1(b), a “Change of Control” will be deemed to have occurred if, with respect to any particular 24-month period, the individuals who, at the beginning of such 24-month period, constituted the Board of Directors (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the beginning of such 24-month period whose election, or nomination for election by the stockholders of the Corporation, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors.

 

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Section 6.2 Right to Advancement of Expenses.

 

(a) In addition to the right to indemnification conferred in Section 6.1, an Indemnitee shall, to the fullest extent permitted by law, also have the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred in defending any Proceeding in advance of its final disposition (hereinafter an “Advancement of Expenses”), provided, however, that an Advancement of Expenses shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “Undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal (hereinafter a “Final Adjudication”) that such Indemnitee is not entitled to be indemnified for such expenses under this Article VI or otherwise.

 

(b) To receive an Advancement of Expenses under this Section 6.2, an Indemnitee shall submit a written request to the Secretary. Such request shall reasonably evidence the expenses incurred by the Indemnitee and shall include or be accompanied by the Undertaking required by Section 6.2(a). Each such Advancement of Expenses shall be made within 20 days after the receipt by the Secretary of a written request for Advancement of Expenses.

 

Section 6.3 Indemnification for Successful Defense. To the extent that an Indemnitee has been successful on the merits or otherwise in defense of any Proceeding (or in defense of any claim, issue or matter therein), such Indemnitee shall be indemnified under this Section 6.3 against expenses (including attorneys’ fees) actually and reasonably incurred in connection with such defense. Indemnification under this Section 6.3 shall not be subject to satisfaction of a standard of conduct, and the Corporation may not assert the failure to satisfy a standard of conduct as a basis to deny indemnification or recover amounts advanced, including in a suit brought pursuant to Section 6.4 (notwithstanding anything to the contrary therein); provided, however, that, any Indemnitee who is not a current or former director or officer (as such term is defined in the final sentence of Section 145(c)(1) of the DGCL) shall be entitled to indemnification under ‎‎Section 6.1 and this Section 6.3 only if such Indemnitee has satisfied the standard of conduct required for indemnification under Section 145(a) or Section 145(b) of the DGCL.

 

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Section 6.4 Right of Indemnitee to Bring Suit. In the event that a determination is made that the Indemnitee is not entitled to indemnification or if payment is not timely made following a determination of entitlement to indemnification pursuant to Section 6.1(b), if a request for indemnification under Section 6.3 is not paid in full by the Corporation within 60 days after a written request has been received by the Secretary, or if an Advancement of Expenses is not timely made under Section 6.2(b), the Indemnitee may at any time thereafter bring suit against the Corporation in a court of competent jurisdiction in the State of Delaware seeking an adjudication of entitlement to such indemnification or Advancement of Expenses. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit to the fullest extent permitted by law. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that the Indemnitee has not met any applicable standard of conduct for indemnification set forth in Section 145(a) or Section 145(b) of the DGCL. Further, in any suit brought by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Corporation shall be entitled to recover such expenses upon a Final Adjudication that the Indemnitee has not met any applicable standard of conduct for indemnification set forth in Section 145(a) or Section 145(b) of the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an Advancement of Expenses hereunder, or brought by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such Advancement of Expenses, under applicable law, this Article VI or otherwise shall be on the Corporation.

 

Section 6.5 Non-Exclusivity of Rights; Priority. The rights conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any law, agreement, vote of stockholders or disinterested directors, provisions of a certificate of incorporation or bylaws, or otherwise. The Corporation hereby acknowledges that certain Indemnitees may have rights to indemnification and advancement (directly or through insurance) provided by one or more third parties with which they are associated, and which may include third parties for whom the Indemnitees serve as a manager, member, officer, employee or agent (collectively, the “Other Indemnitors”). The Corporation hereby agrees and acknowledges that notwithstanding any such rights that an Indemnitee may have with respect to any Other Indemnitors: (a) the Corporation is the indemnitor of first resort with respect to any Proceedings or amounts that are the subject of the Corporation’s indemnification and advancement obligations under this Article VI; (b) the Corporation shall be required to indemnify and advance the full amount of expenses incurred by the Indemnitees, to the fullest extent required by law, these Bylaws, any agreement to which the Corporation is a party, any vote of the stockholders or the Board of Directors, or otherwise, without regard to any rights the Indemnitees may have against the Other Indemnitors; and (c) to the fullest extent permitted by law, the Corporation irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by the Other Indemnitors with respect to any claim for which the Indemnitees have sought payment from the Corporation shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of any such advancement or payment to all of the rights of recovery of the Indemnitees against the Corporation. These rights shall be a contract right, and the Other Indemnitors are express third party beneficiaries of the terms of this Section 6.5. Notwithstanding anything to the contrary herein, the obligations of the Corporation under this Section 6.5 shall only apply to Indemnitees in their capacity as Indemnitees.

 

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Section 6.6 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

 

Section 6.7 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent and in the manner permitted by law, and to the extent authorized from time to time, grant rights to indemnification and to advancement of expenses to any employee or agent of the Corporation.

 

Section 6.8 Nature of Rights. The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director or officer and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article VI that adversely affects any right of an Indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, alteration or repeal.

 

Section 6.9 Settlement of Claims. Notwithstanding anything in this Article VI to the contrary, the Corporation shall not be liable to indemnify any Indemnitee under this Article VI for any amounts paid in settlement of any Proceeding effected without the Corporation’s written consent, which consent shall not be unreasonably withheld.

 

Section 6.10 Subrogation. In the event of payment under this Article VI, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee (excluding insurance obtained on the Indemnitee’s own behalf), and the Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation effectively to bring suit to enforce such rights.

 

Section 6.11 Severability. If any provision or provisions of this Article VI shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law: (a) the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Article VI (including, without limitation, all portions of any paragraph of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VI (including, without limitation, all portions of any paragraph of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent of the parties that the Corporation provide protection to the Indemnitee to the fullest extent set forth in this Article VI.

 

Article VII
CAPITAL STOCK

 

Section 7.1 Certificates of Stock. The shares of the Corporation shall be represented by certificates; provided, however, that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by any two authorized officers of the Corporation, including, without limitation, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, the Controller, the Secretary, or an Assistant Treasurer or Assistant Secretary certifying the number of shares owned by such holder in the Corporation. Any or all such signatures may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

 

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Section 7.2 Special Designation on Certificates. If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the registered owner thereof shall be given a notice, in writing or by electronic transmission, containing the information required to be set forth or stated on certificates pursuant to this Section 7.2 or Sections 151, 156, 202(a) or 218(a) of the DGCL or with respect to this Section 7.2 and Section 151 of the DGCL a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

 

Section 7.3 Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation upon authorization by the registered holder thereof or by such holder’s attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary or a transfer agent for such stock, and if such shares are represented by a certificate, upon surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of any taxes thereon; provided, however, that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. Transfers may also be made in any manner authorized by the Corporation (or its authorized transfer agent) and permitted by Section 224 of the DGCL.

 

Section 7.4 Lost Certificates. The Corporation may issue a new share certificate or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate or the owner’s legal representative to give the Corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. The Board of Directors may adopt such other provisions and restrictions with reference to lost certificates, not inconsistent with applicable law, as it shall in its discretion deem appropriate.

 

Section 7.5 Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

 

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Section 7.6 Record Date for Determining Stockholders.

 

(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjourned meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjourned meeting; provided, however, that the Board of Directors may fix a new record date for the determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

 

(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

Section 7.7 Regulations. To the extent permitted by applicable law, the Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of shares of stock of the Corporation.

 

Section 7.8 Waiver of Notice. Whenever notice is required to be given under any provision of the DGCL or the Certificate of Incorporation or these Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, the Board of Directors or a committee of the Board of Directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these Bylaws.

 

Article VIII
GENERAL MATTERS

 

Section 8.1 Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January of each year and end on the last day of December of the same year, or shall extend for such other 12 consecutive months as the Board of Directors may designate.

 

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Section 8.2 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

 

Section 8.3 Reliance upon Books, Reports and Records. Each director and each member of any committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

 

Section 8.4 Subject to Law and Certificate of Incorporation. All powers, duties and responsibilities provided for in these Bylaws, whether or not explicitly so qualified, are qualified by the Certificate of Incorporation (including any Preferred Stock Designation) and applicable law.

 

Section 8.5 Electronic Signatures, etc. Except as otherwise required by the Certificate of Incorporation (including as otherwise required by any Preferred Stock Designation) or these Bylaws (including, without limitation, as otherwise required by Section 2.13), any document, including, without limitation, any consent, agreement, certificate or instrument, required by the DGCL, the Certificate of Incorporation (including any Preferred Stock Designation) or these Bylaws to be executed by any officer, director, stockholder, employee or agent of the Corporation may be executed using a facsimile or other form of electronic signature to the fullest extent permitted by applicable law. All other contracts, agreements, certificates or instruments to be executed on behalf of the Corporation may be executed using a facsimile or other form of electronic signature to the fullest extent permitted by applicable law. The terms “electronic mail,” “electronic mail address,” “electronic signature” and “electronic transmission” as used herein shall have the meanings ascribed thereto in the DGCL.
 

Article IX
AMENDMENTS

 

Section 9.1 Amendments. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal these Bylaws. Except as otherwise provided in the Certificate of Incorporation (including the terms of any Preferred Stock Designation that provides for a greater or lesser vote) or these Bylaws, and in addition to any other vote required by law, the affirmative vote of at least a majority of the voting power of the stock outstanding and entitled to vote thereon, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal, or adopt any provision inconsistent with, any provision of these Bylaws.

 

The foregoing Bylaws were adopted by the Board of Directors on August 15, 2022, effective as of August 15, 2022.

 

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Exhibit 4.5

 

AMENDMENT OF WARRANT AGREEMENT

 

This Amendment of Warrant Agreement (this “Agreement”) is made as of August 15, 2022, by and between Rubicon Technologies, Inc., a Delaware corporation (formerly known as Founder SPAC, a Cayman Islands exempted company) (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation (the “Warrant Agent”).

 

WHEREAS, the Company and the Warrant Agent are parties to that certain Warrant Agreement, dated as of October 14, 2021 and filed by the Company with the United States Securities and Exchange Commission on October 20, 2021 (the “Existing Warrant Agreement”);

 

WHEREAS, the terms of the Warrants (as defined in the Existing Warrant Agreement) are governed by the Existing Warrant Agreement and capitalized terms used herein, but not otherwise defined, shall have the meanings given to such terms in the Existing Warrant Agreement;

 

WHEREAS, on December 15, 2021, the Company, Ravenclaw Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, Ravenclaw Merger Sub Corporation 1, a Delaware corporation and wholly owned subsidiary of the Company, Ravenclaw Merger Sub Corporation 2, a Delaware corporation and wholly owned subsidiary of the Company, Ravenclaw Merger Sub Corporation 3, a Delaware corporation and wholly owned subsidiary of the Company, Boom Clover Business Limited, a British Virgin Islands corporation, NZSF Frontier Investments Inc., a Delaware corporation, and PLC Blocker A LLC, a Delaware limited liability company, entered into an agreement and plan of merger (the “Merger Agreement”) with Rubicon Technologies, LLC, a Delaware limited liability company;

 

WHEREAS, pursuant to the Merger Agreement, among other things, the Company deregistered under the Cayman Islands Companies Act (As Revised) and domesticated as a Delaware corporation under Section 388 of the Delaware General Corporation Law (the “Domestication”) and in connection therewith, the Company changed its name from Founder SPAC (“Founder”) to Rubicon Technologies, Inc.;

 

WHEREAS, immediately following the Domestication, the parties to the Merger Agreement consummated the mergers contemplated thereby;

 

WHEREAS, as a result of and upon the effective time of the Domestication, among other things, (A) each then-issued and outstanding Class A ordinary share, par value $0.0001 per share, of Founder (“Founder Class A Shares”) automatically converted into one share of Class A common stock, par value $0.0001 per share, of the Company (“Domestication Class A Common Stock”), (B) each then-issued and outstanding Class B ordinary share, par value $0.0001 per share, of Founder converted into one share of Domestication Class A Common Stock pursuant to the Sponsor Agreement, dated December 15, 2021, by and among Founder, Founder SPAC Sponsor LLC, Rubicon Technologies, LLC, and certain insiders of Founder, (C) each then-issued and outstanding public warrant of Founder, each representing a right to acquire one Founder Class A Share for $11.50 (a “Founder Public Warrant”), converted automatically, on a one-for-one basis, into a public warrant of the Company (the “Domestication Public Warrant”) that represents a right to acquire one share of Domestication Class A Common Stock for $11.50 pursuant to Section 4.5 of the Existing Warrant Agreement, (D) each then-issued and outstanding private placement warrant, each representing a right to acquire one Founder Class A Share for $11.50, converted automatically, on a one-for-one basis, into a private placement warrant of the Company that represents a right to acquire one share of Domestication Class A Common Stock for $11.50 pursuant to Section 4.5 of the Existing Warrant Agreement, and (E) each then-issued and outstanding unit of Founder, each representing a Founder Class A Share and one-half of a Founder Public Warrant (a “Founder Unit”), that had not been previously separated into the underlying Founder Class A Share and one-half of one Founder Public Warrant upon the request of the holder thereof, was separated and automatically converted into one share of Domestication Class A Common Stock and one-half of one Domestication Public Warrant. No fractional Domestication Public Warrants were issued upon separation of the Founder Units. In addition, the certificate of incorporation of the Company authorized Class V common stock, par value $0.0001 per share (“Domestication Class V Common Stock”). Domestication Class A Common Stock is entitled to economic rights and one vote per share and Domestication Class V Common Stock is entitled to one vote per share with no economic rights;

 

 

 

 

WHEREAS, effective as of the Domestication, as provided in Section 4.5 of the Existing Warrant Agreement, the Warrants are no longer exercisable for Founder Class A Shares, but instead are exercisable (subject to the terms and conditions of the Existing Warrant Agreement as amended hereby) for a like number of shares of Domestication Class A Common Stock;

 

WHEREAS, the consummation of the transactions contemplated by the Merger Agreement constituted a Business Combination (as defined in the Existing Warrant Agreement); and

 

WHEREAS, Section 9.8 of the Existing Warrant Agreement provides that the Company and the Warrant Agent may amend the Existing Warrant Agreement without the consent of any registered holder (as defined in the Existing Warrant Agreement) for the purpose of, among other things, adding or changing any other provisions with respect to matters or questions arising under the Existing Warrant Agreement as the Company and the Warrant Agent may deem necessary or desirable and that the Company and the Warrant Agent deem shall not adversely affect the interest of the registered holders.

 

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

 

1. Amendment of Existing Warrant Agreement. The Company and the Warrant Agent hereby amend the Existing Warrant Agreement as provided in this Section 1, effective as of the Effective Time (as defined in the Merger Agreement), and acknowledge and agree that the amendments to the Existing Warrant Agreement set forth in this Section 1 are necessary or desirable and that such amendments do not adversely affect the interests of the registered holders.

 

1.1 Preamble; References to the “Company”. The preamble to the Existing Warrant Agreement is hereby amended by deleting “Founder SPAC, a Cayman Islands exempted company” and replacing it with “Rubicon Technologies, Inc., a Delaware corporation”. As a result thereof, all references to the “Company” in the Existing Warrant Agreement shall be references to Rubicon Technologies, Inc. rather than Founder SPAC.

 

1.2 References to “Ordinary Shares”. All references to “Ordinary Shares” in the Existing Warrant Agreement (including all Exhibits thereto) shall be references to Domestication Class A Common Stock.

 

1.3 References to “Business Combination”. All references to the “Business Combination” in the Existing Warrant Agreement (including all Exhibits thereto) shall be references to the transactions contemplated by the Merger Agreement, and references to “the closing of the Business Combination” and all variations thereof in the Existing Warrant Agreement (including all Exhibits thereto) shall be references to the Effective Time.

 

1.4 Notices. Section 9.2 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

 

Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:

 

Rubicon Technologies, Inc.

950 E. Paces Ferry Road, Suite 1900

Atlanta, GA 30326

Attention: William Meyer, General Counsel

Email: bill.meyer@rubicon.com

 

Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

 

Continental Stock Transfer &
Trust Company One State Street,
30th Floor

New York, NY 10004

Attention: Compliance Department

 

in each case, with copies to:

 

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Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, DC 20036

Attn: Evan D’Amico

Email: EDAmico@gibsondunn.com

 

2. Miscellaneous Provisions.

 

2.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their permitted respective successors and assigns.

 

2.2 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

2.3 Applicable Law. The validity, interpretation and performance of this Agreement shall be governed in all respects by the laws of the State of New York, without giving effect to conflict of laws. The parties hereby agree that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

 

2.4 Counterparts. This Agreement may be executed in any number of counterparts, and by facsimile or portable document format (pdf) transmission, and each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument.

 

2.5 Effect of Headings; Interpretation. The Section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof. All references to “dollars” or “$” refer to currency of the United States of America.

 

2.6 Entire Agreement. The Existing Warrant Agreement, as modified by this Agreement, constitutes the entire understanding of the parties and supersedes all prior agreements, understandings, arrangements, promises and commitments, whether written or oral, express or implied, relating to the subject matter hereof, and all such prior agreements, understandings, arrangements, promises and commitments are hereby canceled and terminated.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed as of the date first above written.

 

  RUBICON TECHNOLOGIES, INC. (f/k/a FOUNDER SPAC)
     
  By: Nathaniel R. Morris
     
  Name: Nate Morris
     
  Title: Chief Executive Officer

 

  CONTINENTAL STOCK TRANSFER & TRUST COMPANY
     
  By: Luis Ortiz
     
  Name: Luis Ortiz
     
  Title: Vice President

 

[Signature Page to Amendment of Warrant Agreement]

 

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Exhibit 10.3

 

Indemnification Agreement

 

This Indemnification Agreement (this “Agreement”) is entered into as of August 15, 2022 (the “Effective Date”) by and between Rubicon Technologies, Inc., a Delaware corporation (the “Company”), and the undersigned (the “Indemnitee”).

 

Recitals

 

WHEREAS, the Board of Directors has determined that the inability to attract and retain qualified persons as directors and officers of the Company and its subsidiaries is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there shall be adequate certainty of protection through insurance and indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of the Company;

 

WHEREAS, the Company has adopted provisions in its Bylaws (as amended and/or restated from time to time, the “Bylaws”) providing for indemnification and advancement of expenses of its directors and officers, and the Company wishes to clarify and enhance the rights and obligations of the Company and the Indemnitee with respect to indemnification and advancement of expenses;

 

WHEREAS, Indemnitee is a director, officer and/or employee of the Company and/or its subsidiaries, and/or is serving another enterprise at the Company’s request, and in order to induce and encourage highly experienced and capable persons such as the Indemnitee to serve and continue to serve as directors and officers of the Company and/or its subsidiaries and in any other capacity with respect to the Company as the Company may request, and to otherwise promote the desirable end that such persons shall resist what they consider unjustified lawsuits and claims made against them in connection with the good faith performance of their duties to the Company, with the knowledge that certain costs, judgments, penalties, fines, liabilities, and expenses incurred by them in their defense of such litigation are to be borne by the Company and they shall receive appropriate protection against such risks and liabilities, the Board of Directors of the Company has determined that the following Agreement is reasonable and prudent to promote and ensure the best interests of the Company and its stockholders; and

 

WHEREAS, the Company desires to have the Indemnitee serve or continue to serve as a director or officer of the Company and/or its subsidiaries and in any other capacity with respect to the Company as the Company may request, as the case may be, free from undue concern for unpredictable, inappropriate, or unreasonable legal risks and personal liabilities by reason of the Indemnitee acting in good faith in the performance of the Indemnitee’s duties; and the Indemnitee desires to continue so to serve, provided, and on the express condition, that he or she is furnished with the protections set forth hereinafter.

 

Agreement

 

NOW, THEREFORE, in consideration of the Indemnitee’s continued service as a director, officer and/or employee of the Company and/or its subsidiaries, the parties hereto agree as follows:

 

 

 

 

1. Definitions. For purposes of this Agreement:

 

(a) A “Change in Control” will be deemed to have occurred if, with respect to any particular 24-month period, the individuals who, at the beginning of such 24-month period, constituted the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the beginning of such 24-month period whose election, or nomination for election by the stockholders of the Company, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors. For the avoidance of doubt, a “Change in Control” shall not include the initial public offering of Class A Common Stock of the Company, par value $0.0001 per share, or the actions or transactions contemplated to effect any such transaction.

 

(b) “Disinterested Director” means a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by the Indemnitee.

 

(c) “Expenses” includes, without limitation, expenses incurred in connection with the defense or settlement of any action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, judicial, administrative, or legislative hearing, or any other threatened, pending, or completed proceeding, whether brought by or in the right of the Company and/or its subsidiaries or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative, or other nature, attorneys’ fees, witness fees and expenses, fees and expenses of accountants, expert witnesses and other advisors, retainers and disbursements and advances thereon, the premium, security for, and other costs relating to any bond (including cost bonds, appraisal bonds, or their equivalents), and any expenses of establishing a right to indemnification or advancement under Sections 9, 11, 13, and 16 hereof, but shall not include the amount of judgments, fines, ERISA excise taxes, or penalties actually levied against the Indemnitee, or any amounts paid in settlement by or on behalf of the Indemnitee.

 

(d) “Independent Counsel” means a law firm or a member of a law firm that neither is presently nor in the past five years has been retained to represent (i) the Company or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a request for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s right to indemnification under this Agreement.

 

(e) “Proceeding” means any action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, judicial, administrative, or legislative hearing, or any other threatened, pending, or completed proceeding, whether brought by or in the right of the Company and/or its subsidiaries or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative, or other nature, to which the Indemnitee was or is a party or is threatened to be made a party or is otherwise involved in by reason of the fact that the Indemnitee is or was a director, officer, employee, agent, or trustee of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, or by reason of anything done or not done by the Indemnitee in any such capacity, whether or not the Indemnitee is serving in such capacity at the time any expense, liability, or loss is incurred for which indemnification or advancement can be provided under this Agreement.

 

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2. Service by the Indemnitee. The Indemnitee shall serve and/or continue to serve as a director, officer and/or employee of the Company and/or its subsidiaries faithfully and to the best of the Indemnitee’s ability so long as the Indemnitee is duly elected or appointed and until such time as the Indemnitee’s successor is elected and qualified or the Indemnitee is removed as permitted by applicable law or tenders a resignation. Service at any subsidiary of the Company shall be deemed to be service at the request of the Company for purposes of this Agreement. By entering into this Agreement, Indemnitee is deemed to be serving at the request of the Company, and the Company is deemed to be requesting such service.

 

3. Indemnification and Advancement of Expenses. The Company shall indemnify and hold harmless the Indemnitee, and shall pay to the Indemnitee in advance of the final disposition of any Proceeding all Expenses incurred by the Indemnitee in defending any such Proceeding, to the fullest extent authorized by the General Corporation Law of the State of Delaware (the “DGCL”), as the same exists or may hereafter be amended, all on the terms and conditions set forth in this Agreement. Without diminishing the scope of the rights provided by this Section, the rights of the Indemnitee to indemnification and advancement of Expenses provided hereunder shall include but shall not be limited to those rights hereinafter set forth, except that no indemnification or advancement of Expenses shall be paid to the Indemnitee (unless the Board of Directors otherwise determines that such payment is appropriate):

 

(a) to the extent expressly prohibited by applicable law;

 

(b) for and to the extent that payment is actually made to the Indemnitee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, provision of the Certificate of Incorporation or Bylaws, or agreement of the Company or any other company or other enterprise (and the Indemnitee shall reimburse the Company for any amounts paid by the Company and subsequently so recovered by the Indemnitee);

 

(c) in connection with an action, suit, or proceeding, or part thereof voluntarily initiated by the Indemnitee (including claims and counterclaims, whether such counterclaims are asserted by (i) the Indemnitee, or (ii) the Company and/or its subsidiaries in an action, suit, or proceeding initiated by the Indemnitee), except a judicial proceeding or arbitration pursuant to Section 11 to enforce rights under this Agreement, unless the action, suit, or proceeding, or part thereof, was authorized or ratified by the Board of Directors of the Company or the Board of Directors otherwise determines that indemnification or advancement of Expenses is appropriate; or

 

(d) with respect to any Proceeding brought by or in the right of the Company and/or its subsidiaries against the Indemnitee that is authorized or ratified by the Board of Directors of the Company, including any Proceeding brought by the Company and/or its subsidiaries seeking reimbursement pursuant to any compensation recoupment or clawback policy adopted by the Board of Directors or the compensation committee of the Board of Directors, except as provided in Sections 5, 6, and 7 below.

 

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4. Action or Proceedings Other than an Action by or in the Right of the Company. Except as limited by Section 3 above, the Indemnitee shall be entitled to the indemnification rights provided in this Section if the Indemnitee was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding (other than an action by or in the right of the Company and/or its subsidiaries) by reason of the fact that the Indemnitee is or was a director, officer, employee, agent, or trustee of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, or by reason of anything done or not done by the Indemnitee in any such capacity. Pursuant to this Section, the Indemnitee shall be indemnified against all expense, liability, and loss (including judgments, fines, ERISA excise taxes, penalties, amounts paid in settlement by or on behalf of the Indemnitee, and Expenses) actually and reasonably incurred by the Indemnitee in connection with such Proceeding, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and/or its subsidiaries, and with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

5. Indemnity in Proceedings by or in the Right of the Company. Except as limited by Section 3 above, the Indemnitee shall be entitled to the indemnification rights provided in this Section if the Indemnitee was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding brought by or in the right of the Company and/or its subsidiaries to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director, officer, employee, agent, or trustee of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, or by reason of anything done or not done by the Indemnitee in any such capacity. Pursuant to this Section, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and/or its subsidiaries; provided, however, that no such indemnification shall be made in respect of any claim, issue, or matter as to which the DGCL expressly prohibits such indemnification by reason of any adjudication of liability of the Indemnitee to the Company, unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is entitled to indemnification for such expense, liability, and loss as such court shall deem proper.

 

6. Indemnification for Costs, Charges, and Expenses of Successful Party. Notwithstanding any limitations of Sections 3(c), 3(d), 4, and 5 above, to the extent that the Indemnitee has been successful, on the merits or otherwise, in whole or in part, in defense of any Proceeding, or in defense of any claim, counterclaim, issue, or matter therein, including, without limitation, the dismissal of any action without prejudice, or if it is ultimately determined, by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal, that the Indemnitee is otherwise entitled to be indemnified against Expenses, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection therewith.

 

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7. Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expense, liability, and loss (including judgments, fines, ERISA excise taxes, penalties, amounts paid in settlement by or on behalf of the Indemnitee, and Expenses) actually and reasonably incurred in connection with any Proceeding, or in connection with any judicial proceeding or arbitration pursuant to Section 11 below to enforce rights under this Agreement, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such expense, liability, and loss actually and reasonably incurred to which the Indemnitee is entitled.

 

8. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the maximum extent permitted by the DGCL, the Indemnitee shall be entitled to indemnification against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf if the Indemnitee appears as a witness or otherwise incurs legal expenses as a result of or related to the Indemnitee’s service as a director or officer of the Company and/or its subsidiaries, in any threatened, pending, or completed action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, judicial, administrative, or legislative hearing, or any other threatened, pending, or completed proceeding, whether of a civil, criminal, administrative, legislative, investigative, or other nature, to which the Indemnitee neither is, nor is threatened to be made, a party.

 

9. Determination of Entitlement to Indemnification. To receive indemnification under this Agreement, the Indemnitee shall submit a written request to the General Counsel of the Company. Such request shall include a schedule setting forth in detail the dollar amounts requested, supported by copies of the bill, agreement or other documentation relating thereto (which may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law) and such other documentation or information that is necessary for such determination and is reasonably available to the Indemnitee. Upon receipt by the General Counsel of the Company of a written request by the Indemnitee for indemnification, the entitlement of the Indemnitee to indemnification, to the extent not required pursuant to the terms of Section 6 or Section 8 of this Agreement, shall be determined by the following person or persons who shall be empowered to make such determination (as selected by the Board of Directors, except with respect to Section 9(e) below): (a) the Board of Directors of the Company by a majority vote of Disinterested Directors, whether or not such majority constitutes a quorum; (b) a committee of Disinterested Directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum; (c) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee; (d) the stockholders of the Company; or (e) in the event that a Change in Control has occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee. Such Independent Counsel shall be selected by the Board of Directors and approved by the Indemnitee, except that in the event that a Change in Control has occurred, Independent Counsel shall be selected by the Indemnitee. Upon failure of the Board of Directors so to select such Independent Counsel or upon failure of the Indemnitee so to approve (or so to select, in the event a Change in Control has occurred), such Independent Counsel shall be selected upon application to a court of competent jurisdiction. The determination of entitlement to indemnification shall be made and, unless a contrary determination is made, such indemnification shall be paid in full by the Company not later than 60 calendar days after receipt by the General Counsel of the Company of a written request for indemnification. If the person making such determination shall determine that the Indemnitee is entitled to indemnification as to part (but not all) of the application for indemnification, such person shall reasonably prorate such partial indemnification among the claims, issues, or matters at issue at the time of the determination.

 

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10. Presumptions and Effect of Certain Proceedings. The General Counsel of the Company shall, promptly upon receipt of the Indemnitee’s written request for indemnification, advise in writing the Board of Directors or such other person or persons empowered to make the determination as provided in Section 9 that the Indemnitee has made such request for indemnification. Upon making such request for indemnification, the Indemnitee shall be presumed to be entitled to indemnification hereunder and the Company shall have the burden of proof in making any determination contrary to such presumption. If the person or persons so empowered to make such determination shall have failed to make the requested determination with respect to indemnification within 60 calendar days after receipt by the General Counsel of the Company of such request, a requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be absolutely entitled to such indemnification, absent actual fraud in the request for indemnification. The termination of any Proceeding described in Sections 4 or 5 by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself (a) create a presumption that the Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and/or its subsidiaries, and with respect to any criminal Proceeding, had reasonable cause to believe his or her conduct was unlawful or (b) otherwise adversely affect the rights of the Indemnitee to indemnification except as may be provided herein.

 

11. Remedies of the Indemnitee in Cases of Determination Not to Indemnify or to Advance Expenses; Right to Bring Suit. In the event that a determination is made that the Indemnitee is not entitled to indemnification hereunder or if payment is not timely made following a determination of entitlement to indemnification pursuant to Sections 9 and 10, or if an advancement of Expenses is not timely made pursuant to Section 16, the Indemnitee may at any time thereafter bring suit against the Company seeking an adjudication of entitlement to such indemnification or advancement of Expenses, and any such suit shall be brought in the Court of Chancery of the State of Delaware unless otherwise required by the law of the state in which the Indemnitee primarily resides and works. Alternatively, the Indemnitee at the Indemnitee’s option may seek an award in an arbitration to be conducted by a single arbitrator in the State of Delaware pursuant to the rules of the American Arbitration Association, such award to be made within 60 calendar days following the filing of the demand for arbitration. The Company shall not oppose the Indemnitee’s right to seek any such adjudication or award in arbitration. In any suit or arbitration brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit or arbitration brought by the Indemnitee to enforce a right to an advancement of Expenses), it shall be a defense that the Indemnitee has not met any applicable standard of conduct for indemnification set forth in the DGCL, including the standard described in Section 4 or 5, as applicable. Further, in any suit brought by the Company to recover an advancement of Expenses pursuant to the terms of an undertaking, the Company shall be entitled to recover such Expenses upon a final judicial decision of a court of competent jurisdiction from which there is no further right to appeal that the Indemnitee has not met the standard of conduct described above. Neither the failure of the Company (including the Disinterested Directors, a committee of Disinterested Directors, Independent Counsel, or its stockholders) to have made a determination prior to the commencement of such suit or arbitration that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the standard of conduct described above, nor an actual determination by the Company (including the Disinterested Directors, a committee of Disinterested Directors, Independent Counsel, or its stockholders) that the Indemnitee has not met the standard of conduct described above shall create a presumption that the Indemnitee has not met the standard of conduct described above, or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of Expenses hereunder, or brought by the Company to recover an advancement of Expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section 11 or otherwise shall be on the Company. If a determination is made or deemed to have been made pursuant to the terms of Section 9 or 10 that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination and is precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding, and enforceable. The Company further agrees to stipulate in any court or before any arbitrator pursuant to this Section 11 that the Company is bound by all the provisions of this Agreement and is precluded from making any assertions to the contrary. If the court or arbitrator shall determine that the Indemnitee is entitled to any indemnification or advancement of Expenses hereunder, the Company shall pay all Expenses actually and reasonably incurred by the Indemnitee in connection with such adjudication or award in arbitration (including, but not limited to, any appellate proceedings) to the fullest extent permitted by law, and in any suit brought by the Company to recover an advancement of Expenses pursuant to the terms of an undertaking, the Company shall pay all Expenses actually and reasonably incurred by the Indemnitee in connection with such suit to the extent the Indemnitee has been successful, on the merits or otherwise, in whole or in part, in defense of such suit, to the fullest extent permitted by law.

 

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12. Non-Exclusivity of Rights. The rights to indemnification and to the advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other right that the Indemnitee may now or hereafter acquire under any applicable law, agreement (including any partnership agreement or limited liability company agreement), vote of stockholders or Disinterested Directors, provisions of an entity’s organizational documents (including the Company’s certificate of incorporation (as it may be amended and/or restated from time to time, the “Certificate of Incorporation”), and the Bylaws), or otherwise.

 

13. Expenses to Enforce Agreement. In the event that the Indemnitee is subject to or intervenes in any action, suit, or proceeding in which the validity or enforceability of this Agreement is at issue or seeks an adjudication or award in arbitration to enforce the Indemnitee’s rights under, or to recover damages for breach of, this Agreement, the Indemnitee, if the Indemnitee prevails in whole or in part in such action, suit, or proceeding, shall be entitled to recover from the Company and shall be indemnified by the Company against any Expenses actually and reasonably incurred by the Indemnitee in connection therewith.

 

14. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director, officer, employee, agent, or trustee of the Company and/or its subsidiaries or is serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, and shall continue thereafter with respect to any possible claims based on the fact that the Indemnitee was a director, officer, employee, agent, or trustee of the Company and/or its subsidiaries or was serving at the request of the Company as a director, officer, employee, agent, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan. This Agreement shall be binding upon all successors and assigns of the Company (including any transferee of all or substantially all of its assets and any successor by merger or operation of law) and shall inure to the benefit of the Indemnitee’s heirs, executors, and administrators.

 

15. Notification and Defense of Proceeding. Promptly after receipt by the Indemnitee of notice of any Proceeding, the Indemnitee shall, if a request for indemnification or an advancement of Expenses in respect thereof is to be made against the Company under this Agreement, notify the Company in writing of the commencement thereof; but the omission so to notify the Company shall not relieve it from any liability that it may have to the Indemnitee. Notwithstanding any other provision of this Agreement, with respect to any such Proceeding of which the Indemnitee notifies the Company:

 

(a) The Company shall be entitled to participate therein at its own expense;

 

(b) Except as otherwise provided in this Section 15(b), to the extent that it may wish, the Company, jointly with any other indemnifying party similarly notified, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election so to assume the defense thereof, the Company shall not be liable to the Indemnitee under this Agreement for any expenses of counsel subsequently incurred by the Indemnitee in connection with the defense thereof except as otherwise provided below. The Indemnitee shall have the right to employ the Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such Proceeding, or (iii) the Company shall not within 60 calendar days of receipt of notice from the Indemnitee in fact have employed counsel to assume the defense of the Proceeding, in each of which cases the Expenses of the Indemnitee’s counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (ii) above; and

 

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(c) Notwithstanding any other provision of this Agreement, the Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, or for any judicial or other award, if the Company was not given an opportunity, in accordance with this Section 15, to participate in the defense of such Proceeding. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on or disclosure obligation with respect to the Indemnitee, or that would directly or indirectly constitute or impose any admission or acknowledgment of fault or culpability with respect to the Indemnitee, without the Indemnitee’s written consent. Neither the Company nor the Indemnitee shall unreasonably withhold its consent to any proposed settlement.

 

16. Advancement of Expenses. Except as limited by Section ‎3 above, all Expenses incurred by the Indemnitee in defending any Proceeding described in Section ‎4 or ‎5 shall be paid by the Company in advance of the final disposition of such Proceeding at the request of the Indemnitee. The Indemnitee’s right to advancement shall not be subject to the satisfaction of any standard of conduct and advances shall be made without regard to the Indemnitee’s ultimate entitlement to indemnification under the provisions of this Agreement or otherwise. To receive an advancement of Expenses under this Agreement, the Indemnitee shall submit a written request to the General Counsel of the Company. Such request shall include a schedule with supporting documentation relating thereto, setting forth in detail the Expenses incurred by the Indemnitee (which may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law), and shall include or be accompanied by an undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced if it shall ultimately be determined, by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal, that the Indemnitee is not entitled to be indemnified for such Expenses by the Company as provided by this Agreement or otherwise. For the avoidance of doubt, a single undertaking by the Indemnitee pursuant to this Section ‎16 may cover all funds advanced from time to time in respect of a Proceeding. The Indemnitee agrees to repay all such amounts promptly following any such final judicial decision. The Indemnitee’s undertaking to repay any such amounts is not required to be secured. Each such advancement of Expenses shall be made within 20 calendar days after the receipt by the General Counsel of the Company of such written request. The Indemnitee’s entitlement to Expenses under this Agreement shall include those incurred in connection with any action, suit, or proceeding by the Indemnitee seeking an adjudication or award in arbitration pursuant to Section ‎11 of this Agreement (including the enforcement of this provision) to the extent the court or arbitrator shall determine that the Indemnitee is entitled to an advancement of Expenses hereunder.

 

17. Severability; Prior Indemnification Agreements. If any provision or provisions of this Agreement shall be held to be invalid, illegal, or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law (a) the validity, legality, and enforceability of such provision in any other circumstance and of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal, or unenforceable, that are not by themselves invalid, illegal, or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal, or unenforceable, that are not themselves invalid, illegal, or unenforceable) shall be construed so as to give effect to the intent of the parties that the Company provide protection to the Indemnitee to the fullest extent set forth in this Agreement. This Agreement shall supersede and replace any prior indemnification agreements entered into by and between the Company or its subsidiaries and the Indemnitee and any such prior agreements shall be terminated upon execution of this Agreement.

 

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18. Headings; References; Pronouns. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. References herein to section numbers are to sections of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the singular or plural as appropriate.

 

19. Other Provisions.

 

(a) This Agreement and all disputes or controversies arising out of or related to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of conflicts of laws principles of the State of Delaware, unless otherwise required by the law of the state in which the Indemnitee primarily resides and works.

 

(b) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

 

(c) This Agreement shall not be deemed an employment contract between the Company and any Indemnitee who is an officer of the Company and/or its subsidiaries, and, if the Indemnitee is an officer, the Indemnitee specifically acknowledges that the Indemnitee may be discharged at any time for any reason, with or without cause, and with or without severance compensation, except as may be otherwise provided in a separate written contract between the Indemnitee and the Company and/or its subsidiaries.

 

(d) In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, and the Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

 

(e) This Agreement may not be amended, modified, or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, shall preclude any other or further exercise thereof or the exercise of any other right or power.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Company and the Indemnitee have caused this Agreement to be executed as of the date first written above.

 

 Rubicon Technologies, Inc.
   
 By: 
  Name:  
  Title:  
   
 Indemnitee
   
  
 Name:

 

Signature Page to Indemnification Agreement

 

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Exhibit 10.4

 

RUBICON TECHNOLOGIES, INC.

2022 EQUITY INCENTIVE PLAN

 

1. Purpose

 

The purpose of this Rubicon Technologies, Inc. 2022 Equity Incentive Plan (the “Plan”) is to promote and closely align the interests of employees, officers, non-employee directors and other service providers of Rubicon Technologies, Inc. and its stockholders by providing stock-based compensation and other performance-based compensation. The objectives of the Plan are to attract and retain the best available employees for positions of substantial responsibility and to motivate Participants to optimize the profitability and growth of the Company through incentives that are consistent with the Company’s goals and that link the personal interests of Participants to those of the Company’s stockholders. The Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock and Other Stock-Based Awards, any of which may be performance-based, and for Incentive Bonuses, which may be paid in cash, Common Stock or a combination thereof, as determined by the Committee.

 

2. Definitions

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

(a) “Affiliate” means any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee from time to time.

 

(b) “Act” means the Securities Exchange Act of 1934, as amended.

 

(c) “Award” means an Option, Stock Appreciation Right, Restricted Stock Unit, Restricted Stock, Other Stock-Based Award or Incentive Bonus granted to a Participant pursuant to the provisions of the Plan, any of which may be subject to performance conditions.

 

(d) “Award Agreement” means a written or electronic agreement or other instrument as may be approved from time to time by the Committee and designated as such implementing the grant of each Award. An Award Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices or similar instruments as approved by the Committee and designated as such.

 

(e) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Act.

 

(f) “Board” means the Board of Directors of the Company.

 

(g) “Cause” has the meaning set forth in the written employment, offer, services or severance agreement or letter between the Participant and the Company or an Affiliate, or if there is no such agreement or no such term is defined in such agreement, means a Participant’s Termination of Employment by the Company or an Affiliate by reason of (i) the Participant’s material breach of any agreement between the Participant and the Company or an Affiliate or any policy of the Company of an Affiliate; (ii) the willful failure or refusal by the Participant to substantially perform his or her duties; (iii) the commission or conviction of the Participant of, or the entering of a plea of nolo contendere by the Participant with respect to, (A) a felony or (B) a misdemeanor involving moral turpitude; (iv) the Participant’s gross misconduct that causes harm to the reputation of the Company or (v) the Participant’s inability or failure to competently perform his or her duties in any material respect due to the use of drugs or other illicit substances. A Participant’s employment or service will be deemed to have been terminated for Cause if it is determined subsequent to such Participant’s Termination of Employment that grounds for a Termination of Employment for Cause existed at the time of such Termination of Employment, as determined by the Committee in good faith.

 

 

 

 

(h) “Change in Control” means the occurrence of any one of the following:

 

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person or any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in Section 2(h)(iii)(A) below;

 

(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: (A) individuals who, on the Effective Date (as defined below), constitute the Board and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least a majority of the directors then still in office who were either directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended;

 

(iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the holders of the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

 

(iv) the implementation of a plan of complete liquidation or dissolution of the Company; or

 

(v) there is consummated a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which is owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder.

 

(j) “Committee” means the Compensation Committee of the Board (or any successor committee) or such other committee as designated by the Board to administer the Plan under Section 6.

 

(k) “Common Stock” means the Class A common stock of the Company, $0.0001 par value per share, or such other class or kind of shares or other securities as may be applicable under Section 16.

 

(l) “Company” means Rubicon Technologies, Inc., a Delaware corporation, and except as utilized in the definition of Change in Control, any successor corporation.

 

(m) “Disability” has the meaning set forth in a written employment, offer, services or severance agreement or letter between the Participant and the Company or an Affiliate, or if there is no such agreement or no such term is defined in such agreement, means, as determined by the Committee in its discretion exercised in good faith, a physical or mental condition of a Participant that would entitle him or her to payment of disability income payments under the Company’s long-term disability insurance policy or plan for employees as then in effect; or in the event that a Participant is not covered, for whatever reason under the Company’s long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy, “Disability” means a permanent and total disability as defined in Section 22(e)(3) of the Code. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, Participants shall submit to an examination by such physician upon request by the Committee.

 

(n) “Dividend Equivalent” mean an amount payable in cash or Common Stock, as determined by the Committee, equal to the dividends that would have been paid to the Participant if the share of Common Stock with respect to which the Dividend Equivalent relates had been owned by the Participant.

 

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(o) “Effective Date” means the date on which the Plan takes effect, as defined pursuant to Section 4.

 

(p) “Eligible Person” means (x) any current or prospective employee, officer, non-employee director or other service provider of the Company or any of its Subsidiaries and (y) any person as contemplated under the Merger Agreement, dated December 15, 2021, by and among the Company (formerly Founder SPAC), Ravenclaw Merger Sub LLC, Ravenclaw Merger Sub Corporation 1, Ravenclaw Merger Sub Corporation 2, Ravenclaw Merger Sub Corporation 3, Boom Clover Business Limited, NZSF Frontier Investments INC., PLC Blocker A LLC, and Rubicon Technologies Holdings, LLC (formerly Rubicon Technologies, LLC); provided however that Incentive Stock Options may only be granted to employees of the Company or any of its “subsidiary corporations” within the meaning of Section 424 of the Code.

 

(q) “Fair Market Value” means as of any date, the value of the Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, system or market, its Fair Market Value shall be the closing price for the Common Stock as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Committee deems reliable (or, if no sale of Common Stock is reported for such date, on the next preceding date on which any sale shall have been reported); and (ii) in the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Committee by the reasonable application of a reasonable valuation method, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Committee deems appropriate.

 

(r) “Incentive Bonus” means a bonus opportunity awarded under Section 12 pursuant to which a Participant may become entitled to receive an amount based on satisfaction of such performance criteria established for a specified performance period as specified in the Award Agreement.

 

(s) “Incentive Stock Option” means a stock option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(t) “Nonqualified Stock Option” means a stock option that is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(u) “Option” means a right to purchase a number of shares of Common Stock at such exercise price, at such times and on such other terms and conditions as are specified in or determined pursuant to an Award Agreement. Options granted pursuant to the Plan may be Incentive Stock Options or Nonqualified Stock Options.

 

(v) “Other Stock-Based Award” means an Award granted to an Eligible Person under Section 11.

 

(w) “Participant” means any Eligible Person to whom Awards have been granted from time to time by the Committee and any authorized transferee of such individual.

 

(x) “Person” shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 14(d) and 15(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(y) “Restricted Stock” means an Award or issuance of Common Stock the grant, issuance, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or engagement or performance conditions) and terms as the Committee deems appropriate.

 

(z) “Restricted Stock Unit” means an Award denominated in units of Common Stock under which the issuance of shares of Common Stock (or cash payment in lieu thereof) is subject to such conditions (including continued employment or engagement or performance conditions) and terms as the Committee deems appropriate.

 

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(aa) “Separation from Service” or “Separates from Service” means a Termination of Employment that constitutes a “separation from service” within the meaning of Section 409A of the Code.

 

(bb) “Stock Appreciation Right” means a right granted that entitles the Participant to receive, in cash or Common Stock or a combination thereof, as determined by the Committee, value equal to the excess of (i) the Fair Market Value of a specified number of shares of Common Stock at the time of exercise over (ii) the exercise price of the right, as established by the Committee on the date of grant.

 

(cc) “Subsidiary” means any business association (including a corporation or a partnership, other than the Company) in an unbroken chain of such associations beginning with the Company if each of the associations other than the last association in the unbroken chain owns equity interests (including stock or partnership interests) possessing 50% or more of the total combined voting power of all classes of equity interests in one of the other associations in such chain.

 

(dd) “Substitute Awards” means Awards granted or Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

 

(ee) “Termination of Employment” means ceasing to serve as an employee of the Company and its Subsidiaries or, with respect to a non-employee director or other service provider, ceasing to serve as such for the Company and its Subsidiaries, except that with respect to all or any Awards held by a Participant (i) the Committee may determine that a leave of absence or employment on a less than full-time basis is considered a “Termination of Employment,” (ii) the Committee may determine that a transition from employment to service with a partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a party is not considered a “Termination of Employment,” (iii) service as a member of the Board shall constitute continued employment with respect to Awards granted to a Participant while he or she served as an employee, (iv) service as an employee of the Company or a Subsidiary shall constitute continued employment with respect to Awards granted to a Participant while he or she served as a member of the Board or other service provider, and (v) the Committee may determine that a transition from employment with the Company or a Subsidiary to service to the Company or a Subsidiary other than as an employee shall constitute a “Termination of Employment”. The Committee shall determine whether any corporate transaction, such as a sale or spin-off of a division or Subsidiary that employs or engages a Participant, shall be deemed to result in a Termination of Employment with the Company and its Subsidiaries for purposes of any affected Participant’s Awards, and the Committee’s decision shall be final and binding.

 

3. Eligibility

 

Any Eligible Person is eligible for selection by the Committee to receive an Award.

 

4. Effective Date and Termination of Plan

 

This Plan became effective on August 15, 2022 (the “Effective Date”). The Plan shall remain available for the grant of Awards until the 10th anniversary of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted.

 

5. Shares Subject to the Plan and to Awards

 

(a) Aggregate Limits. The aggregate number of shares of Common Stock issuable under the Plan shall be equal to 29,000,000; provided that such number of shares issuable under the Plan will automatically increase on January 1st of each year beginning in 2022 and ending with a final increase on January 1, 2031, in an amount equal to five percent (5%) of the total number of shares of Common Stock outstanding on December 31st of the preceding calendar year (provided that the Board may provide that there will be no January 1st increase in the number of shares issuable for any such year or that the increase in the number of shares issuable for any such year will be a smaller number of shares of Common Stock than would otherwise occur pursuant to the preceding clause). The aggregate number of shares of Common Stock available for grant under this Plan and the number of shares of Common Stock subject to Awards outstanding at the time of any event described in Section 16 shall be subject to adjustment as provided in Section 16. The shares of Common Stock issued pursuant to Awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

 

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(b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of shares of Common Stock issued under this Plan at any time shall equal only the number of shares of Common Stock actually issued upon exercise or settlement of an Award. Shares of Common Stock subject to Awards that have been canceled, expired, forfeited or otherwise not issued under an Award and shares of Common Stock subject to Awards settled in cash shall not count as shares of Common Stock issued under this Plan. The aggregate number of shares available for issuance under this Plan at any time shall not be reduced by (i) shares subject to Awards that have been terminated, expired unexercised, forfeited or settled in cash, (ii) shares subject to Awards that have been retained or withheld by the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award, or (iii) shares subject to Awards that otherwise do not result in the issuance of shares in connection with payment or settlement thereof. In addition, shares that have been delivered (either actually or by attestation) to the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award shall be available for issuance under this Plan.

 

(c) Substitute Awards. Substitute Awards shall not reduce the shares of Common Stock authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for issuance under the Plan; provided that, Awards using such available shares (i) shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, (ii) shall only be made to individuals who were employees of such acquired or combined company before such acquisition or combination, and (iii) shall comply with the requirements of any stock exchange or market or quotation system on which the Common Stock is traded, listed or quoted.

 

(d) Tax Code Limits. The aggregate number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall be equal to 29,000,000, which number shall be calculated and adjusted pursuant to Section 16 only to the extent that such calculation or adjustment will not affect the status of any option intended to qualify as an Incentive Stock Option under Section 422 of the Code.

 

(e) Limits on Non-Employee Director Compensation. The aggregate dollar value of equity-based (based on the grant date Fair Market Value of equity-based Awards) and cash compensation granted under this Plan or otherwise during any calendar year to any non-employee director shall not exceed $400,000; provided, however, that in the calendar year in which a non-employee director first joins the Board or during any calendar year in which a non-employee director is designated as Chairman of the Board or Lead Director, the maximum aggregate dollar value of equity-based and cash compensation granted to the non-employee director may be up to $800,000.

 

6. Administration of the Plan

 

(a) Administrator of the Plan. The Plan shall be administered by the Committee. The Board shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. Any power of the Committee may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Act. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. To the maximum extent permissible under applicable law, the Committee (or any successor) may by resolution delegate any or all of its authority to one or more subcommittees composed of one or more directors and/or officers of the Company, and any such subcommittee shall be treated as the Committee for all purposes under this Plan. Notwithstanding the foregoing, if the Board or the Committee (or any successor) delegates to a subcommittee comprised of one or more officers of the Company (who are not also directors) the authority to grant Awards, the resolution so authorizing such subcommittee shall specify the total number of shares of Common Stock such subcommittee may award pursuant to such delegated authority, and no such subcommittee shall designate any officer serving thereon or any officer (within the meaning of Section 16 of the Act) or non-employee director of the Company as a recipient of any Awards granted under such delegated authority. The Committee hereby delegates to and designates the Chief Financial Officer of the Company (or such other officer with similar authority), and to his or her delegates or designees, the authority to assist the Committee in the day-to-day administration of the Plan and of Awards granted under the Plan, including those powers set forth in Section 6(b)(iv) through (ix) and to execute Award Agreements or other documents entered into under this Plan on behalf of the Committee or the Company. The Committee may further designate and delegate to one or more additional officers or employees of the Company or any Subsidiary, and/or one or more agents, authority to assist the Committee in any or all aspects of the day-to-day administration of the Plan and/or of Awards granted under the Plan.

 

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(b) Powers of Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of this Plan, including:

 

(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein;

 

(ii) to determine which persons are Eligible Persons, to which of such Eligible Persons, if any, Awards shall be granted hereunder and the timing of any such Awards;

 

(iii) to prescribe and amend the terms of the Award Agreements, to grant Awards and determine the terms and conditions thereof;

 

(iv) to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, retention, vesting, exercisability or settlement of any Award;

 

(v) to prescribe and amend the terms of or form of any document or notice required to be delivered to the Company by Participants under this Plan;

 

(vi) to determine the extent to which adjustments are required pursuant to Section 16;

 

(vii) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Committee, in good faith, determines that it is appropriate to do so;

 

(viii) to approve corrections in the documentation or administration of any Award; and

 

(ix) to make all other determinations deemed necessary or advisable for the administration of this Plan.

 

Notwithstanding anything in this Plan to the contrary, with respect to any Award that is “deferred compensation” under Section 409A of the Code, the Committee shall exercise its discretion in a manner that causes such Awards to be compliant with or exempt from the requirements of Section 409A of the Code. Without limiting the foregoing, unless expressly agreed to in writing by the Participant holding such Award, the Committee shall not take any action with respect to any Award which constitutes (x) a modification of a stock right within the meaning of Treas. Reg. § 1.409A-1(b)(5)(v)(B) so as to constitute the grant of a new stock right, (y) an extension of a stock right, including the addition of a feature for the deferral of compensation within the meaning of Treas. Reg. § 1.409A-1 (b)(5)(v)(C), or (z) an impermissible acceleration of a payment date or a subsequent deferral of a stock right subject to Section 409A of the Code within the meaning of Treas. Reg. § 1.409A-1(b)(5)(v)(E).

 

The Committee may, in its sole and absolute discretion, without amendment to the Plan but subject to the limitations otherwise set forth in Section 20, waive or amend the operation of Plan provisions respecting exercise after Termination of Employment. The Committee or any member thereof may, in its sole and absolute discretion, except as otherwise provided in Section 20, waive, settle or adjust any of the terms of any Award so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of an applicable stock exchange, disruption of communications or natural catastrophe).

 

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(c) Determinations by the Committee. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan and the terms and conditions of, or operation of, any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations, including the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. Members of the Board and members of the Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for as a result of gross negligence or willful misconduct in the performance of their duties.

 

(d) Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Committee so directs, be implemented by the Company issuing any subject shares of Common Stock to the Subsidiary, for such lawful consideration as the Committee may determine, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the Participant in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Committee shall determine.

 

7. Plan Awards

 

(a) Terms Set Forth in Award Agreement. Awards may be granted to Eligible Persons as determined by the Committee at any time and from time to time prior to the termination of the Plan. The terms and conditions of each Award shall be set forth in an Award Agreement in a form approved by the Committee for such Award, which Award Agreement may contain such terms and conditions as specified from time to time by the Committee, provided such terms and conditions do not conflict with the Plan. The Award Agreement for any Award (other than Restricted Stock awards) shall include the time or times at or within which and the consideration, if any, for which any shares of Common Stock or cash, as applicable, may be acquired from the Company. The terms of Awards may vary among Participants, and the Plan does not impose upon the Committee any requirement to make Awards subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary.

 

(b) Termination of Employment. Subject to the express provisions of the Plan, the Committee shall specify before, at, or after the time of grant of an Award the provisions governing the effect(s) upon an Award of a Participant’s Termination of Employment.

 

(c) Rights of a Stockholder. A Participant shall have no rights as a stockholder with respect to shares of Common Stock covered by an Award (including voting rights) until the date the Participant becomes the holder of record of such shares of Common Stock. No adjustment shall be made for dividends or other rights for which the record date is prior to such date, except as provided in Sections 10(b)11(b) or 16 of this Plan or as otherwise provided by the Committee.

 

8. Options

 

(a) Grant, Term and Price. The grant, issuance, retention, vesting and/or settlement of any Option shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of an Option shall in no event be greater than 10 years; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company’s insider trading policy from exercising the Option, which extension shall expire on the 30th day following the date such prohibition no longer applies. The Committee will establish the price at which Common Stock may be purchased upon exercise of an Option, which in no event will be less than the Fair Market Value of such shares on the date of grant; provided, however, that the exercise price per share of Common Stock with respect to an Option that is granted as a Substitute Award may be less than the Fair Market Value of the shares of Common Stock on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of (i) Section 409A of the Code, if such options held by such optionees are not intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code, and (ii) Section 424(a) of the Code, if such options held by such optionees are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. The exercise price of any Option may be paid in cash or such other method as determined by the Committee, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares of Common Stock issuable under an Option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock deliverable upon exercise.

 

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(b) No Repricing without Stockholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 16), the Committee shall not, without stockholder approval, reduce the exercise price of a previously awarded Option, and at any time when the exercise price of a previously awarded Option is above the Fair Market Value of a share of Common Stock, the Committee shall not, without stockholder approval, cancel and re-grant or exchange such Option for cash or a new Award with a lower (or no) exercise price.

 

(c) No Reload Grants. Options shall not be granted under the Plan in consideration for, and shall not be conditioned upon the delivery of, shares of Common Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option.

 

(d) Incentive Stock Options. Notwithstanding anything to the contrary in this Section 8, in the case of the grant of an Incentive Stock Option, if the Participant owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company (a “10% Stockholder”), the exercise price of such Option must be at least 110% of the Fair Market Value of the shares of Common Stock on the date of grant and the Option must expire within a period of not more than five years from the date of grant. Notwithstanding anything in this Section 8 to the contrary, options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (i) the aggregate Fair Market Value of shares of Common Stock (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (ii) such Options otherwise remain exercisable but are not exercised within three months (or such other period of time provided in Section 422 of the Code) of separation of service (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder).

 

(e) No Stockholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Option or any shares of Common Stock subject to an Option until the Participant has become the holder of record of such shares.

 

9. Stock Appreciation Rights

 

(a) General Terms. The grant, issuance, retention, vesting and/or settlement of any Stock Appreciation Right shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of Options granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”). Upon exercise of a tandem SAR as to some or all of the shares covered by the grant, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. Conversely, if the related Option is exercised as to some or all of the shares covered by the grant, the related tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, provided that the Fair Market Value of Common Stock on the date of the SAR’s grant is not greater than the exercise price of the related Option. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 and all tandem SARs shall have the same exercise price as the Option to which they relate. Subject to the provisions of Section 8 and the immediately preceding sentence, the Committee may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Common Stock, cash, Restricted Stock or a combination thereof, as determined by the Committee and set forth in the applicable Award Agreement.

 

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(b) No Repricing without Stockholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 16), the Committee shall not, without stockholder approval, reduce the exercise price of a previously awarded Stock Appreciation Right, and at any time when the exercise price of a previously awarded Stock Appreciation Right is above the Fair Market Value of a share of Common Stock, the Committee shall not, without stockholder approval, cancel and re-grant or exchange such Stock Appreciation Right for cash or a new Award with a lower (or no) exercise price.

 

(c) No Stockholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Award of Stock Appreciation Rights or any shares of Common Stock subject to an Award of Stock Appreciation Rights until the Participant has become the holder of record of such shares.

 

10. Restricted Stock and Restricted Stock Units

 

(a) Vesting and Performance Criteria. The grant, issuance, vesting and/or settlement of any Award of Restricted Stock or Restricted Stock Units shall occur at such time and be subject to such terms and conditions as determined by the Committee or under criteria established by the Committee, which may include conditions based on continued employment or engagement, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. In addition, the Committee shall have the right to grant Restricted Stock or Restricted Stock Unit Awards as the form of payment for grants or rights earned or due under other stockholder-approved compensation plans or arrangements of the Company.

 

(b) Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those shares of Common Stock, unless determined otherwise by the Committee. The Committee will determine whether any such dividends or distributions will be automatically reinvested in additional shares of Restricted Stock and/or subject to the same restrictions on transferability as the Restricted Stock with respect to which they were distributed or whether such dividends or distributions will be paid in cash. Shares underlying Restricted Stock Units shall be entitled to dividends or distributions only to the extent provided by the Committee. Notwithstanding anything herein to the contrary, in no event will dividends or Dividend Equivalents be paid during the performance period with respect to unearned Awards of Restricted Stock or Restricted Stock Units that are subject to performance-based vesting criteria. Dividends or Dividend Equivalents accrued on such shares shall become payable no earlier than the date the performance-based vesting criteria have been achieved and the underlying shares or Restricted Stock Units have been earned.

 

11. Other Stock-Based Awards

 

(a) General Terms. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan. The Committee shall determine the terms and conditions of such Other Stock-Based Awards. Common Stock delivered pursuant to an Other-Stock Based Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Stock, other Awards, or other property, as the Committee shall determine.

 

(b) Dividends and Distributions. Shares underlying Other Stock-Based Awards shall be entitled to dividends or distributions only to the extent provided by the Committee. Notwithstanding anything herein to the contrary, in no event will Dividend Equivalents be paid during the performance period with respect to unearned Other Stock-Based Awards that are subject to performance-based vesting criteria. Dividend Equivalents accrued on such shares shall become payable no earlier than the date the performance-based vesting criteria have been achieved and the shares underlying the Other Stock-Based Award have been earned.

 

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12. Incentive Bonuses

 

(a) Performance Criteria. The Committee shall establish the performance criteria and level of achievement versus such criteria that shall determine the amount payable under an Incentive Bonus, which may include a target, threshold and/or maximum amount payable and any formula for determining such achievement, and which criteria may be based on performance conditions.

 

(b) Timing and Form of Payment. The Committee shall determine the timing of payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in Common Stock, as determined by the Committee.

 

(c) Discretionary Adjustments. Notwithstanding satisfaction of any performance goals and, the amount paid under an Incentive Bonus on account of either financial performance or personal performance evaluations may be adjusted by the Committee on the basis of such further considerations as the Committee shall determine.

 

13. Performance Awards

 

The Committee may establish performance criteria and level of achievement versus such criteria that shall determine the number of shares of Common Stock, Restricted Stock Units, or cash to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an Award (any such Award, a “Performance Award”). A Performance Award may be identified as “Performance Share,” “Performance Equity,” “Performance Unit” or other such term as chosen by the Committee.

 

14. Deferral of Payment

 

The Committee may, in an Award Agreement or otherwise, provide for the deferred delivery of Common Stock or cash upon settlement, vesting or other events with respect to Restricted Stock Units, Other Stock-Based Awards or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein to the contrary, in no event will any election to defer the delivery of Common Stock or any other payment with respect to any Award be allowed if the Committee determines, in its sole discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code. The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Committee shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Board or the Committee.

 

15. Conditions and Restrictions Upon Securities Subject to Awards

 

The Committee may provide that the Common Stock issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Common Stock issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Common Stock already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued under an Award, including (a) restrictions under an insider trading policy or pursuant to applicable law, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (d) provisions requiring Common Stock be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.

 

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16. Adjustment of and Changes in the Stock

 

(a) The number and kind of shares of Common Stock available for issuance under this Plan (including under any Awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in Section 5, shall be equitably adjusted by the Committee, as determined in its sole discretion, to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares of Common Stock available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares of Common Stock to reflect a deemed reinvestment in shares of Common Stock of the amount distributed to the Company’s securityholders. The terms of any outstanding Award shall also be equitably adjusted by the Committee, as determined in its sole discretion, as to price, number or kind of shares of Common Stock subject to such Award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. No fractional shares of Common Stock shall be issued or issuable pursuant to such an adjustment.

 

(b) In the event there shall be any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Committee shall determine in its sole discretion the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different Awards or different types of Awards. In addition, in the event of such change described in this paragraph, the Committee may accelerate the time or times at which any Award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Committee in its sole discretion.

 

(c) Unless otherwise expressly provided in the Award Agreement or another contract, including an employment, offer, services or severance agreement or letter, or under the terms of a transaction constituting a Change in Control, the Committee may provide that any or all of the following shall occur upon a Participant’s Termination of Employment without Cause within 24 months following a Change in Control: (i) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise any portion of the Option or Stock Appreciation Right not previously exercisable, (ii) in the case of any Award the vesting of which is in whole or in part subject to performance criteria or an Incentive Bonus, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse and the Participant shall have the right to receive a payment based on target level achievement or actual performance through a date determined by the Committee, and (iii) in the case of outstanding Restricted Stock, Restricted Stock Units or Other Stock-Based Awards (other than those referenced in subsection (ii)), all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. Notwithstanding anything herein to the contrary, in the event of a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue outstanding Awards or issue substitute Awards upon the Change in Control, immediately prior to the Change in Control, all Awards that are not assumed, continued or substituted for shall be treated as follows effective immediately prior to the Change in Control: (A) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, (B) in the case of any Award the vesting of which is in whole or in part subject to performance criteria or an Incentive Bonus, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse and the Participant shall have the right to receive a payment based on target level achievement or actual performance through a date determined by the Committee, as determined by the Committee, and (C) in the case of outstanding Restricted Stock, Restricted Stock Units or Other Stock-Based Awards (other than those referenced in subsection (B)), all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. In no event shall any action be taken pursuant to this Section 16(c) that would change the payment or settlement date of an Award in a manner that would result in the imposition of any additional taxes or penalties pursuant to Section 409A of the Code.

 

(d) Notwithstanding anything in this Section 16 to the contrary, in the event of a Change in Control, the Committee may provide for the cancellation and cash settlement of all outstanding Awards upon such Change in Control on such terms as determined by the Committee.

 

(e) Notwithstanding anything in this Section 16 to the contrary, any adjustment to an Option or Stock Appreciation Right under this Section 16 shall be made in a manner that will not result in the grant of a new Option or Stock Appreciation Right for purposes of Section 409A of the Code.

 

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17. Transferability

 

Each Award may not be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution, and each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime. Notwithstanding the foregoing, (a) outstanding Options may be exercised following the Participant’s death by the Participant’s beneficiaries or as permitted by the Committee and (b) a Participant may transfer or assign an Award as a gift to an entity wholly owned by such Participant (an “Assignee Entity”), provided that such Assignee Entity shall be entitled to exercise assigned Options and Stock Appreciation Rights only during the lifetime of the assigning Participant (or following the assigning Participant’s death, by the Participant’s beneficiaries or as otherwise permitted by the Committee) and provided further that such Assignee Entity shall not further sell, pledge, transfer, assign or otherwise alienate or hypothecate such Award.

 

18. Compliance with Laws and Regulations

 

(a) This Plan, the grant, issuance, vesting, exercise and settlement of Awards hereunder, and the obligation of the Company to sell, issue or deliver shares of Common Stock under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver Common Stock prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such shares of Common Stock as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Common Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the Common Stock underlying such Option is effective and current or the Company has determined, in its sole and absolute discretion, that such registration is unnecessary.

 

(b) In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Committee may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or to recognize differences in local law, currency or tax policy. The Committee may also impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to minimize the Company’s obligations with respect to tax equalization for Participants employed outside their home country.

 

19. Withholding

 

To the extent required by applicable federal, state, local or foreign law, the Committee may, and/or a Participant shall, make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Award or the issuance or sale of any shares of Common Stock. The Company shall not be required to recognize any Participant rights under an Award, to issue shares of Common Stock or to recognize the disposition of such shares of Common Stock until such obligations are satisfied. To the extent permitted or required by the Committee, these obligations may or shall be satisfied by the Company withholding cash from any compensation otherwise payable to or for the benefit of a Participant, the Company withholding a portion of the shares of Common Stock that otherwise would be issued to a Participant under such Award or any other Award held by the Participant, or by the Participant tendering to the Company cash or, if allowed by the Committee, shares of Common Stock.

 

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20. Amendment of the Plan or Awards

 

The Board may amend, alter or discontinue this Plan, and the Committee may amend or alter any Award Agreement or other document evidencing an Award made under this Plan; however, except as provided pursuant to the provisions of Section 16, no such amendment shall, without the approval of the stockholders of the Company:

 

(a) increase the maximum number of shares of Common Stock for which Awards may be granted under this Plan;

 

(b) reduce the price at which Options may be granted below the price provided for in Section 8(a);

 

(c) reprice outstanding Options or SARs as described in Sections 8(b) and 9(b);

 

(d) extend the term of this Plan;

 

(e) change the class of persons eligible to be Participants;

 

(f) increase the individual maximum limits in Section 5(e); or

 

(g) otherwise amend the Plan in any manner requiring stockholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed or quoted.

 

No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would materially impair the rights of the holder of an Award without such holder’s consent; provided that no such consent shall be required if the Committee determines in its sole discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of, or avoid adverse financial accounting consequences under, any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.

 

21. No Liability of Company

 

The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Committee shall not be liable to a Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder; and (b) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, vesting, exercise or settlement of any Award granted hereunder.

 

22. Non-Exclusivity of Plan

 

Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including the granting of Restricted Stock or stock options otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

23. Governing Law

 

This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the State of Delaware and applicable federal law. Any reference in this Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.

 

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24. No Right to Employment, Reelection or Continued Service

 

Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries and/or its Affiliates to terminate any Participant’s employment, service on the Board or service at any time or for any reason not prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 20, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries and/or its Affiliates.

 

25. Specified Employee Delay

 

To the extent any payment under this Plan is considered deferred compensation subject to the restrictions contained in Section 409A of the Code, such payment may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) upon Separation from Service before the date that is six months after the specified employee’s Separation form Service (or, if earlier, the specified employee’s death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee’s Separation from Service (or, if earlier, as soon as administratively practicable after the specified employee’s death).

 

26. No Liability of Committee Members

 

No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan, unless arising out of such person’s own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation and Bylaws (as each may be amended from time to time), as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

27. Severability

 

If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

 

28. Unfunded Plan

 

The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Committee or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.

 

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29. Clawback/Recoupment

 

Awards granted under this Plan will be subject to recoupment in accordance with any clawback policy that the Company adopts or is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Committee may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Committee determines necessary or appropriate, including a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of misconduct. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or be deemed a “constructive termination” (or any similar term) as such terms are used in any agreement between any Participant and the Company.

 

30. Plan Document Controls

 

The Plan and each Award Agreement together constitute the entire agreement with respect to the subject matter hereof and thereof; provided that in the event of any inconsistency between the Plan and any Award Agreement, the terms and conditions of the Plan shall control.

 

31. Interpretation

 

Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference and shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and where appropriate, the plural shall include the singular and the singular shall include the plural. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan.

 

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Exhibit 10.5

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This Amended and Restated Registration Rights Agreement (this “Agreement”) is entered into as of August 15, 2022, by and among:

 

(i) Founder SPAC, a Cayman Islands exempted company (together with its successors, including after the Domestication) (“SPAC”);

 

(ii) Founder SPAC Sponsor LLC, a Delaware limited liability company (the “Sponsor”);

 

(iii) Rubicon Technologies, LLC, a Delaware limited liability company (“Rubicon”, which will be renamed “Rubicon Technologies Holdings, LLC” prior to the Merger (defined below) or “Legacy Rubicon” following the Merger (defined below)); and

 

(iv) the equityholders designated as Legacy Rubicon Equityholders on Schedule A hereto (collectively, the “Legacy Rubicon Equityholders” and, together with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.3 of this Agreement, the “Holders” and each individually a “Holder”).

 

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Business Combination Agreement (defined below).

 

RECITALS

 

WHEREAS, SPAC and the Sponsor are party to that certain Registration Rights Agreement, dated as of October 14, 2021 (the “Prior Agreement”);

 

WHEREAS, SPAC, Rubicon, Ravenclaw Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of SPAC (“Merger Sub LLC”), certain blocker merger subsidiaries listed on the signature pages thereto (collectively, the “Blocker Merger Subs,” and Blocker Merger Subs, Merger Sub LLC, and the SPAC, collectively, the “SPAC Entities”), certain blocker companies listed on the signature pages thereto (collectively, the “Blocker Companies”) are party to that certain Agreement and Plan of Merger, dated as of December 15, 2021 (as amended, supplemented, restated, or otherwise modified from time to time, the “Business Combination Agreement”), pursuant to which, among other things, Merger Sub will merge with and into Rubicon (the “Merger”), with Rubicon surviving the Merger as a subsidiary of SPAC;

 

WHEREAS, following the consummation of the Merger, SPAC will be renamed “Rubicon Technologies Inc.” (SPAC, following the consummation of the Merger, the “Company”) and, concurrently, Rubicon will be renamed;

 

WHEREAS, in connection with the consummation of the Merger, the parties to the Prior Agreement desire to amend and restate the Prior Agreement in its entirety as set forth herein, and the parties hereto desire to enter into this Agreement pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement.

 

 

 

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

 

1. DEFINITIONS. The following capitalized terms used herein have the following meanings:

 

Adverse Disclosure” means any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or Chief Financial Officer of the Company, after consultation with legal counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making public.

 

Agreement” is defined in the preamble to this Agreement.

 

Blackout Period” is defined in Section 3.4.2.

 

Block Trade” means an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction.

 

Board” means the board of directors of the Company.

 

Business Combination Agreement” is defined in the recitals to this Agreement.

 

Class A Common Stock” means the Class A common stock of the Company, par value $0.0001 per share.

 

Class A Units” means the Class A Units of limited liability company interest in Rubicon (other than any such interests owned, directly or indirectly, by the Company or any of its subsidiaries).

 

Class B Common Stock” means the Class B common stock of the Company, par value $0.0001 per share.

 

Closing” shall have the meaning given in the Business Combination Agreement.

 

Closing Date” shall have the meaning given in the Business Combination Agreement.

 

Commission” means the Securities and Exchange Commission, or any other Federal agency then administering the Securities Act or the Exchange Act.

 

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Common Stock” means the Class A Common Stock and the Class B Common Stock.

 

Company” is defined in the recitals to this Agreement.

 

Demanding Holder” is defined in Section 2.1.4.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

FINRA” means the Financial Industry Regulatory Authority Inc.

 

Form S-1 Shelf” is defined in Section 2.1.1.

 

Form S-3 Shelf” is defined in Section 2.1.1.

 

Governmental Authority” means any United States or foreign or international (a) federal, state, local, municipal or other government, (b) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), or (c) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitrator or arbitral tribunal (public or private), which for the purposes of this Agreement shall include FINRA and the Commission.

 

Governmental Order” means any writ, order, judgment, injunction, decision, determination, award, ruling, verdict or decree entered, issued or rendered by any Governmental Authority.

 

Holder” is defined in the preamble to this Agreement.

 

Holder Indemnified Party” is defined in Section 4.1.

 

Indemnified Party” is defined in Section 4.3.

 

Indemnifying Party” is defined in Section 4.3.

 

Law” means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.

 

Legacy Rubicon” is defined in the recitals to this Agreement.

 

Legacy Rubicon Equityholders” is defined in the preamble to this Agreement.

 

Maximum Number of Securities” is defined in Section 2.1.5.

 

Merger” is defined in the recitals to this Agreement.

 

Merger Shares” is defined in the recitals to this Agreement.

 

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Merger Sub” is defined in the recitals to this Agreement.

 

Minimum Takedown Threshold” is defined in Section 2.1.4.

 

Misstatement” means an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading.

 

New Registration Statement” is defined in Section 2.1.7.

 

Other Coordinated Offering” is defined in Section 2.4.1.

 

Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

Piggyback Registration” is defined in Section 2.2.1.

 

Prior Agreement” is defined in the recitals to this Agreement.

 

Private Placement Warrants” is defined in the recitals to this Agreement.

 

Prospectus” means the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.

 

Register,” “Registered” and “Registration” mean the effect of preparing and filing a registration statement, prospectus or similar document (including any related Shelf Takedown) in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

 

Registrable Securities” means (a) any outstanding shares of Class A Common Stock held by a Holder immediately following the Closing (including shares of Common Stock issuable pursuant to the Business Combination Agreement and upon the exchange of Class A Units), (b) all shares of Class A Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security held directly or indirectly by a Holder immediately following the Closing, including, without limitation, all shares of Class A Common Stock issuable upon exchange of any Class A Units, (c) any warrants or any shares of Common Stock that may be acquired by Holders upon the exercise of a warrant or other right to acquire Common Stock held by a Holder immediately following the Closing, (d) any shares of Common Stock or warrants to purchase shares of Common Stock (including any shares of Common Stock issued or issuable upon the exercise of any such warrant or upon the exchange of Class A Units) of the Company otherwise acquired or owned by a Holder following the date hereof to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company, and (e) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a), (b), (c) or (d) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder; (B) such securities shall have been otherwise transferred, new certificates or book-entry positions for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the Securities Act (but with no volume or other restrictions or limitations including as to manner or timing of sale); and (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.

 

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Registration Expenses” shall mean the expenses of a Registration, including, without limitation, the following:

 

(i) all registration and filing fees (including fees with respect to filings required to be made with FINRA) and any national securities exchange on which the Common Stock is then listed;

 

(ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of outside counsel for the Underwriters, placement agent or sales agent in connection with blue sky qualifications of Registrable Securities);

 

(iii) printing, messenger, telephone and delivery expenses;

 

(iv) reasonable fees and disbursements of counsel for the Company;

 

(v) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

 

(vi) reasonable fees and expenses of one legal counsel selected by the majority-in-interest of the Demanding Holders in an Underwritten Offering or Other Coordinated Offering (not to exceed $50,000 without the consent of the Company).

 

Registration Statement” means any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity (other than Rubicon)).

 

Requesting Holder” is defined in Section 2.1.5.

 

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SEC Guidance” is defined in Section 2.1.7.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

Shelf” means the Form S-1 Shelf, a Form S-3 Shelf or any Subsequent Shelf Registration, as the case may be.

 

Shelf Registration” means a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).

 

Shelf Takedown” means an Underwritten Shelf Takedown or any proposed transfer or sale using a Shelf, including a Piggyback Registration.

 

SPAC” is defined in the preamble to this Agreement.

 

Sponsor” is defined in the preamble to this Agreement.

 

Sponsor Shares” is defined in the recitals to this Agreement.

 

Subscription Agreements” means those certain subscription agreements the Company entered into with certain investors pursuant to which such investors purchased shares of Common Stock in connection with the consummation of the transactions contemplated in the Business Combination Agreement.

 

Subsequent Shelf Registration” is defined in Section 2.1.2.

 

Suspension Period” is defined in Section 3.4.1.

 

Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).

 

Underwriter” means a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer’s market-making activities.

 

Underwritten Offering” means a Registration in which securities of the Company are sold to an Underwriter in a underwriting for distribution to the public.

 

Underwritten Shelf Takedown” is defined in Section 2.1.4.

 

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Warrants” means the warrants of the Company, including the Private Placement Warrants, with each whole warrant entitling the holder to purchase one share of Common Stock.

 

Withdrawal Notice” is defined in Section 2.1.6.

 

2. REGISTRATION RIGHTS.

 

2.1 Shelf Registration.

 

2.1.1 Filing. Subject to Section 3.3, the Company shall file within 30 days after the Closing Date, and shall use commercially reasonable efforts to cause to be declared effective as soon as practicable thereafter, a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) covering the resale of all the Registrable Securities (determined as of two business days prior to such filing) on a delayed or continuous basis. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. Following the filing of a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Registration Statement on Form S-3 (the “Form S-3 Shelf”) as soon as reasonably practicable after the Company is eligible to use Form S-3. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities outstanding.

 

2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities (determined as of two business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities outstanding. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form.

 

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2.1.3 Additional Registrable Securities. In the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon request of a Holder that holds at least five (5.0%) percent of the Registrable Securities then outstanding, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, the Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof.

 

2.1.4 Requests for Underwritten Shelf Takedowns. At any time and from time to time when an effective Shelf is on file with the Commission, any one or more Holders (in such case, a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided in each case that the Company shall only be obligated to effect an Underwritten Offering if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder(s) with a total offering price reasonably expected to exceed, in the aggregate, $35 million (the “Minimum Takedown Threshold”). Other than a Registration effected pursuant to Section 2.4, all requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Promptly (but in any event within ten (10) days) after receipt of a request for Underwritten Shelf Takedown, the Company shall give written notice of the Underwritten Shelf Takedown to all other Holders. Subject to Section 2.4.3, the Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The Legacy Rubicon Equityholders, on the one hand, and the Sponsor, on the other hand, may each demand not more than two (2) Underwritten Shelf Takedowns pursuant to this Section 2.1.4 in any 12-month period. Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Shelf Takedown pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.

 

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2.1.5 Reduction of Underwritten Shelf Takedown. Other than with respect to a Registration effected pursuant to Section 2.4, if the managing Underwriter or Underwriters in an Underwritten Shelf Takedown advises the Company, the Demanding Holders and the Holders requesting piggy-back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other shares of Common Stock or other equity securities that the Company desires to sell and all other shares of Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten Shelf Takedown pursuant to separate written contractual piggy-back registration rights held by any other stockholders, in such Underwriter’s reasonable judgment, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Shelf Takedown without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Shelf Takedown, before including any shares of Common Stock or other equity securities proposed to be sold by Company or by other holders of Common Stock or other equity securities, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata, as nearly as practicable, based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown, or in such other proportion as shall mutually be agreed to by all such Demanding Holders and Requesting Holders) that can be sold without exceeding the Maximum Number of Securities. To facilitate the allocation of Registrable Securities in accordance with the above provisions, the Company or the Underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. The Company shall not be required to include any Registrable Securities in such Underwritten Shelf Takedown unless the Holders accept the terms of the underwriting as agreed upon between the Company and its Underwriters.

 

2.1.6 Withdrawal. Other than with respect to a Registration effected pursuant to this Section 2.4, prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that any Holder may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the remaining Holders. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown for purposes of Section 2.1.4, unless the Holder reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown; provided that, if a Legacy Rubicon Equityholder or the Sponsor elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by the Legacy Rubicon Equityholders or the Sponsor, as applicable, for purposes of Section 2.1.4. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Underwritten Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with an Underwritten Shelf Takedown prior to its withdrawal under this Section 2.1.6, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to the second sentence of this Section 2.1.6.

 

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2.1.7 New Registration Statement. Notwithstanding the registration obligations set forth in this Section 2.1, in the event the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly and no later than 15 days after receiving such notice from the Commission, (i) inform each of the holders thereof and use its commercially reasonable efforts to file amendments to the Shelf Registration as required by the Commission and/or (ii) withdraw the Shelf Registration and file a new registration statement (a “New Registration Statement”), on Form S-3, or if Form S-3 is not then available to the Company for such registration statement, on such other form available to register for resale of the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with any publicly available written or oral guidance, comments, requirements or requests of the Commission staff (the “SEC Guidance”). Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used commercially reasonable efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by a holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced on a pro rata basis based on the total number of Registrable Securities held by the Holders, subject to a determination by the Commission that certain Holders must be reduced first based on the number of Registrable Securities held by such Holders. In the event the Company amends the Shelf Registration or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Shelf Registration, as amended, or the New Registration Statement.

 

2.1.8 Effective Registration. Notwithstanding the provisions of Section 2.1.3 or Section 2.1.4 above or any other part of this Agreement, a Registration shall not count as a Registration unless and until (i) the Registration Statement has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders initiating such Registration thereafter affirmatively elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.

 

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2.2 Piggyback Registration.

 

2.2.1 Piggyback Rights. Subject to Section 2.4.3, if the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.1 hereof), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an offering of debt that is convertible into equity securities of the Company, (iv) for a dividend reinvestment plan or (v) for a rights offering, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company to the extent the Registration was initiated by the Company for its own account and not any Holder pursuant to Section 2.1.

 

2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company desires to sell, taken together with (i) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:

 

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(a) If the Registration or registered offering is undertaken for the Company’s account, the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering or in such other proportions as shall mutually be agreed to by all such selling Holders, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum Number of Securities;

 

(b) If the Registration or registered offering is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering or in such other proportions as shall mutually be agreed to by all such selling Holders, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities; and

 

(c) If the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration or registered offering such Registrable Securities pursuant to Section 2.1.5.

 

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2.2.3 Piggyback Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdrawal from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration (which, in no circumstance, shall include the Shelf) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3.

 

2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2.1.4 hereof.

 

2.3 Market Stand-Off. In connection with any Underwritten Offering of equity securities of the Company, each Holder that elects to participate in the Underwritten Offering pursuant to the terms of this Agreement agrees that it shall not Transfer any shares of Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the 90-day period beginning on the date of pricing of such offering or such shorter period during which the Company agrees not to conduct an underwritten primary offering of Common Stock, except in the event the Underwriters managing the offering otherwise agree by written consent. Each Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all such Holders).

 

2.4 Block Trades; Other Coordinated Offerings.

 

2.4.1 Notwithstanding the foregoing, at any time and from time to time when an effective Shelf is on file with the Commission and effective, if a Demanding Holder wishes to engage in (a) a Block Trade or (b) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal (an “Other Coordinated Offering”), in each case with a total offering price reasonably expected to exceed, in the aggregate, either (x) $35 million or (y) all remaining Registrable Securities held by the Demanding Holder, then notwithstanding the time periods provided for in Section 2.1.4, such Demanding Holder shall notify the Company of the Block Trade or Other Coordinated Offering at least five (5) business days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with the Company and any Underwriters or placement agents or sales agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering and any related due diligence and comfort procedures.

 

2.4.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in-interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a Withdrawal Notice to the Company and the Underwriter or Underwriters or placement agents or sales agents (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal under this Section 2.4.2.

 

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2.4.3 Any Registration effected pursuant to this Section 2.4 shall be deemed an Underwritten Shelf Takedown and within the cap on Underwritten Shelf Takedowns provided in the last sentence of Section 2.1.4. Notwithstanding anything to the contrary in this Agreement, Section 2.2 hereof shall not apply to a Block Trade or Other Coordinated Offering initiated by a Demanding Holder pursuant to this Agreement.

 

2.4.4 The majority in interest of the Demanding Holder initiating such Block Trade shall have the right to select the Underwriters and any sale agents or placement agents (if any) for such Block Trade or Other Coordinated Offering (in each case, which shall consist of one or more reputable nationally recognized investment banks).

 

3. REGISTRATION PROCEDURES

 

3.1 Filings; Information. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection therewith:

 

3.1.1 Filing Registration Statement. The Company shall prepare and file with the Commission as soon as practicable a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its commercially reasonable efforts to cause such Registration Statement to become effective and use its commercially reasonable efforts to keep it effective for the period required by Section 3.1.3.

 

3.1.2 Copies. The Company shall, prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Holders of Registrable Securities included in such Registration or legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders.

 

3.1.3 Amendments and Supplements. The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn.

 

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3.1.4 Notification. After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the Holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such Holders promptly and confirm such advice in writing in all events within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any Prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such Prospectus will not contain a Misstatement, and promptly make available to the Holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that no less than five (5) days before filing with the Commission a Registration Statement or Prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall consider such comments in good faith before filing any Registration Statement or Prospectus or amendment or supplement thereto, including documents incorporated by reference.

 

3.1.5 State Securities Laws Compliance. The Company shall (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or take any action to which it would be subject to general service of process or taxation in any such jurisdiction.

 

3.1.6 Agreements for Disposition. The Company shall enter into customary agreements (including, if applicable, an underwriting agreement or other sales or distribution agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any such agreement which are made to or for the benefit of any Underwriters or other placement agent or sales agent, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such registration statement.

 

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3.1.7 Records. The Company shall make available for inspection by the holders of Registrable Securities included in such Registration Statement, any Underwriter or placement agent or sales agent participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter or placement agent or sales agent, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply any information reasonably requested by any of them in connection with such Registration Statement; provided, however, that such Underwriter, placement agent, sales agent or other representatives enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information.

 

3.1.8 Opinions and Comfort Letters. The Company shall use commercially reasonable efforts to obtain (i) a “comfort” letter (including a bring-down letter dated as of the date the Registrable Securities are delivered for sale pursuant to such Registration) from the Company’s independent registered public accountants in the event of an Underwritten Offering, Block Trade or Other Coordinated Offering, in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter or placement agent or sales agent may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders, and (ii) an opinion and negative assurance letter, to be delivered on the date the Registrable Securities are delivered for sale pursuant to such Registration Statement, of counsel representing the Company for the purposes of such Registration, addressed to the Holders, the placement agent or sale agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the Holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, and reasonably satisfactory to a majority in interest of the participating Holders; provided, however, that counsel for the Company shall not be required to provide any opinions with respect to any Holder.

 

3.1.9 Earnings Statement. The Company shall use commercially reasonable efforts to make available to its shareholders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

3.1.10 Listing. The Company shall cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the holders of a majority of the Registrable Securities included in such registration.

 

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3.1.11 Road Show. The Company shall make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering.

 

3.1.12 Legend Removal. Upon request of a Holder, the Company shall (i) authorize the Company’s transfer agent to remove any legend on share certificates of such Holder’s Common Stock restricting further transfer (or any similar restriction in book entry positions of such Holder) if such restrictions are no longer required by the Securities Act or any applicable state securities laws or any agreement with the Company to which such Holder is a party, including if such shares subject to such a restriction have been sold on a Registration Statement and are no longer held by an affiliate of the Company, (ii) request the Company’s transfer agent to issue in lieu thereof shares of Common Stock without such restrictions to the Holder upon, as applicable, surrender of any stock certificates evidencing such shares of Common Stock, or to update the applicable book entry position of such Holder so that it no longer is subject to such a restriction, and (iii) use commercially reasonable efforts to cooperate with such Holder to have such Holder’s shares of Common Stock transferred into a book-entry position at The Depository Trust Company, in each case, subject to delivery of by the Holder of customary documentation requested by the Company or the Company’s transfer agent, including any documentation required to be provided by the Company by such restrictive legend or book-entry notation or as may be requested by the Company’s transfer agent.

 

3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ or agents’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.

 

3.3 Information. The Holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter or placement agent or sales agent, if any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Article 2 and in connection with the Company’s obligation to comply with federal and applicable state securities laws. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide such information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the Registration and such Holder continues thereafter to withhold such information. No person may participate in any Underwritten Offering or other coordinated offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.

 

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3.4 Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights.

 

3.4.1 Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time the Company becomes aware of the Misstatement), or until it is advised in writing by the Company that the use of the Prospectus may be resumed (any such period, a “Suspension Period”).

 

3.4.2 If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the Company to make an Adverse Disclosure, (b) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (c) in the good faith judgment of the majority of the Board, be seriously detrimental to the Company and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for a period of not more than sixty (60) consecutive days after such notice is given to the Holders (any such period, a “Blackout Period”). In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4. Notwithstanding anything to the contrary in this Section 3.4, in no event shall any Suspension Period or any Blackout Period continue for more than one-hundred twenty (120) days in the aggregate during any 365-day period.

 

3.4.3 (a) During the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date three hundred and sixty five (365) days after the effective date of, a Company-initiated Registration and provided that the Company continues to actively employ, in good faith, all reasonable efforts to maintain the effectiveness of the applicable Shelf, or (b) if, pursuant to Section 2.1.4, Holders have requested an Underwritten Shelf Takedown and the Company and such Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, the Company may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.4 or Section 2.4.

 

3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 145 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

 

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4. INDEMNIFICATION AND CONTRIBUTION

 

4.1 Indemnification by the Company. To the extent permitted by law and subject to the limitations set forth in Section 4.4.3 hereof, the Company agrees to indemnify and hold harmless each Holder of Registrable Securities, and each of their respective officers, employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls a Holder of Registrable Securities (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Holder Indemnified Party”), from and against all losses, judgments, claims, damages, liabilities and out-of-pocket expenses, whether joint or several, arising out of or based upon any Misstatement or alleged Misstatement contained in any Registration Statement or Prospectus; provided, however, that the indemnity agreement contained in this Section 4.1 shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, and the Company will not be liable in any such case to the extent that any such losses, judgments, claims, damages, liabilities or out-of-pocket expenses arises out of or is based upon any Misstatement or alleged Misstatement made in such Registration Statement or Prospectus in reliance upon and in conformity with information furnished to the Company, in writing, by a Holder Indemnified Party expressly for use therein.

 

4.2 Indemnification by Holders of Registrable Securities. In connection with any Registration Statement in which the Holder of Registrable Securities is participating, to the extent permitted by law and subject to the limitations set forth in Section 4.4.3 hereof, each selling Holder of Registrable Securities will, in the event that any Registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling Holder, indemnify and hold harmless the Company, each of its directors and officers, legal counsel and accountants for the Company and each Underwriter or placement agent or sales agent (if any), and each other selling Holder and each other person, if any, who controls the Company, another selling holder or such Underwriter or placement agent or sales agent within the meaning of the Securities Act, against any losses, claims, judgments, damages, liabilities and out-of-pocket expenses, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any Misstatement or alleged Misstatement contained in any Registration Statement, if the Misstatement or alleged Misstatement was made in reliance upon and in conformity with information furnished in writing to the Company by such selling Holder expressly for use therein; provided, however, that the indemnity agreement contained in this Section 4.2 shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld. Each selling Holder’s indemnification obligations hereunder shall be several and not joint and several and shall be limited to the amount of any net proceeds actually received by such selling holder, except in the case of fraud or willful misconduct by such Holder.

 

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4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or Section 4.2, such person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify such other person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party provided, that, if (i) the Indemnified Party shall have reasonably concluded that there may be one or more legal or equitable defenses available to it which are additional to or conflict with those available to the Indemnifying Party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against the Indemnified Party or involves actual or alleged criminal activity, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of the Indemnified Party without such Indemnified Party’s prior written consent and the Indemnifying Party shall reimburse the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party for that portion of the fees and expenses of any counsel retained by the Indemnified Party which is reasonably related to the matters covered by the indemnity provided hereunder. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, in the reasonable judgment of the Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

 

4.4 Contribution

 

4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the Misstatement or alleged Misstatement relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such Misstatement or alleged Misstatement.

 

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4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.

 

4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) with respect to any action shall be entitled to contribution in such action from any person who was not guilty of such fraudulent misrepresentation.

 

5. MISCELLANEOUS

 

5.1 Other Registration Rights. Except as provided in the Subscription Agreements, the Company represents and warrants that no person, other than the holders of the Registrable Securities, has any right to require the Company to register any shares of the Company’s capital stock for sale or to include shares of the Company’s capital stock in any registration filed by the Company for the sale of shares of capital stock for its own account or for the account of any other person.

 

5.2 Acknowledgment. The Holders hereby agree and acknowledge that their respective Registrable Securities (other than their respective Registrable Securities acquired in the public market or pursuant to a transaction exempt from registration under the Securities Act of 1933, as amended, pursuant to a subscription agreement where the issuance of Registrable Securities occurs on or after the closing of the Merger) are subject to the lock-up provisions set forth in (a) with respect to the Sponsor, Section 3 of that certain letter agreement, dated as of December 15, 2021, by and among SPAC, the Sponsor, Legacy Rubicon and the other parties thereto, and (b) with respect to the Rubicon Equityholders, the lock-up agreement, dated as of December 15, 2021, between the Rubicon Equityholders and the Company.

 

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5.3 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the rights, duties and obligations of the holders of Registrable Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities in conjunction with and to the extent of any transfer of Registrable Securities by any such holder. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties, to the permitted assigns of the Holders or holder of Registrable Securities or of any assignee of the Holders or holder of Registrable Securities. This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Article 4 and this Section 5.3.

 

5.4 Modifications, Amendments and Waivers. Prior to the Closing, upon the written consent of Rubicon and the Company, and from and after the Closing, upon the written consent of (a) the Company and (b) the Holders of a majority of the total Registrable Securities, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that in the event any such waiver, amendment or modification would be adverse in any material respect to the material rights or obligations hereunder of a Holder, the written consent of such Holder will also be required; provided further that in the event any such waiver, amendment or modification would be disproportionate and adverse in any material respect to the material rights or obligations hereunder of a Holder, the written consent of such Holder will also be required. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

5.5 Termination of Existing Registration Rights. The registration rights granted under this Agreement shall supersede any registration, qualification or similar rights of the Holders with respect to any shares or securities of the Company or Legacy Rubicon granted under any other agreement, including, but not limited to, the Prior Agreement and that certain Amended and Restated Investors’ Rights Agreement, dated as of May 7, 2020, by and among Legacy Rubicon Equityholders and the other parties thereto, any of such preexisting registration, qualification or similar rights and such agreements shall be terminated and of no further force and effect.

 

5.6 Term. This Agreement shall terminate with respect to any Holder on the date that such Holder no longer holds any Registrable Securities. The provisions of Article IV shall survive any termination.

 

5.7 Notices. All notices, requests, claims, demands and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

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  If to SPAC (prior to the Closing Date), to:
       
    Founder SPAC
    11752 Lake Potomac Drive
    Potomac, MD 20854
    Attn: Osman Ahmed
    Email: osman@thefounderspac.com
       
  with copies (which shall not constitute notice) to:
       
    Winston & Strawn LLP
    800 Capitol Street, Suite 2400
    Houston, TX 77002
    Attn: Michael Blankenship
      James R. Brown
    Email: mblankenship@winston.com
      jrbrown@winston.com
       
  If to the Company (on or after the Closing Date), to:
       
    Rubicon Technologies Inc.
    950 E. Paces Ferry Road
    Suite 1900
    Atlanta, GA 30326
    Attn: William Meyer, General Counsel
    Email: bill.meyer@rubicon.com
       
  with copies (which shall not constitute notice) to:
       
    Gibson Dunn & Crutcher LLP
    200 Park Avenue
    New York, NY 10166
    Attn: Saee Muzumdar
      Evan D’Amico
    Email: SMuzumdar@gibsondunn.com
      EDAmico@gibsondunn.com
       
    Chamberlain, Hrdlicka, White, Williams & Aughtry, P.C.
    191 Peachtree, NE
    46th Floor
    Atlanta, GA 30075
    Attention: Scott A. Augustine
      Erica L. Opitz
    Email: scott.augustine@chamberlainlaw.com
      erica.opitz@chamberlainlaw.com

 

23

 

 

or to such other address as SPAC or the Company, as applicable, may have previously furnished to the others in writing in the manner set forth above. If to any Holder, to such address indicated on (i) prior to the Closing Date, Legacy Rubicon’s or SPAC’s records, as applicable, with respect to such Holder or to such other address or addresses as such Holder may from time to time designate in writing and (ii) on or after the Closing Date, the Company’s records with respect to such Holder or to such other address or addresses as such Holder may from time to time designate in writing.

 

5.8 Further Assurances. The parties hereto will sign such further documents, cause such meetings to be held, resolutions passed, exercise their votes and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof.

 

5.9 Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, 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 provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

 

5.10 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.

 

24

 

 

5.11 Submission to Jurisdiction. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction, any state or federal court sitting in Wilmington, Delaware), for the purposes of any proceeding, claim, demand, action or cause of action (a) arising under this Agreement or (b) in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the transactions contemplated hereby, and irrevocably and unconditionally waives any objection to the laying of venue of any such proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such proceeding has been brought in an inconvenient forum. Each party hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any proceeding claim, demand, action or cause of action against such party (i) arising under this Agreement or (ii) in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the transactions contemplated hereby, (A) any claim that such party is not personally subject to the jurisdiction of the courts as described in this Section 5.11 for any reason, (B) that such party or such party’s property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) that (x) the proceeding, claim, demand, action or cause of action in any such court is brought against such party in an inconvenient forum, (y) the venue of such proceeding, claim, demand, action or cause of action against such party is improper or (z) this Agreement, or the subject matter hereof, may not be enforced against such party in or by such courts. Each party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address in accordance with Section 5.7 shall be effective service of process for any such proceeding, claim, demand, action or cause of action.

 

5.12 Remedies. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform their obligations under the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The parties hereto acknowledge and agree that (i) such parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof and thereof, without proof of damages and without posting a bond, prior to the valid termination of this Agreement, this being in addition to any other remedy to which they are entitled under this Agreement, and (ii) the right of specific enforcement is an integral part of the transactions contemplated hereby and without that right, none of the parties hereto would have entered into this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other parties hereto have an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 5.12 shall not be required to provide any bond or other security in connection with any such injunction.

 

5.13 Entire Agreement. This Agreement and any other documents, instruments and certificates explicitly referred to herein, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties hereto or any of their respective subsidiaries with respect to the subject matter hereof. No representations, warranties, covenants, understandings, agreements, oral or otherwise, with respect to the subject matter contemplated by this Agreement exist between the parties hereto, except as expressly set forth or referenced in this Agreement.

 

25

 

 

5.14 Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

5.15 Captions. The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

 

5.16 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement or any joinder to this Agreement by electronic means, including DocuSign, e-mail, or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

 

5.17 Several Liability. The liability of any Holder hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Holder be liable for any other Holder’s breach of such other Holder’s obligations under this Agreement.

 

5.18 Effectiveness. This Agreement shall be valid and enforceable as of the date of this Agreement and may not be revoked by any party hereto; provided, however, that the provisions herein shall not be effective until the consummation of the Merger. In the event the Business Combination Agreement is terminated in accordance with its terms, this Agreement shall automatically terminate and be of no further force and effect.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

26

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.

 

  FOUNDER SPAC
     
  By: /s/ Osman Ahmed
    Name: Osman Ahmed
    Title: Chief Executive Officer
     
  FOUNDER SPAC SPONSOR LLC
     
  By: /s/ Manpreet Singh
    Name: Manpreet Singh
    Title: Manager
     
  RUBICON TECHNOLOGIES, LLC
     
  By: /s/ Nate Morris
    Name: Nate Morris
    Title: Chief Executive Officer

 

  HOLDERS:
     
  By: /s/ Andres Chico
  Name: Andres Chico
     
  By: /s/ William D. Meyer
  Name: William D. Meyer
     
  By: /s/ Dan Sampson
  Name: Dan Sampson
     
  By: /s/ David Manuel Gutierrez Muguerza
  Name: David Manuel Gutierrez Muguerza
     
  By: /s/ David Rachelson
  Name: David Rachelson

 

[Signature Page to Registration Rights Agreement]

 

27

 

 

  GFAPCH FO, S.C.
     
  By: /s/ Jose Michel Enrich
  Name: Jose Miguel Enrich
  Title: President
     
  Guardians of New Zealand Superannuation, as manager of the New Zealand Superannuation Fun
     
  By: /s/ Sarah Gold
  Name: Sarah Gold
  Title: Senior Legal Counsel
     
  By: /s/ Jevan Anderson
  Name: Jevan Anderson
     
  By: /s/ Jose Miguel Enrich
  Name: Jose Miguel Enrich
     
  MBI Holdings LP
     
  By: /s/ Jose Miguel Enrich
  Name: Jose Miguel Enrich
  Title: General Partner
     
  By: /s/ Michael Allegretti
  Name: Michael Allegretti
     
  By: /s/ Michael Heller
  Name: Michael Heller
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
     
  By: /s/ Phil Rodoni 
  Name: Phil Rodoni
     
  By: /s/ Raul Manuel Gutierrez Muguerza 
  Name: Raul Manuel Gutierrez Muguerza
     
  By: /s/ Renaud de Viel Castel
  Name: Renaud de Viel Castel

 

[Signature Page to Registration Rights Agreement]

 

28

 

 

  RGH, Inc.
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Title: CEO
     
  RUBCN Holdings LP
     
  By: /s/ Jose Miguel Enrich
  Name: Jose Miguel Enrich
  Title: Director
     
  RUBCN Holdings V LP
     
  By: /s/ Jose Miguel Enrich 
  Name: Jose Miguel Enrich
  Title: Director
     
  RUBCN IV LP
     
  By: /s/ Jose Miguel Enrich 
  Name: Jose Miguel Enrich
  Title: Director
     
  By: /s/ Sergio Manuel Gutierrez Muguerza
  Name: Sergio Manuel Gutierrez Muguerza
     
  By: /s/ Tom Owston
  Name: Tom Owston

 

[Signature Page to Registration Rights Agreement]

 

29

 

Exhibit 10.9

 

 

 

 

 

EIGHTH AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

RUBICON TECHNOLOGIES HOLDINGS, LLC

 

a Delaware limited liability company

 

dated as of August 15, 2022

 

 

 

 

 

THE LIMITED LIABILITY COMPANY INTERESTS IN RUBICON TECHNOLOGIES HOLDINGS, LLC HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND HAVE BEEN OR ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE COMPANY AND THE APPLICABLE MEMBER. THE LIMITED LIABILITY COMPANY INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS, THIS EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, AND ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BY THE COMPANY AND THE APPLICABLE MEMBER. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH LIMITED LIABILITY COMPANY INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

 

 

 

 

TABLE OF CONTENTS

 

    Page
Article I GENERAL PROVISIONS   1
  Section 1.1   Formation and Continuation   2
  Section 1.2   Name   2
  Section 1.3   Principal Place of Business; Other Places of Business   2
  Section 1.4   Designated Agent for Service of Process   2
  Section 1.5   Term   2
  Section 1.6   No State Law Partnership   2
  Section 1.7   Business Purpose   2
  Section 1.8   Powers   2
  Section 1.9   Certificates; Filings   3
  Section 1.10   Representations and Warranties by the Members   3
           
Article II UNITS; CAPITAL CONTRIBUTIONS   5
  Section 2.1   Units   5
  Section 2.2   Capital Contributions of the Members; No Deficit Restoration Obligation   5
  Section 2.3   No Interest; No Return   6
  Section 2.4   Issuances of Additional Units   6
  Section 2.5   Additional Funds and Additional Capital Contributions   7
           
Article III DISTRIBUTIONS   8
  Section 3.1   Distributions Generally   8
  Section 3.2   Tax Distributions   8
  Section 3.3   Distributions in Kind   10
  Section 3.4   Distributions to Reflect Additional Units   10
  Section 3.5   Other Distribution Rules   10
           
Article IV Management and OPERATIONS   11
  Section 4.1   Management   11
  Section 4.2   Tax Actions   14
  Section 4.3   Compensation and Reimbursement of Managing Member   14
  Section 4.4   Outside Activities   15
  Section 4.5   Transactions with Affiliates   16
  Section 4.6   Limitation on Liability   16
  Section 4.7   Indemnification   17
           
Article V BOOKS AND RECORDS   17
  Section 5.1   Books and Records   17
  Section 5.2   Financial Accounts   18
  Section 5.3   Inspection; Confidentiality   18
  Section 5.4   Information to Be Provided by Managing Member to Members   18
           
Article VI Tax Matters, ACCOUNTING, AND REPORTING   18
  Section 6.1   Tax Matters   18
  Section 6.2   Accounting and Fiscal Year   18

 

i

 

 

TABLE OF CONTENTS

(continued)

 

    Page
Article VII UNIT TRANSFERS, Encumbrance, AND member WITHDRAWALS   19
  Section 7.1   Transfer Generally Prohibited   19
  Section 7.2   Conditions Generally Applicable to All Transfers   19
  Section 7.3   Substituted Members   20
  Section 7.4   Drag-Along Rights   21
  Section 7.5   Company Right to Call Units   22
  Section 7.6   Withdrawal   22
  Section 7.7   Restrictions on Termination Transactions   23
  Section 7.8   Incapacity   23
  Section 7.9   Legend   24
  Section 7.10   Encumbrance   24
           
Article VIII ADMISSION OF ADDITIONAL MEMBERS   24
  Section 8.1   Admission of Additional Members   24
  Section 8.2   Limit on Number of Members   25
           
Article IX DISSOLUTION, LIQUIDATION AND TERMINATION   25
  Section 9.1   Dissolution Generally   25
  Section 9.2   Events Causing Dissolution   25
  Section 9.3   Distribution upon Dissolution   26
  Section 9.4   Rights of Members   27
  Section 9.5   Termination   27
           
Article X PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; MEETINGS   27
  Section 10.1   Actions and Consents of Members   27
  Section 10.2   Procedures for Meetings and Actions of the Members   27
           
Article XI EXCHANGE RIGHTS   29
  Section 11.1   Elective and Mandatory Exchanges   29
  Section 11.2   Additional Terms Applying to Exchanges   30
  Section 11.3   Exchange Consideration; Settlement   31
  Section 11.4   Adjustment   32
  Section 11.5   Class A Common Stock to Be Issued in Connection with an Exchange   32
  Section 11.6   Withholding   33
  Section 11.7   Tax Treatment   33
  Section 11.8   Contribution by the Managing Member   33

 

ii

 

 

TABLE OF CONTENTS
(continued)

 

    Page
Article XII MISCELLANEOUS   33
  Section 12.1   Conclusive Nature of Determinations   33
  Section 12.2   Company Counsel   33
  Section 12.3   Appointment of Managing Member as Attorney-in-Fact   34
  Section 12.4   Entire Agreement   35
  Section 12.5   Further Assurances   35
  Section 12.6   Notices   35
  Section 12.7   Governing Law   36
  Section 12.8   Jurisdiction and Venue   36
  Section 12.9   Equitable Remedies   36
  Section 12.10   Construction   37
  Section 12.11   Counterparts   37
  Section 12.12   Third-Party Beneficiaries   37
  Section 12.13   Binding Effect   37
  Section 12.14   Severability   37
  Section 12.15   Survival   37
           
Article XIII DEFINED TERMS   37
  Section 13.1   Definitions   37
  Section 13.2   Interpretation   46
           
Schedules    
  Schedule 1 (Member Roll)    
  Schedule 2.1(d)(ii) (Incentive Units)    

 

iii

 

 

EIGHTH AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF RUBICON TECHNOLOGIES HOLDINGS, LLC

 

THIS EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of RUBICON TECHNOLOGIES HOLDINGS, LLC, a Delaware limited liability company (the “Company”), dated as of August 15, 2022, is entered into by and among the Persons listed on Schedule 1 and Rubicon Technologies, Inc. (the “Managing Member”).

 

WHEREAS, the Company’s current operating agreement is the Seventh Amended and Restated Operating Agreement, dated April 27, 2018, as amended by that certain First Amendment to Seventh Amended and Restated Operating Agreement, dated July 2, 2019, as further amended by that certain Second Amendment to Seventh Amended and Restated Operating Agreement, dated August 17, 2021, and as further amended by that Third Amendment to Seventh Amended and Restated Operating Agreement, dated August 15, 2022 (the “Seventh Amended and Restated Operating Agreement”);

 

WHEREAS, in connection with the Merger (as defined in this Agreement), the Members of the Company desire to amend and restate the Seventh Amended and Restated Operating Agreement in its entirety by this Eighth Amended and Restated Operating Agreement (the “Eighth Amended and Restated Operating Agreement”), with this Eighth Amended and Restated Operating Agreement superseding and replacing the Seventh Amended and Restated Operating Agreement in its entirety; and

 

WHEREAS, immediately upon the effectiveness of this Agreement and without any action required on part of the Company or any Member, the Recapitalization (as defined in this Agreement) occurs.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as follows:

 

Article I

GENERAL PROVISIONS

 

Section 1.1 Formation and Continuation. The Company is a limited liability company previously formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. Except as expressly provided in this Agreement to the contrary, the rights and obligations of the Members and the administration and termination of the Company shall be governed by the Act. The Certificate of Formation and all actions taken or to be taken by any person who executed and filed or who executes and files, after the date of this Agreement, the Certificate of Formation or any amendment thereto are hereby adopted and ratified, or authorized, as the case may be.

 

1

 

 

Section 1.2 Name. The name of the Company is “Rubicon Technologies Holdings, LLC.” The Company may also conduct business at the same time under one or more fictitious names if the Managing Member determines that such is in the best interests of the Company. The Company may change its name, from time to time, in accordance with Law.

 

Section 1.3 Principal Place of Business; Other Places of Business. The principal business office of the Company is located at 950 East Paces Ferry Road, Suite 1900, Atlanta, GA 30326, or such other place within or outside the State of Delaware as the Managing Member may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Managing Member deems advisable.

 

Section 1.4 Designated Agent for Service of Process. So long as required by the Act, the Company shall continuously maintain a registered office and a designated and duly qualified agent for service of process on the Company in the State of Delaware. The address of the registered office of the Company in the State of Delaware shall be as set forth in the Certificate of Formation. The Company’s registered agent for service of process at such address shall also be as set forth in the Certificate of Formation.

 

Section 1.5 Term. The term of the Company commenced at the time the Certificate of Formation of the Company was filed with the office of the Secretary of State of the State of Delaware and shall continue until the Company is dissolved in accordance with the Act or this Agreement. Notwithstanding the dissolution of the Company, the existence of the Company shall continue until its termination pursuant to this Agreement or as otherwise provided in the Act.

 

Section 1.6 No State Law Partnership. The Members intend that the Company shall not be a partnership (including a limited partnership) or joint venture, and that no Member shall be an agent, partner or joint venturer of any other Member, for any purposes other than for U.S. federal, state, and local tax purposes, and this Agreement shall not be construed to suggest otherwise. Each Member hereby acknowledges and agrees that, except as expressly provided herein, in performing its obligations or exercising its rights under this Agreement, it is acting independently and is not acting in concert with, on behalf of, as agent for, or as joint venturer of, any other Member. Other than in respect of the Company, nothing contained in this Agreement shall be construed as creating a corporation, association, joint stock company, business trust, or organized group of Persons, whether incorporated or not, among or involving any Member or its Affiliates, and nothing in this Agreement shall be construed as creating or requiring any continuing relationship or commitment as between such parties other than as specifically set forth in this Agreement.

 

Section 1.7 Business Purpose. The Company may carry on any Lawful business, purpose or activity in which a limited liability company may be engaged under Law.

 

Section 1.8 Powers. Subject to the limitations set forth in this Agreement, the Company will possess and may exercise all of the powers and privileges granted to it by the Act, any other Law, or this Agreement, together with all powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purposes of the Company set forth in ‎Section 1.7.

 

2

 

 

Section 1.9 Certificates; Filings. The Certificate of Formation was previously filed on behalf of the Company in the office of the Secretary of State of the State of Delaware as required by the Act. The Managing Member may execute and file any duly authorized amendments to the Certificate of Formation from time to time in a form prescribed by the Act. The Managing Member shall also cause to be made, on behalf of the Company, such additional filings and recordings as the Managing Member shall deem necessary or advisable. If requested by the Managing Member, the Members shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the Managing Member to accomplish all filing, recording, publishing, and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of a limited liability company under the Laws of the State of Delaware, (b) if the Managing Member deems it advisable, the operation of the Company as a limited liability company, in all jurisdictions in which the Company proposes to operate, and (c) all other filings required (or determined by the Managing Member to be necessary or appropriate) to be made by the Company.

 

Section 1.10 Representations and Warranties by the Members.

 

(a) Individual-Member-Specific Representations. Each Member that is an individual (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and the consummation of the transactions contemplated by this Agreement to be performed by such Member will not result in a breach or violation of, or a default under, any material agreement by which such Member or any of such Member’s property is bound, or any statute, regulation, order or other Law to which such Member is subject and (ii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms, except (A) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (B) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

 

(b) Non-Individual-Member-Specific Representations. Each Member that is not an individual (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) represents and warrants to, and covenants with, each other Member that (i) the execution of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including that of its general partner(s), managing member(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the execution of this Agreement and consummation of such transactions will not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be), any material agreement by which such Member or any of such Member’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other Law to which such Member or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, and (iii) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms, except (A) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (B) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

 

3

 

 

(c) Securities Laws. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) represents, warrants, and agrees that it has acquired and continues to hold its interest in the Company for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Member further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Company in what it understands to be a speculative and illiquid investment.

 

(d) Survival of Representations and Warranties. The representations and warranties contained in Sections ‎1.10(a), ‎1.10(b), and ‎1.10(c) shall survive the execution and delivery of this Agreement by each Member (and, in the case of an Additional Member or a Substituted Member, the admission of such Additional Member or Substituted Member as a Member in the Company), and the dissolution, liquidation, and termination of the Company.

 

(e) No Representations as to Performance. Each Member (including each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Company or the Managing Member have been made by the Company or any Member or any employee or representative or Affiliate of the Company or any Member, and that projections and any other information, including financial and descriptive information and documentation, that may have been in any manner submitted to such Member shall not constitute any representation or warranty of any kind or nature, express or implied.

 

(f) Modification of Representations and Warranties. The Managing Member may permit the modification of any of the representations and warranties contained in Sections ‎1.10(a), ‎1.10(b), and ‎1.10(c), as applicable, to any Member (including any Additional Member or Substituted Member or any transferee of either); provided, that such representations and warranties, as modified, shall be set forth in either (i) a Unit Designation applicable to the Units held by such Member or (ii) a separate writing addressed to the Company.

 

4

 

 

Article II

UNITS; CAPITAL CONTRIBUTIONS

 

Section 2.1 Units.

 

(a) Generally. The interests of the Members in the Company are divided into, and represented by, the Units, each having the rights and obligations specified in this Agreement.

 

(b) Classes. The Units are initially divided into:

 

(i) “Class A Units,” which are issuable solely to the Managing Member and such other persons as the Managing Member shall determine;

 

(ii) “Class B Units,” which are issuable to the Members as set forth on the Register and as otherwise provided in this Agreement; and

 

(iii) Other Classes of Units. The Company may issue additional Units or create additional classes, series, subclasses, or sub-series of Units in accordance with this Agreement.

 

(c) [Reserved].

 

(d) Recapitalization. Immediately upon the execution of this Agreement and without any action required on part of the Company or any Member:

 

(i) The Series A Units, Series B Units, Series C Units, Series D Units, Series E Units, and Common Units (each as defined in the Seventh Amended and Restated Operating Agreement) of the Company issued and outstanding immediately before the effective time of this Agreement shall be recapitalized into Class B Units of the Company in the amount set forth opposite the name of the Member on the Register; and

 

(ii) The Incentive Units (as defined in the Seventh Amended and Restated Operating Agreement) of the Company issued and outstanding immediately before the effective time of this Agreement and set forth on Schedule 2.1(d)(ii) shall be recapitalized into Class B Units of the Company in the amount set forth opposite the name of the Member on the Register (the recapitalizations described in clauses (i) and (ii), together, the “Recapitalization”).

 

Section 2.2 Capital Contributions of the Members; No Deficit Restoration Obligation.

 

(a) Capital Contributions. The Members made, shall be treated as having made, or have agreed to make, Capital Contributions to the Company and were issued the Units indicated on the Register. Except as provided by Law or in this Agreement, the Members shall have no obligation or, except as otherwise provided in this Agreement or with the prior written consent of the Managing Member, right to make any other Capital Contributions or any loans to the Company.

 

(b) No Deficit Restoration Obligation. No Member shall have an obligation to make any contribution to the capital of the Company as the result of a deficit balance in its Capital Account, and any such deficit shall not be considered a Debt owed to the Company or to any other Person for any purpose whatsoever.

 

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Section 2.3 No Interest; No Return. No Member shall be entitled to interest on its Capital Contribution or on such Member’s Capital Account balance. Except as provided by this Agreement, any Unit Designation, or by Law, no Member shall have any right to demand or receive a withdrawal or the return of its Capital Contribution from the Company. Except to the extent provided in this Agreement or in any Unit Designation, no Member shall have priority over any other Member as to distributions or the return of Capital Contributions.

 

Section 2.4 Issuances of Additional Units. Subject to the rights of any Member set forth in a Unit Designation:

 

(a) General. The Company may issue additional Units for any Company purpose at any time or from time to time to the Members (including, subject to Section 2.4(b), the Managing Member) or any other Person and may admit any such Person as an Additional Member for such consideration and on such terms and conditions as shall be established by the Company. Any additional Units may be issued in one or more classes or one or more series of any of such classes with such designations, preferences, conversion or other rights, voting powers, restrictions, rights to distributions, qualifications and terms and conditions of redemption (including rights that may be senior or otherwise entitled to preference over existing Units) as shall be determined by the Company (each, a “Unit Designation”). Upon the issuance of any additional Unit, the Managing Member shall amend the Register and the books and records of the Company as appropriate to reflect such issuance. Except to the extent specifically set forth in any Unit Designation, a Unit of any class or series other than a Common Unit shall not entitle the holder thereof to vote on, or consent to, any matter.

 

(b) Issuances to the Managing Member. No additional Units shall be issued to the Managing Member unless at least one of the following conditions is satisfied:

 

(i) The additional Units are issued to all Members holding Common Units in proportion to their respective Percentage Interests in the Common Units;

 

(ii) The additional Units are (x) Class A Units issued in connection with an issuance of Class A Common Stock or issued with appropriate adjustments to the Exchange Rate in accordance with Section 11.4, or (y) Equivalent Units (other than Common Units) issued in connection with an issuance of Preferred Stock, New Securities, or other interests in the Managing Member (other than Common Stock), and, in each case, the Managing Member contributes to the Company the net proceeds received in connection with the issuance of such Class A Common Stock, Preferred Stock, New Securities, or other interests in the Managing Member;

 

(iii) The additional Units are Class A Units issued in connection with an issuance of Class A Common Stock in accordance with the Incentive Compensation Plans of the Managing Member to an employee of the Company or its Subsidiaries;

 

(iv) The additional Units are issued as Earnout Shares in accordance with the Merger Agreement;

 

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(v) There is a recapitalization of the Capital Stock of the Managing Member, including any stock split, stock dividend, reclassification or similar transaction;

 

(vi) The additional Units are issued upon the conversion, redemption or exchange of Debt, Units or other securities issued by the Company and held by the Managing Member; or

 

(vii) The additional Units are issued in accordance with the express terms of the other provisions of this Article II (other than Section 2.4(a)).

 

(c) Issuances of Class B Units. No additional Class B Units shall be issued except (1) in the event of a recapitalization of the Capital Stock of the Managing Member, including any stock split, stock dividend, reclassification or similar transaction or (2) as Earnout Shares in accordance with the Merger Agreement.

 

(d) No Preemptive Rights. Except as expressly provided in this Agreement or in any Unit Designation, no Person shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Unit.

 

Section 2.5 Additional Funds and Additional Capital Contributions 

 

(a) General. The Company may, at any time and from time to time, determine that it requires additional funds (“Additional Funds”) for the acquisition or development of additional Assets, for the redemption of Units, or for such other purposes as the Company may determine. Additional Funds may be obtained by the Company in any manner provided in, and in accordance with, the terms of this ‎‎Section 2.5 without the approval of any Member or any other Person.

 

(b) Additional Capital Contributions. The Company may obtain any Additional Funds by accepting Capital Contributions from any Members or other Persons. In connection with any such Capital Contribution, the Company is hereby authorized from time to time to issue additional Units (as set forth in ‎Section 2.4) in consideration for such Capital Contribution.

 

(c) Loans by Third Parties. The Company may obtain any Additional Funds by incurring Debt payable to any Person upon such terms as the Company determines appropriate, including making such Debt convertible, redeemable, or exchangeable for Units; provided, however, that the Company shall not incur any such Debt if any Member would be personally liable for the repayment of all or any portion of such Debt unless that Member otherwise agrees in writing.

 

(d) Issuance of Securities by the Managing Member.

 

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Unless otherwise agreed to by the Members, after the completion of the SPAC Transaction, except in the case of a Liquidity Offering for purposes of a Cash Settlement, the Managing Member shall not issue any additional Capital Stock or New Securities unless (1) such Capital Stock or New Securities are issued in accordance with the Incentive Compensation Plan of the Managing Member to an employee of the Company or its Subsidiaries, or (2) the Managing Member contributes the net proceeds received from the issuance of such additional Capital Stock or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Stock or New Securities to the Company in exchange for (i) in the case of an issuance of Class A Common Stock, Class A Units, (ii) in the case of an issuance of Class V Common Stock, Class B Units, or (iii) in the case of an issuance of Preferred Stock or New Securities, Equivalent Units. If at any time any Preferred Stock or New Securities are issued that are convertible into or exercisable for Class A Common Stock or another security of the Managing Member, then upon any such conversion or exercise, the corresponding Equivalent Unit shall be similarly converted or exercised, as applicable, and an equivalent number of Class A Units or other Equivalent Units shall be issued to the Managing Member. It is the intent of the parties that the Managing Member will always maintain a one-to-one ratio of Units to its outstanding Capital Stock (other than Class V Common Stock), except as provided pursuant to Section 11.4, and the parties hereby acknowledge that the Managing Member may undertake all actions, subject to applicable Law and the terms of any such outstanding Capital Stock, in order to maintain such ratio.

 

(e) Reimbursement of Issuance Expenses. If the Managing Member issues additional Capital Stock or New Securities and contributes the net proceeds (after deduction of any underwriters’ discounts and commissions) received from such issuance to the Company pursuant to Section 2.5(d), the Company shall reimburse or assume (on an after-tax basis) the Managing Member’s expenses associated with such issuance.

 

(f) Repurchase or Redemption of Capital Stock. If any shares of Capital Stock, or New Securities are repurchased, redeemed or otherwise retired (whether by exercise of a put or call, automatically or by means of another arrangement) by the Managing Member, then the Managing Member shall cause the Company, immediately before such repurchase, redemption or retirement of such Capital Stock or New Securities, to redeem, repurchase or otherwise retire a corresponding number of Class A Units, Class B Units, or Equivalent Units held by the Managing Member, upon the same terms and for the same consideration as the Capital Stock or New Securities to be repurchased, redeemed, or retired.

 

Article III

DISTRIBUTIONS

 

Section 3.1 Distributions Generally.

 

Except as otherwise provided in this Article III and subject to the terms of any Unit Designation, the Company shall distribute an amount of Available Cash if, when, and as determined by the Managing Member to the Members pro rata in accordance with their Units.

 

Section 3.2 Tax Distributions.

 

(a) Generally. If the amount distributed to a Designated Member pursuant to ‎Section 3.1 in respect of a Fiscal Year is less than that Member’s Assumed Tax Liability, the Company shall distribute an amount of Available Cash to the Members such that the Designated Member with the highest Assumed Tax Liability receives distributions of Available Cash in respect of each Fiscal Year in an amount at least equal to such Member’s Assumed Tax Liability for such Fiscal Year (each such distribution, a “Tax Distribution”). Any Tax Distribution made to a Member shall be treated as an advance against, and shall reduce, future amounts otherwise distributable to such Member under ‎Section 3.1 or ‎Section 9.3(a). Except as provided in ‎Section 3.2(d) and subject to any Unit Designation, all Tax Distributions shall be made to the Members pro rata in accordance with their Units.

 

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(b) Calculation of Assumed Tax Liability. For purposes of calculating the amount of each Member’s Tax Distributions under ‎Section 3.2(a), a Designated Member’s “Assumed Tax Liability” means an amount equal to the product of:

 

(i) the sum of (A) the net taxable income and gain allocated to that Member for U.S. federal income tax purposes in the Fiscal Year, and (B) to the extent (x) determined by the Company in its sole discretion and (y) attributable to the Company, the amount the Member is required to include in income by reason of Code sections 707(c) (but not including guaranteed payments for services within the meaning of Code section 707(c)), 951(a), and 951A(a); multiplied by

 

(ii) the highest combined effective U.S. federal, state, and local marginal rate of tax applicable to an individual resident in the U.S. (as reasonably determined by the Company) for the Fiscal Year (such tax rate, the “Assumed Tax Rate”).

 

The calculation required by this Section 3.2(b) shall be made by (i) taking into account (x) the character of the income or gain and (y) any limitations on the use of deductions or credits allocable with respect to the Fiscal Year and (ii) disregarding the effect of any special basis adjustments under Code section 743(b). In addition, the Company shall increase a Designated Member’s Assumed Tax Liability to the extent the Company reasonably determines is necessary or appropriate as a result of any differences between U.S. federal income tax law and the tax laws of other jurisdictions in which the Company has a taxable presence. The Company shall calculate the amount of any increase described in the preceding sentence by applying the principles of Section 3.2(b)(i) and (ii)replacing the words “U.S. federal” with a reference to the applicable jurisdiction.

 

(c) Timing of Tax Distributions. If reasonably practicable, the Company shall make distributions of the estimated Tax Distributions in respect of a Fiscal Year on a quarterly basis to facilitate the payment of quarterly estimated income taxes, taking into account amounts previously distributed by reason of this ‎Section 3.2. Not later than sixty (60) Business Days after the end of the Fiscal Year, the Company shall make a final Tax Distribution in an amount sufficient to fulfill the Company’s obligations under ‎Section 3.2(a).

 

(d) Impact of Insufficient Available Cash. If the amount of Tax Distributions to be made exceeds the amount of the Available Cash, the Tax Distribution for each Member that would otherwise be made under Section 3.2(a) and Section 3.2 (b) shall be reduced in accordance with the provisions of this Section 3.2(d) (the amount of the reduction in each Member’s share, the “Tax Distribution Shortfall Amount”), and Available Cash shall be distributed in the following order of priority:

 

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(i) First, to the Managing Member in an amount equal to the full amount of its Tax Distribution, but calculated by substituting the words “a corporation doing business” for “an individual resident” in the definition of “Assumed Tax Rate”;

 

(ii) Second, to the Members other than the Managing Member pro rata in accordance with their Units in an amount such that the Designated Member with the highest Assumed Tax Liability has received distributions pursuant to this Section 3.2(d)(ii) that is not less than their Assumed Tax Liability (calculated by substituting the words “a corporation doing business” for “an individual resident” in the definition of “Assumed Tax Rate”); and

 

(iii) Third, to the Members (including the Managing Member) pro rata in accordance with their Units until each Member has received the full amount of its Tax Distribution calculated in accordance with Section 3.2(b).

 

Any Tax Distribution Shortfall Amounts will be carried forward to subsequent Fiscal Years and will be distributed when and to the extent that the Company has sufficient Available Cash. The distribution of any Tax Distribution Shortfall Amounts to a Member shall for all purposes of this Agreement be a Tax Distribution and shall be treated as an advance against, and shall reduce, future amounts otherwise distributable to such Member under ‎Section 3.1 or ‎Section 9.3(a).

 

(e) No Tax Distributions on Liquidation. No Tax Distributions shall be made (i) in connection with the liquidation of the Company or a Member’s Units in the Company or (ii) solely by reason of any income or gain arising as a result of any Exchange, redemption, or Transfer of a Member’s Units in the Company.

 

Section 3.3 Distributions in Kind. No Member may demand to receive property other than cash as provided in this Agreement. The Company may make a distribution in kind of Assets to the Members, and if a distribution is made both in cash and in kind, such distribution shall be made so that, to the fullest extent practical, the percentage of the cash and any other Assets distributed to each Member entitled to such distribution is identical.

 

Section 3.4 Distributions to Reflect Additional Units. If the Company issues additional Units pursuant to the provisions of ‎Article II, subject to the provisions of any Unit Designation, the Managing Member is authorized to make such revisions to this ‎Article III and to ‎Annex C as it determines are reasonably necessary or desirable to reflect the issuance of such additional Units, including making preferential distributions to certain classes of Units.

 

Section 3.5 Other Distribution Rules.

 

(a) Transfers. From and after the Transfer of a Unit, for purposes of determining the rights to distributions (including Tax Distributions) under this Agreement, distributions (including Tax Distributions) made to the transferor Member, along with any withholding or deduction in respect of any such distribution, shall be treated as having been made to the transferee unless otherwise determined by the Company.

 

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(b) Record Date for Distributions. The Company may designate a Record Date for purposes of calculating and giving effect to distributions. All distributions shall be made to the holders of record as of the applicable Record Date.

 

(c) Over-Distributions. If the amount of any distribution to a Member under the Agreement exceeds the amount to which the Member in entitled (e.g., by reason of an accounting error), the Member shall, upon written notice of the over-distribution delivered to the Member within one year of the over-distribution, promptly return the amount of such over-distribution to the Company.

 

(d) Reimbursements of Preformation Capital Expenditures. To the extent a distribution (or deemed distribution resulting from a reduction in a Member’s share of Company liabilities for federal tax purposes) otherwise would be treated as proceeds in a sale under Code section 707(a)(2)(B), the Members intend such actual or deemed distribution to reimburse preformation capital expenditures under Treas. Reg. § 1.707-4(d) to the maximum extent permitted by Law.

 

(e) Limitation on Distributions. Notwithstanding any provision of this Agreement to the contrary, the Company shall not make a distribution to any Member to the extent such distribution would violate the Act or other Law or would result in the Company or any of its Subsidiaries being in default under any material agreement.

 

Article IV

Management and OPERATIONS

 

Section 4.1 Management.

 

(a) Authority of Managing Member.

 

(i) Except as otherwise provided in this Agreement, the Managing Member shall have full, exclusive, and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company and to do or cause to be done any and all acts, at the expense of the Company, as the Managing Member deems necessary or appropriate to accomplish the purposes and direct the affairs of the Company. Without limiting the generality of the preceding sentence and subject to Section 4.1, the Managing Member may cause the Company, without the consent or approval of any other Member, to enter into any of the following in one or a series of related transactions: (i) any merger, (ii) any acquisition, (iii) any consolidation, (iv) any sale, lease or other transfer or conveyance of Assets, (v) any recapitalization or reorganization of outstanding securities, (vi) any merger, sale, lease, spin-off, exchange, transfer or other disposition of a Subsidiary, division or other business, (vii) any issuance of Debt or equity securities (subject to any limitations expressly provided for in this Agreement), or (viii) any incurrence of Debt.

 

(ii) The Managing Member shall have the exclusive power and authority to bind the Company and shall be an agent of the Company’s business. The actions of the Managing Member taken in such capacity and in accordance with this Agreement shall bind the Company. Except to the extent expressly delegated in writing by the Managing Member, no Member or Person other than the Managing Member shall be an agent for the Company or have any right, power or authority to transact any business in the name of the Company or act for or on behalf of or to bind the Company.

 

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(iii) Subject to the rights of any Member set forth in Section 4.1(f), any determinations to be made by the Company pursuant to this Agreement shall be made by the Managing Member, and such determinations shall be final, conclusive and binding upon the Company and every Member.

 

(iv) The Managing Member shall at all times be a Member of the Company and may not be removed by the Members, with or without cause, except with the consent of the Managing Member. Subject to the rights of any Member set forth in Section 4.1(f), any determinations to be made by the Company pursuant to this Agreement shall be made by the Managing Member, and such determinations shall be final, conclusive and binding upon the Company and every Member.

 

(b) Appointment of Officers. The Managing Member may, from time to time, appoint such officers and establish such management and/or advisory boards or committees of the Company as the Managing Member deems necessary or advisable, each of which shall have such powers, authority, and responsibilities as are delegated in writing by the Managing Member from time to time. Each such officer and/or board or committee member shall serve at the pleasure of the Managing Member. The initial Officers of the Company are set forth on ‎Annex D attached to this Agreement.

 

(c) No Participation by Members Other than Managing Member. Except as otherwise expressly provided in this Agreement or required by any non-waivable provision of the Act or other Law and subject to Section 4.1, no Member (acting in such capacity) other than the Managing Member shall (x) have any right to vote on or consent to any other matter, act, decision or document involving the Company or its business or any other matter, or (y) take part in the day-to-day management, or the operation or control, of the business and affairs of the Company.

 

(d) Bankruptcy. Only the Managing Member may commence a voluntary case on behalf of, or an involuntary case against, the Company under a chapter of Title 11 U.S.C. by the filing of a “petition” (as defined in 11 U.S.C. 101(42)) with the United States Bankruptcy Court. Any such petition filed by any other Member, to the fullest extent permitted by Law, shall be deemed an unauthorized and bad faith filing, and all parties to this Agreement shall use their best efforts to cause such petition to be dismissed.

 

(e) Amendment of Agreement. All amendments to this Agreement must be approved by the Managing Member. Subject to the rights of any Member set forth in a Unit Designation and ‎Section 4.1(f) and ‎Section 4.1(g), the Managing Member shall have the power, without the consent or approval of any Member, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

 

(i) To add to the obligations of the Managing Member or surrender any right or power granted to the Managing Member or any Affiliate of the Managing Member for the benefit of the Members;

 

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(ii) To reflect a change that is of an inconsequential nature or does not adversely affect the Members in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with Law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with Law or with the provisions of this Agreement;

 

(iii) To satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency, or in federal or state Law;

 

(iv) To reflect the admission, substitution, or withdrawal of Members, the Transfer of any Units, the issuance of additional Units, or the termination of the Company in accordance with this Agreement, and to amend the Register in connection with such admission, substitution, withdrawal, or Transfer;

 

(v) To set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional Units issued pursuant to Article II;

 

(vi) If the Company is the Surviving Company in any Termination Transaction, to modify Section 11.1 or any related definitions to provide the holders of interests in the Surviving Company rights that are consistent with Section 7.7(b)(iii); and

 

(vii) To reflect any other modification to this Agreement as is reasonably necessary or appropriate for the business or operations of the Company or the Managing Member and that does not violate a Unit Designation, ‎‎Section 4.1(f), or Section 4.1(g).

 

(f) Certain Amendments and Actions Requiring Member Consent.

 

(i) Notwithstanding anything in Section 4.1(e) or Article X to the contrary, this Agreement shall not be amended, and no action may be taken by the Managing Member or the Company without the consent of any Member holding Common Units that would be adversely affected by such amendment or action. Without limiting the generality of the preceding sentence, for purposes of this Section 4.1(f)(i), the Members holding Common Units will be deemed to be adversely affected by an amendment or action that would (A) adversely alter the rights of any Member to receive the distributions to which such Member is entitled pursuant to Article III or Section 9.3(a)(iii), (B) convert the Company into a corporation or cause the Company to be classified as a corporation for federal income tax purposes (other than in connection with a Termination Transaction), or (C) amend this Section 4.1(f)(i). Notwithstanding the provisions of the preceding two sentences of this Section 4.1(f)(i), but subject to Section 4.1(f)(ii), the consent of any Member holding Common Units that would be adversely affected by an amendment or action shall not be required for any such amendment or action that affects all Members holding the same class or series of Units on a uniform or pro rata basis if such amendment or action is approved by a Majority-in-Interest of the Members of such class or series. If some, but not all, of the Members consent to such an amendment or action, the Company may, in its discretion, make such amendment or action effective only as to the Members that consented to it, to the extent it is practicable to do so.

 

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(ii) This Agreement shall not be amended, and no action may be taken by the Managing Member without the consent of any Member holding Common Units that would be adversely affected by such amendment or action if such amendment or action would (A) modify the limited liability of a Member or increase the obligation of a Member to make a Capital Contribution to the Company or (B) amend this Section 4.1(f)(ii).

 

(g) Implementation of Amendments. Upon obtaining any Consent required under this Section 4.1 or otherwise required by this Agreement, and without further action or execution by any other Person, including any Member, (i) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the Managing Member, and (ii) the Members shall be deemed a party to and bound by that amendment of this Agreement.

 

Section 4.2 Tax Actions. All tax-related action, decision, or determination (or failure to take an available tax-related action, decision, or determination) by or with respect to the Company or any Subsidiary of the Company not expressly reserved for the Members shall be made, taken, or determined by the Managing Member.

 

Section 4.3 Compensation and Reimbursement of Managing Member.

 

(a) General. The Managing Member shall not receive any fees from the Company for its services in administering the Company, except as otherwise provided in this Agreement.

 

(b) Reimbursement of Managing Member. The Company shall be liable for, and shall reimburse the Managing Member on an after-tax basis at such intervals as the Managing Member may determine, all:

 

(i) overhead, administrative expenses, insurance and reasonable legal, accounting and other professional fees and expenses of the Managing Member;

 

(ii) expenses of the Managing Member incidental to being a public reporting company;

 

(iii) reasonable fees and expenses related to the SPAC Transactions or any subsequent public offering of equity securities of the Managing Member (without duplicating any provisions of Section 2.5(e)) or private placement of equity securities of the Managing Member (including any reasonable fees and expenses related to the registration for resale of any such securities), whether or not consummated;

 

(iv) franchise and similar taxes of the Managing Member, Pre-Closing Taxes, and other fees and expenses in connection with the maintenance of the existence of the Managing Member;

 

(v) customary compensation and benefits payable by the Managing Member, and indemnities provided by the Managing Member on behalf of, the officers, directors, and employees of the Managing Member; and

 

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(vi) reasonable expenses paid by Managing Member on behalf of the Company; provided, however, that the amount of any reimbursement shall be reduced by any interest earned by the Managing Member with respect to bank accounts or other instruments or accounts held by it on behalf of the Company as permitted pursuant to Section 4.4. Such reimbursements shall be in addition to any reimbursement of the Managing Member as a result of indemnification pursuant to Section 4.7.

 

Section 4.4 Outside Activities.

 

(a) Limitation on Outside Activities of Managing Member. The Managing Member shall not directly or indirectly enter into or conduct any business, other than in connection with (i) the ownership, acquisition, and disposition of Units, (ii) maintaining its legal existence (including the ability to incur and pay, as applicable, fees, costs, expenses and taxes relating to that maintenance), (iii) the management of the business of the Company and its Subsidiaries, (iv) its operation as a reporting company with a class (or classes) of securities registered under the Exchange Act, (v) the offering, sale, syndication, private placement, or public offering of stock, bonds, securities, or other interests of the Managing Member, (vi) the financing or refinancing of any type related to the Company or its Assets or activities, (vii) receiving and paying dividends and distributions or making contributions to the capital of its Subsidiaries, (viii) filing tax reports and tax returns and paying taxes and other customary obligations in the ordinary course (and contesting any taxes), (ix) participating in tax, accounting, and other administrative matters with respect to its Subsidiaries and providing administrative and advisory services (including treasury and insurance services, including maintaining directors’ and officers’ insurance on its behalf and on behalf of its Subsidiaries) to its Subsidiaries, (x) holding any cash or property (but not operating any property), (xi) indemnifying officers, directors, members of management, managers, employees, consultants, or independent contractors of the Managing Member, the Company or their respective Subsidiaries, (xii) entering into any Termination Transaction or similar transaction in accordance with this Agreement, (xiii) preparing reports to governmental authorities and to its shareholders, (xiv) holding director and shareholder meetings, preparing organizational records, and other organizational activities required to maintain its separate organizational structure, (xv) complying with applicable Law, (xvi) engaging in activities relating to any management equity plan, stock option plan or any other management or employee benefit plan of the Managing Member, the Company or their respective Subsidiaries, and (xvii) engaging in activities that are incidental to clauses (i) through (xvi). The provisions of this ‎Section 4.4 shall restrict only the Managing Member and its Subsidiaries (other than the Company and its Subsidiaries) and shall not restrict the other Members or any Affiliate of the other Members (other than the Managing Member).

 

(b) Outside Activities of Members.

 

(i) Subject to (w) Article XIII of the Amended and Restated Certificate of Incorporation of the Managing Member, (x) any agreements entered into pursuant to Section 4.5 and (y) any other agreements (including any employment agreement) entered into by a Member or any of its Affiliates with the Managing Member, the Company or a Subsidiary, any Member (but, with respect to the Managing Member, subject to Section 4.4(a)), or any officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities that are in direct or indirect competition with the Company or that are enhanced by the activities of the Company.

 

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(ii) None of the Members, the Company or any other Person shall have any rights by virtue of this Agreement or the relationship established hereby in any business ventures of any other Member or Person. Subject to any other agreements entered into by a Member or its Affiliates with the Managing Member, the Company or a Subsidiary, no Member (other than the Managing Member) or any such other Person shall have any obligation pursuant to this Agreement to offer any interest in any such business ventures to the Company, any Member, or any such other Person.

 

Section 4.5 Transactions with Affiliates. Subject to the provisions of Section 4.1(f) and ‎Section 4.4, the Company may enter into any transaction or arrangement with the Managing Member or Subsidiaries of the Company or other Persons in which the Company has an equity investment on terms and conditions determined by the Managing Member. Without limiting the foregoing, but subject to ‎Section 4.4, (a) the Company may (i) lend funds to, or borrow funds from, the Managing Member or to Subsidiaries of the Company or other Persons in which the Company has an equity investment and (ii) transfer Assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which the Company or any of its Subsidiaries is or thereby becomes a participant, and (b) the Managing Member may (i) propose and adopt on behalf of the employee benefit plans funded by the Company for the benefit of employees of the Managing Member, the Company, Subsidiaries of the Company or any Affiliate of any of them in respect of services performed, directly or indirectly, to or for the benefit of the Managing Member, the Company or any of the Company’s Subsidiaries and (ii) sell, transfer or convey any property to the Company, directly or indirectly.

 

Section 4.6 Limitation on Liability.

 

(a) General. To the fullest extent permitted by Law, no Indemnitee, in such capacity, shall be liable to the Company, any Member or any of their respective Affiliates, for any losses sustained or liabilities incurred as a result of any act or omission of such Person if (i) either (A) the Indemnitee, at the time of such act or omission, determined in good faith that its, his or her course of conduct was in, or not opposed to, the best interests of the Company or (B) in the case of omission by the Indemnitee, the Indemnitee did not intend its, his or her inaction to be harmful or opposed to the best interests of the Company and (ii) the act or omission did not constitute fraud or willful misconduct by the Indemnitee.

 

(b) Action in Good Faith. An Indemnitee acting under this Agreement shall not be liable to the Company for its, his, or her good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand, restrict, or eliminate the duties and liabilities of such Persons otherwise existing at Law or in equity, are agreed by the Members to replace fully and completely such other duties and liabilities of such Persons. Whenever the Managing Member or the Company is permitted or required to make a decision or take an action under this Agreement (i) in making such decisions, such Person shall be entitled to take into account its own interests as well as the interests of the Members as a whole or (ii) in its “good faith” or under another expressed standard, such Person shall act under such express standard and shall not be subject to any other or different standards.

 

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(c) Outside Counsel. The Managing Member may consult with legal counsel, accountants and financial or other advisors, and any act or omission suffered or taken by the Managing Member on behalf of the Company or in furtherance of the interests of the Company in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will be full justification for any such act or omission, and the Managing Member will be fully protected in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.

 

Section 4.7 Indemnification.

 

(a) General. The Company shall indemnify and hold harmless each Indemnitee (and such Person’s heirs, successors, assigns, executors or administrators) to the full extent permitted by Law and to the same extent and in the same manner provided by the provisions of Article VI of the Amended and Restated Bylaws of the Managing Member applicable to officers and directors as if such provisions were set forth herein, mutatis mutandis, and applied to each such Indemnitee.

 

(b) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this ‎Section 4.7 shall not be exclusive of any other right that any Person may have or hereafter acquire under any law, agreement, vote of stockholders or disinterested directors, provisions of a certificate of incorporation or bylaws, or otherwise.

 

(c) Nature of Rights. The rights conferred upon Indemnitees in this ‎Section 4.7 shall be contract rights and shall continue as to an Indemnitee who has ceased to be the Managing Member, an Affiliate of the Managing Member, the Tax Representative, the Designated Individual, or an officer or director of the Managing Member, the Company, or their respective Affiliates. Any amendment, alteration or repeal of this ‎Section 4.7 or of Article VI of the Amended and Restated Bylaws of the Managing Member that would adversely affect any right of an Indemnitee or its successors shall apply prospectively only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place before such amendment, alteration or repeal.

 

Article V

BOOKS AND RECORDS

 

Section 5.1 Books and Records.

 

(a) General. The Company shall maintain in its principal business office, or any other place as may be determined by the Company, the books and records of the Company.

 

(b) Specific Records. In particular, the Company shall maintain:

 

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(i) A register containing the name, address, and number and class of Units (including Equivalent Units) of each Member, and such other information as the Managing Member may deem necessary or desirable and attached to this Agreement as Annex A (as may be amended or updated from time to time, the “Register”). The Managing Member shall from time to time update the Register as necessary to ensure the Register is accurate, including as a result of any sales, exchanges, or other Transfers, or any redemptions, issuances, or similar events involving Units. Except as required by Law, no Member shall be entitled to receive a copy of the Register or of the information set forth in the Register relating to any Member other than itself.

 

(ii) A copy of the Certificate of Formation and this Agreement and all amendments thereto.

 

Section 5.2 Financial Accounts. At all times during the continuance of the Company, the Company shall prepare and maintain separate books of account for the Company for financial reporting purposes, on an accrual basis, in accordance with United States generally accepted accounting principles, consistently applied.

 

Section 5.3 Inspection; Confidentiality. The Managing Member may keep confidential from the Members (or any of them) for such period of time as the Managing Member determines to be reasonable, any information (a) that the Managing Member believes to be in the nature of trade secrets, (b) the disclosure of which the Managing Member in good faith believes is not in the best interests of the Company or the Managing Member, or (c) that the Company or the Managing Member is required by Law, agreement, or customary commercial practice to keep confidential. Subject to the provisions of the previous sentence, the Members (personally or through an authorized representative) may, for purposes reasonably related to their respective interests in the Company, examine and copy (at their own cost and expense) the books and records of the Company at all reasonable business hours upon reasonable prior notice.

 

Section 5.4 Information to Be Provided by Managing Member to Members. The Company shall deliver (or otherwise make accessible) to each Member a copy of any information mailed or delivered electronically to all of the common stockholders of the Managing Member as soon as practicable after such mailing or electronic delivery.

 

Article VI

Tax Matters, ACCOUNTING, AND REPORTING

 

Section 6.1 Tax Matters.

 

(a) Tax Returns. The Company shall use reasonable best efforts to cause to be prepared and timely filed (taking into account available extensions) all federal, state, and local, and non-U.S. tax returns of the Company for each year for which such returns are required to be filed and shall determine the appropriate treatment of each tax item of the Company and make all other determinations with respect to such tax returns.

 

(b) Other Tax Matters. Each of the provisions of Annex C, which address various tax matters, is incorporated into and shall constitute a part of this Agreement.

 

Section 6.2 Accounting and Fiscal Year. Unless otherwise determined by the Company or required by Code section 706, the fiscal year of the Company (the “Fiscal Year”) shall be the calendar year ending December 31st, or, in the case of the last Fiscal Year of the Company, the fraction thereof ending on the date on which the winding up of the Company is completed.

 

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Article VII

UNIT TRANSFERS, Encumbrance, AND member WITHDRAWALS

 

Section 7.1 Transfer Generally Prohibited. No Units shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this ‎Article VII and ‎Article XI. Any Transfer or purported Transfer of a Unit not made in accordance with this ‎Article VII or ‎Article XI shall be null and void ab initio.

 

Section 7.2 Conditions Generally Applicable to All Transfers. All Transfers are subject to the satisfaction of the following conditions:

 

(a) Transfers by Members Other than the Managing Member.

 

(i) Consent of Managing Member. No Member other than the Managing Member shall Transfer any portion of its Units to any transferee without the prior written consent of the Managing Member unless the Transfer is a Related Party Transfer and all the conditions in this Section 7.2 are satisfied.

 

(ii) Assumption of Obligations; No Relief from Obligations. Any transferee of all or a portion of a Unit (whether or not admitted as a Substituted Member) shall take subject to and assume, by operation of Law or express agreement, all of the obligations of the transferor Member under this Agreement with respect to such Transferred Unit. No Transfer (other than pursuant to a statutory merger or consolidation pursuant to which all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of Law) shall relieve the transferor Member of its obligations under this Agreement without the approval of the Managing Member.

 

(iii) No Rights as Member. No transferee, whether by a voluntary Transfer, by operation of Law or otherwise, shall have any rights under this Agreement unless admitted as a Substituted Member.

 

(b) Transfers by the Managing Member.

 

(i) Consent of Members. The Managing Member may not Transfer any of its Units without the consent of a Majority-in-Interest of the Members, except in connection with an Applicable Sale or Termination Transaction or to a wholly owned subsidiary in accordance with ‎Section 7.2(b)(ii).

 

(ii) Transfer to Subsidiary. Subject to compliance with the other provisions of this ‎Article VII, the Managing Member may Transfer all of its Units at any time to any Person that is, at the time of such Transfer, a direct or indirect wholly owned Subsidiary of the Managing Member without the consent of any Member and may designate the transferee to become the new Managing Member for all purposes of this Agreement.

 

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(c) Withholding with Respect to a Transfer of Units. A Member making a Transfer permitted by this Agreement shall comply with Section 4.10(b) of Annex C.

 

(d) Other Restrictions on Transfer. In addition to any other restrictions on Transfer in this Agreement, no Member may Transfer a Unit (including by way of a Related Party Transfer, an acquisition of Units by the Managing Member or any other acquisition of Units by the Company) if the Company determines:

 

(i) Based on the advice of nationally recognized tax counsel (for the avoidance of doubt, including each Company Counsel), such Transfer would create a material risk of the Company being classified as an association taxable as a corporation for U.S. federal, state, or local income tax purposes;

 

(ii) That the Transfer would be to any Person or entity that lacks the legal right, power or capacity to own a Unit;

 

(iii) That the Transfer would be in violation of Law;

 

(iv) That the Transfer would be of any fractional or component portion of a Unit, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Unit;

 

(v) That the Transfer would create a material risk that the Company would become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified Person” (as defined in Code section 4975(c));

 

(vi) Based on the advice of counsel, that the Transfer would create a material risk that any portion of the Assets would constitute assets of any employee benefit plan pursuant to Department of Labor Reg. § 2510.2-101;

 

(vii) Based on the advice of counsel, that the Transfer would require the registration of such Unit pursuant to any applicable federal or state securities Laws;

 

(viii) Based on advice of counsel, that such Transfer would create a material risk that the Company would become a reporting company under the Exchange Act; or

 

(ix) Based on the advice of counsel, that the Transfer would subject the Company to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.

 

Section 7.3 Substituted Members.

 

(a) Admission as Member. A transferee of Units of a Member, other than a Related-Party Transferee, may be admitted as a Substituted Member only with the consent of the Company. A Related-Party Transferee shall be admitted as a Substituted Member without the consent of the Company, subject to compliance with ‎Section 7.3(b). The failure or refusal by the Company to permit a transferee of Units to become a Substituted Member shall not give rise to any cause of action against the Company or the Managing Member. A transferee who has been admitted as a Substituted Member in accordance with this ‎Article VII shall have all the rights and powers and be subject to all the restrictions and liabilities of a Member under this Agreement.

 

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(b) Documents to Be Provided by Transferee. No transferee shall be admitted as a Substituted Member until and unless it furnishes to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such transferee and (iii) such other documents and instruments as the Managing Member may require to effect such transferee’s admission as a Substituted Member, including a certification from the transferee or an opinion of counsel reasonably acceptable to the Company in respect of any of the restrictions on transfer set forth in Section 7.2(d) (which certification or opinion may be waived, in whole or in part, in the sole discretion of the Company).

 

(c) Amendment of Books and Records. In connection with, and as evidence of, the admission of a Substituted Member, the Managing Member or Company shall amend the Register and the books and records of the Company to reflect the name, address and number of Units of such Substituted Member and to eliminate or adjust, if necessary, the name, address and number of Units of the predecessor of such Substituted Member.

 

Section 7.4 Drag-Along Rights.

 

(a) If at any time the Managing Member and/or its Affiliates (excluding, for purposes of this Section 7.4, the Company and its Subsidiaries) desire to Transfer in one or more transactions a sufficient portion of its and/or their Units (or any beneficial interest therein) to constitute a Change of Control to a bona fide third party that is not an Affiliate of the Managing Member (an “Applicable Sale”), the Managing Member may require each other Member either (i) to sell the same ratable share of its Units as is being sold by the Managing Member and such Affiliates (based upon the total Units held by the Managing Member and its Affiliates at such time) on the same terms and conditions and/or (ii) to exchange its Units pursuant to Section 11.1(b) (each, a “Drag-Along Right”). The Managing Member may in its sole discretion elect to cause the Managing Member and/or the Company to structure the Applicable Sale as a merger or consolidation or as a sale of the Company’s Assets.

 

(b) No Member shall have any dissenters’ rights, appraisal rights or similar rights in connection with any Applicable Sale, and no Member may object to any subsequent liquidation or other distribution of the proceeds from an Applicable Sale that is a sale of Assets. Each Member agrees to consent to, and raise no objections against, an Applicable Sale. In the event of the exercise by the Managing Member of its Drag-Along Right pursuant to this Section 7.4, each Member shall take all reasonably necessary and desirable actions approved by the Managing Member in connection with the consummation of the Applicable Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to provide customary and reasonable representations, warranties, indemnities, covenants, conditions and other agreements relating to such Applicable Sale and to otherwise effect the transaction; provided, however, that (A) such Members shall not be required to give disproportionately greater or more onerous representations, warranties, indemnities, or covenants than the Managing Member or its Affiliates, (B) such Members shall not be obligated to bear any share of the out-of-pocket expenses, costs, or fees (including attorneys’ fees) incurred by the Company or its Affiliates in connection with such Applicable Sale unless and to the extent that such expenses, costs, and fees were incurred for the benefit of the Company or all of its Members, (C) such Members shall not be obligated or otherwise responsible for more than their proportionate shares of any indemnities or other liabilities incurred by the Company and the Members as sellers in respect of such Applicable Sale, (D) any indemnities or other liabilities approved by the Managing Member shall be limited, in respect of each Member, to such Member’s share of the proceeds from the Applicable Sale, and (E) such Members shall not be required to enter into any non-compete agreement in connection with such Applicable Sale.

 

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(c) At least five (5) Business Days before consummation of an Applicable Sale, the Managing Member shall (i) provide the Members written notice (the “Applicable Sale Notice”) of the Applicable Sale, which notice shall contain (A) the name and address of the third-party purchaser, (B) the proposed purchase price, terms of payment, and other material terms and conditions of the purchaser’s offer, together with a copy of any binding agreement with respect to the Applicable Sale and (C) notification of whether the Managing Member has elected to exercise its Drag-Along Right and (ii) promptly notify the Members of all proposed changes to the material terms and keep the Members reasonably informed as to all material terms relating to the Applicable Sale or contribution, and promptly deliver to the Members copies of all final material agreements relating to the Applicable Sale not already provided in accordance with this Section 7.4(c) or otherwise. The Managing Member shall provide the Members written notice of the termination of an Applicable Sale within five (5) Business Days following such termination, which notice shall state that the Applicable Sale Notice served with respect to such Applicable Sale is rescinded.

 

Section 7.5 Company Right to Call Units. Beginning on the date on which the aggregate Percentage Interests of the Members (other than the Managing Member and its Subsidiaries) are less than fifteen (15) percent, the Company shall have the right, but not the obligation, from time to time and at any time to redeem all (but not less than all) outstanding Exchangeable Units by treating each Member as an Exchangeable Unit Member who has delivered an Elective Exchange Notice pursuant to the Policy Regarding Exchanges in respect of all of such Exchangeable Unit Member’s Exchangeable Units. The Company shall exercise this right by giving notice to an Exchangeable Unit Member stating that the Company has elected to exercise its rights under this ‎Section 7.5. The notice given by the Company to an Exchangeable Unit Member pursuant to this ‎Section 7.5 shall be treated as if it were an Elective Exchange Notice delivered to the Company by such Exchangeable Unit Member. For purposes of this ‎Section 7.5, the provisions of ‎Annex C shall apply except to the extent otherwise determined by the Company.

 

Section 7.6 Withdrawal.

 

(a) Permissible Withdrawals. Subject to any Unit Designation, no Member may withdraw from the Company other than:

 

(i) As a result of a Transfer of all of such Member’s Units in accordance with this Article VII or Article XI with respect to which the transferee becomes a Substituted Member;

 

(ii) Pursuant to an acquisition by the Managing Member or Subsidiary of the Managing Member of all of its Units; or

 

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(iii) With the prior written consent of the Company.

 

(b) Consequences of Withdrawal. Any Member who Transfers all of its Units in a Transfer (i) permitted pursuant to this ‎Article VII where such transferee was admitted as a Substituted Member or (ii) to the Managing Member, whether or not pursuant to ‎Section 11.1, shall cease to be a Member but shall continue to have the obligations of a former Member that are expressly set forth in this Agreement.

 

Section 7.7 Restrictions on Termination Transactions.

 

(a) General. Except as provided in ‎Section 7.7(b), neither the Company nor the Managing Member shall engage in, or cause or permit, a Termination Transaction.

 

(b) Consent. The Company or Managing Member may engage in, cause, or permit a Termination Transaction only if at least one of the following conditions is satisfied:

 

(i) A Majority-in-Interest of the Members give Consent;

 

(ii) In connection with any such Termination Transaction, each holder of Common Units (other than the Managing Member and its wholly owned Subsidiaries) will receive, or will have the right to elect to receive, for each Common Unit an amount of cash, securities or other property equal to the greatest amount of cash, securities or other property that the holder of Common Units would have received had it exercised its right to Exchange pursuant to Article XI and received Class A Common Stock in exchange for its Common Units immediately before such Termination Transaction; or

 

(iii) All of the following conditions are met: (1) substantially all of the Assets directly or indirectly owned by the Company before the announcement of the Termination Transaction are, immediately after the Termination Transaction, owned directly or indirectly by the Company or another limited partnership or limited liability company that is the survivor of a merger, consolidation or combination of assets with the Company (in each case, the “Surviving Company”); (2) the Surviving Company is classified as a partnership for U.S. federal income tax purposes and each of its Subsidiaries has the same classification for U.S. federal, state, and local tax purposes immediately after the Termination Transaction that each Subsidiary had immediately before the Termination Transaction; (3) the rights of such Members with respect to the Surviving Company (including pursuant to a Tax Receivable Agreement) are at least as favorable as those of Members holding Units immediately before the consummation of such Termination Transaction (except to the extent that any such rights are consistent with clause (4) of this Section 7.7(b)(iii)) and as those applicable to any other limited partners or non-managing members of the Surviving Company; and (4) such rights include the right to cause their interests in the Surviving Company to be redeemed at any time or times for cash in an amount equal to the Fair Market Value of such interest at the time of redemption, as determined at least once every calendar quarter by an independent appraisal firm of recognized national standing retained by the Surviving Company.

 

Section 7.8 Incapacity. If a Member is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Member’s estate (a “Member Representative”) shall have the same rights as the Incapacitated Member possessed to Transfer its Units. The Incapacity of a Member, in and of itself, shall not dissolve or terminate the Company. Unless a Member or Member Representative informs the Company in writing of the Member’s Incapacity, the Company shall have the right to assume each Member is not Incapacitated. The Company shall have no obligation to determine whether or not a Member is Incapacitated.

 

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Section 7.9 Legend. Each certificate representing a Unit, if any, will be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

 

THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.

 

THE TRANSFER AND VOTING OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF RUBICON TECHNOLOGIES HOLDINGS, LLC DATED AS OF AUGUST 15, 2022, AMONG THE MEMBERS LISTED THEREIN, AS IT MAY BE AMENDED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME, AND NO TRANSFER OF THESE SECURITIES WILL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER OF SUCH SECURITIES.”

 

Section 7.10 Encumbrance. Units shall not be subject to the claims of any creditor, spouse for alimony or support, or legal process and may not be voluntarily or involuntarily alienated or encumbered (a “Pledge Transaction”) unless (i) the Company consents in writing to the Pledge Transaction, which consent shall not be unreasonably withheld, conditioned, or delayed, (ii) there is not more than one creditor with respect to all Pledge Transactions by any one Member (each a “Permitted Lender Party”), and (iii) the creditor with respect to the Pledge Transaction is obligated, pursuant to the terms of the Pledge Transaction, to satisfy the requirements of Section 7.3 of this Agreement as a transferee of Units prior to obtaining legal title or beneficial interest in the Units subject to the Pledge Transaction.

 

Article VIII

ADMISSION OF ADDITIONAL MEMBERS

 

Section 8.1 Admission of Additional Members.

 

(a) Requirements for Admission. A Person (other than a then-existing Member) who makes a Capital Contribution to the Company in exchange for Units and in accordance with this Agreement shall be admitted to the Company as an Additional Member only upon furnishing to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all of the terms and conditions of this Agreement, including the power of attorney granted in ‎Section 12.1, (ii) a counterpart signature page to this Agreement executed by such Person, and (iii) such other documents or instruments as may be required by the Managing Member in order to effect such Person’s admission as an Additional Member. In connection with, and as evidence of, the admission of an Additional Member, the Managing Member shall amend the Register and the books and records of the Company to reflect the name, address, number and type of Units of such Additional Member.

 

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(b) Consent of Company Required. Notwithstanding anything to the contrary in this ‎Section 8.1, no Person shall be admitted as an Additional Member without the consent of the Company. The admission of any Person as an Additional Member shall become effective on the date determined by the Company (but in no case earlier than the satisfaction of all the conditions set forth in ‎Section 8.1(a)).

 

Section 8.2 Limit on Number of Members. Unless otherwise permitted by the Managing Member, no Person shall be admitted to the Company after the date of this Agreement as an Additional Member if the effect of such admission would be to cause the Company to have a number of Members (including as Members for this purpose those Persons indirectly owning an interest in the Company through another partnership, a limited liability company, a subchapter S corporation or a grantor trust) that would cause the Company to become a reporting company under the Exchange Act.

 

Article IX

DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 9.1 Dissolution Generally.

 

(a) Dissolution Only in Accordance with This Agreement. The Company shall not be dissolved by the substitution of Members or the admission of Additional Members in accordance with the terms of this Agreement. The Company may be dissolved, liquidated and terminated only pursuant to the provisions of this ‎Article IX, and the Members hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Company or a sale or partition of any or all of the Company’s Assets.

 

(b) Termination of Members. The death, retirement, resignation, expulsion, Bankruptcy, insolvency or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company shall not in and of itself cause dissolution of the Company.

 

Section 9.2 Events Causing Dissolution.

 

(a) Actions by Members. No Member shall take any action to dissolve, terminate or liquidate the Company, or require apportionment, appraisal or partition of the Company or any of its Assets, or file a bill for an accounting, except as specifically provided in this Agreement, and each Member, to the fullest extent permitted by Law, waives any rights to take any such actions under Law, including any right to petition a court for judicial dissolution under Section 18-802 of the Act.

 

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(b) Liquidating Events. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (each, a “Liquidating Event”):

 

(i) an election to dissolve the Company made by the Managing Member, with the Consent of a Majority-in-Interest of the Members;

 

(ii) the expiration of forty-five (45) days after the sale or other disposition of all or substantially all Assets; or

 

(iii) any other event that results in a mandatory dissolution under the Act.

 

Section 9.3 Distribution upon Dissolution.

 

(a) Order of Distributions. Upon the dissolution of the Company pursuant to ‎Section 9.2, the Managing Member (or, in the event that the Managing Member has dissolved, become Bankrupt or ceased to operate, any Person elected by a Majority-in-Interest of the Members (the Managing Member or such other Person, the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Company and shall take full account of the Company’s Assets and liabilities, and the Company’s Assets shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the Managing Member, include shares of stock in the Managing Member) shall be applied and distributed in the following order:

 

(i) First, to the satisfaction of all of the Company’s Debts and liabilities to creditors, including Members who are creditors (other than with respect to liabilities owed to Members in satisfaction of liabilities for previously declared distributions), whether by payment or the making of reasonable provision for payment thereof;

 

(ii) Second, to the satisfaction of all of the Company’s liabilities to the Members in satisfaction of liabilities for previously declared distributions, whether by payment or the making of reasonable provision for payment thereof; and

 

(iii) The balance, if any, to the Members, in the same order of priorities provided for in Article III.

 

(b) Discretion of Liquidator and Managing Member.

 

(i) Notwithstanding the provisions of Section 9.3(a) that require liquidation of the Assets, but subject to the order of priorities set forth therein, if before or upon dissolution of the Company, the Liquidator determines that an immediate sale of part or all of the Company’s Assets would be impractical or would cause undue loss to the Members, the Liquidator may, in its sole discretion, defer for a reasonable time the liquidation of any Assets except those necessary to satisfy liabilities of the Company (including to those Members as creditors) and/or distribute to the Members, in lieu of cash, as tenants-in-common and in accordance with the provisions of Section 9.3(a), undivided interests in such Company Assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and any agreements governing the operation of such properties at such time. The Liquidator shall determine the Fair Market Value of any property distributed in kind using such reasonable method of valuation as it may adopt.

 

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(ii) In the sole discretion of the Managing Member, a pro rata portion of the distributions that would otherwise be made to the Members pursuant to this Article IX may be:

 

A) Distributed to a trust established for the benefit of the Managing Member and the Members for the purpose of liquidating Company Assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Managing Member arising out of or in connection with the Company and/or Company activities. The assets of any such trust shall be distributed to the Members, from time to time, in the reasonable discretion of the Managing Member, in the same proportions and amounts as would otherwise have been distributed to the Members pursuant to this Agreement; or

 

B) Withheld or escrowed to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Company, provided, that such withheld or escrowed amounts shall be distributed to the Members in the manner and order of priority set forth in Section 9.3(a) as soon as practicable.

 

Section 9.4 Rights of Members. Except as otherwise provided in this Agreement and subject to the rights of any Member set forth in a Unit Designation, (a) each Member shall look solely to the Assets for the return of its Capital Contribution, (b) no Member shall have the right or power to demand or receive property other than cash from the Company, and (c) no Member shall have priority over any other Member as to the return of its Capital Contributions or distributions.

 

Section 9.5 Termination. The Company shall terminate when all of the Assets, after payment of or due provision for all Debts, liabilities, and obligations of the Company, have been distributed to the Members in the manner provided for in this ‎Article IX and the Certificate of Formation shall have been cancelled in the manner required by the Act.

 

Article X

PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; MEETINGS

 

Section 10.1 Actions and Consents of Members. The actions requiring Consent of any Member pursuant to this Agreement or otherwise pursuant to Law are subject to the procedures set forth in this ‎Article X.

 

Section 10.2 Procedures for Meetings and Actions of the Members.

 

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(a) Time; Quorum; Consent. Meetings of the Members may be called only by the Managing Member and shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than two (2) days nor more than ninety (90) days before the date of such meeting. Members may vote in Person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement or any Unit Designation, the affirmative vote of a Majority-in-Interest of the Members shall be sufficient to approve such proposal at a meeting of the Members. Whenever the Consent of any Members is permitted or required under this Agreement, such Consent may be given at a meeting of Members or in accordance with the procedure prescribed in ‎Section 10.2(b).

 

(b) Written Consents. Any action requiring the Consent of any Member or a group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a Consent in writing or by electronic transmission and filed with the Managing Member setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such Consent may be in one or several instruments and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the Managing Member may require a response within a reasonable specified time, and failure to respond in such time period shall constitute a Consent that is consistent with the Managing Member’s recommendation with respect to the proposal.

 

(c) Proxy. Each Member entitled to act at a meeting of Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

 

(d) Record Date for Meetings and Other Purposes.

 

(i) The Managing Member may set, in advance, a Record Date (x) for the purpose of determining the identities of the Members entitled to Consent to any action or entitled to receive notice of or vote at any meeting of the Members or (y) to make a determination of Members for any other proper purpose. Any such date shall not be before the close of business on the day the Record Date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than two (2) days, before the date on which the meeting is to be held.

 

(ii) If no Record Date is set, the Record Date for the determination of Members entitled to notice of or vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the Record Date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this Section 10.2(d), such determination shall apply to any adjournment thereof.

 

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(e) Conduct of Meetings. Each meeting of Members shall be conducted by the Managing Member or such other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate.

 

(f) Waivers. Any time period for notice with respect to meetings or consents of the Members may be waived by a Member as to such Member.

 

Article XI

EXCHANGE RIGHTS

 

Section 11.1 Elective and Mandatory Exchanges.

 

(a) Elective Exchanges. Subject to the Policy Regarding Exchanges set forth in ‎Annex E, as amended from time to time by the Company (the “Policy Regarding Exchanges”), an Exchangeable Unit Member shall have the right, from time to time, to surrender Exchangeable Units (free and clear of all liens, encumbrances, rights of first refusal and similar restrictions, except for those arising under this Agreement) to the Company or the Managing Member and to thereby cause the Company or the Managing Member to deliver to that Exchangeable Unit Member (or its designee) the Exchange Consideration as set forth in ‎Section 11.3 (an “Elective Exchange”).

 

(b) Mandatory Exchange Events. Units are subject to Mandatory Exchange in each of the following circumstances:

 

(i) pursuant to Section 7.4, if an Applicable Sale is determined to be a Mandatory Exchange event in the sole discretion of the Managing Member;

 

(ii) pursuant to Section 7.5; or

 

(iii) in the discretion of the Managing Member, with the consent of Members whose Class B Units represent fifty percent (50%) of the Class B Units of all Members in the aggregate, all Members will be required to exchange all Exchangeable Units then held by the Members.

 

(c) Mandatory Exchange Notices and Dates. Upon the occurrence of any of the circumstances set out in ‎Section 11.1(b), the Managing Member may exercise its right to cause a mandatory exchange of a Member’s Exchangeable Units (a “Mandatory Exchange”) by delivering to each Member a written notice pursuant to the notice provisions in Section 12.6 (a “Mandatory Exchange Notice”). A Mandatory Exchange Notice will specify the basis for the Mandatory Exchange, the Exchangeable Units of the Company to which the Mandatory Exchange applies, the Exchange Consideration and the effective date of such Mandatory Exchange (the “Mandatory Exchange Date”), which shall be no earlier than ten (10) Business Days after delivery of the Mandatory Exchange Notice. The Member receiving the Mandatory Exchange Notice shall use its reasonable best efforts to deliver the Certificates, as applicable, representing the applicable Exchangeable Units (free and clear of all liens, encumbrances, rights of first refusal and similar restrictions, except for those arising under this Agreement) no later than one (1) Business Day before the Mandatory Exchange Date. Upon the Mandatory Exchange Date, the Company will effect the Mandatory Exchange.

 

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Section 11.2 Additional Terms Applying to Exchanges.

 

(a) Rights of Exchangeable Unit Member. On an Exchange Date, all rights of the Exchangeable Unit Member as a holder of the Exchangeable Units and, if the applicable Exchangeable Units are Class B Units, shares of Class V Common Stock held by the holder of the Class B Units that are subject to the Exchange shall cease, and, unless the Company or Managing Member, as applicable, has elected Cash Settlement as to all Exchangeable Units tendered, the Managing Member shall use commercially reasonable efforts to cause the transfer agent or registrar of the Managing Member to update the stock register of the Managing Member such that such Exchangeable Unit Member (or its designee) become the record holder of the shares of Class A Common Stock to be received by the Exchangeable Unit Member in respect of such Exchange.

 

(b) Right of Managing Member to Acquire Exchangeable Units. With respect to Units surrendered in an Elective Exchange or subject to a Mandatory Exchange, the Managing Member shall have the right but not the obligation to have the Managing Member (in lieu of the Company) acquire Exchangeable Units and, if the applicable Exchangeable Units are Class B Units, an equivalent number of shares of Class V Common Stock held by the holder of those Class B Units directly from an Exchangeable Unit Member for the elected Exchange Consideration. If the Managing Member acquires Exchangeable Units as described in the preceding sentence, those Exchangeable Units shall be automatically recapitalized into the same number of Class A Units as the Exchangeable Units.

 

(c) Expenses. Except as otherwise agreed by the Company, the Managing Member and an Exchangeable Unit Member, the Company, the Managing Member, and each Exchangeable Unit Member shall bear their own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated. Notwithstanding the foregoing sentence, the Managing Member (or the Company, at the Managing Member’s direction) shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange; provided, however, that if any shares of Class A Common Stock are to be delivered pursuant to an Elective Exchange in a name other than that of the Exchangeable Unit Member that requested the Exchange (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Member) or the Cash Settlement is to be paid to a Person other than the Exchangeable Unit Member that requested the Exchange, then such Member or the Person in whose name such shares are to be delivered or to whom the Cash Settlement is to be paid shall pay to the Managing Member (or the Company, at the Managing Member’s direction) the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange or shall establish to the reasonable satisfaction of the Managing Member that such tax has been paid or is not payable.

 

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Section 11.3 Exchange Consideration; Settlement.

 

(a) Generally. The Managing Member shall have the right, in its sole discretion, to elect the form of Exchange Consideration with respect to any Exchange. On an Exchange Date, provided the Exchangeable Unit Member has satisfied its obligations under the Policy Regarding Exchanges and not validly retracted such proposed Exchange, the Managing Member shall deliver or cause to be delivered the Exchange Consideration to such Exchangeable Unit Member (or its designee), at the address set forth on the applicable Exchange Notice. If the Managing Member elects a Cash Settlement, the Managing Member shall only be obligated to contribute to the Company (or, if the Managing Member elects to settle directly pursuant to ‎Section 11.2(b), settle directly for an amount equal to) an amount in respect of such Cash Settlement equal to the net proceeds (after deduction of any underwriters’ discounts and commissions) from the sale by the Managing Member of a number of shares of Class A Common Stock equal to the number of Exchangeable Units being Exchanged for such Cash Settlement. Except as otherwise required by Law, the Managing Member shall, for U.S. federal income tax purposes, be treated as paying an appropriate portion of the selling expenses described in the previous sentence as agent for and on behalf of the Exchangeable Unit Member. Except as otherwise determined by the Managing Member, if (i) the Managing Member determines that some or all of the Exchange Consideration with respect to an Exchange will be Class A Common Stock and (ii) such Exchange would, but for this Section 11.3(a), result in the Exchangeable Unit Member’s receipt of a fractional share of Class A Common Stock, then the number of shares of Class A Common Stock to be received by the Exchangeable Unit Member shall be rounded down to the nearest whole number of shares and the amount of the reduction shall be paid as a Cash Settlement.

 

(b) Notice of Intended Exchange Consideration. At least two (2) Business Days before the Exchange Date, the Managing Member shall give written notice to the Company (with a copy to the Exchangeable Unit Member) of its intended Exchange Consideration. If the Managing Member does not timely deliver such written notice, the Managing Member shall be deemed to have elected to settle the Exchange with shares of Class A Common Stock.

 

(c) Settlement through Depository Trust Company. To the extent the Class A Common Stock is settled through the facilities of The Depository Trust Company, the Managing Member or the Company will, upon the written instruction of an Exchangeable Unit Member, deliver the shares of Class A Common Stock deliverable to such Exchangeable Unit Member through the facilities of The Depository Trust Company to the account of the participant of The Depository Trust Company designated by such Exchangeable Unit Member in the Exchange Notice.

 

(d) Obligations of Managing Member and Company. Upon any Exchange, the Managing Member or the Company, as applicable, shall take such actions as (A) may be required to ensure that such Member receives the shares of Class A Common Stock and/or the Cash Settlement that such Exchangeable Unit Member is entitled to receive in connection with such Exchange pursuant to ‎Section 11.3(a), and (B) may be reasonably within its control that would cause such Exchange to be treated as a direct exchange between the Managing Member and the Member for U.S. federal and applicable state and local income tax purposes.

 

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(e) Except in connection with a payment in respect of a fractional share (as described in the final sentence of Section 11.3(a)), the Managing Member may elect Cash Settlement with respect to an Exchange of Class B Units only to the extent the Cash Settlement is funded by the proceeds (net of underwriting discounts and commissions) of a Liquidity Offering with respect to that Exchange.

 

Section 11.4 Adjustment. To the extent not reflected in an adjustment to the Exchange Rate, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, then, upon any subsequent Exchange, an Exchangeable Unit Member shall be entitled to receive the amount of such security, securities or other property that such Exchangeable Unit Member would have received if such Exchange had occurred immediately before the effective date of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction. For the avoidance of doubt, if there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Stock is converted or changed or exchanged into or for another security, securities or other property, this ‎Section 11.4 shall continue to be applicable, mutatis mutandis, with respect to such security or other property.

 

Section 11.5 Class A Common Stock to Be Issued in Connection with an Exchange.

 

(a) Class A Common Stock Reserve. The Managing Member shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon an Exchange, such number of shares of Class A Common Stock as shall be deliverable under this Agreement upon all such Exchanges. The preceding sentence shall not affect the Managing Member’s right to elect a Cash Settlement.

 

(b) Rule 16(b) Exemption. The Managing Member has taken and will take all such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions or dispositions of equity securities of the Managing Member (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of the Managing Member for such purposes that result from the transactions contemplated by this Agreement, by each director or officer of the Managing Member (including directors-by-deputization) who may reasonably be expected to be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Managing Member upon the registration of any class of equity security of the Managing Member pursuant to Section 12 of the Exchange Act.

 

(c) Validity of Class A Common Stock. The Managing Member covenants that all shares of Class A Common Stock issued upon an Exchange will, upon issuance, be validly issued, fully paid and non-assessable and not subject to any preemptive right of stockholders of the Managing Member or any right of first refusal or other right in favor of any Person.

 

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Section 11.6 Withholding. Each Member acknowledges and agrees that the Company may be required by Law to deduct and withhold any amounts by reason of any federal, state, local, or non-U.S. tax laws or regulations in respect of any Exchange, as provided in ‎Section 4.10(c) of ‎Annex C.

 

Section 11.7 Tax Treatment. Unless otherwise agreed to in writing by the Exchangeable Unit Member and the Managing Member, it is intended that, for U.S. federal and applicable state and local income tax purposes, each Exchange be treated as direct exchange between the Managing Member and the Exchangeable Unit Member that is a taxable transaction to the Exchangeable Unit Member. All applicable parties shall treat each Exchange consistently with the intended treatment for all U.S. federal and applicable state and local tax purposes unless otherwise required by Law.

 

Section 11.8 Contribution by the Managing Member. On the Exchange Date (i) the Managing Member shall contribute to the Company the shares of Class A Common Stock and/or Cash Settlement that the Managing Member has elected to deliver and that the Member is entitled to receive in the applicable Exchange and (ii) the Company shall issue to the Managing Member a number of Class A Units equal to the number of Exchangeable Units surrendered by the Member.

 

Article XII

MISCELLANEOUS

 

Section 12.1 Conclusive Nature of Determinations. All determinations, interpretations, calculations, adjustments and other actions of the Managing Member, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority), or a designee of any of the foregoing that are within such Person’s authority under this Agreement shall be binding and conclusive on a Member absent manifest error. In connection with any such determination, interpretation, calculation, adjustment, or other action, the Managing Member, the Company, the Board of Directors (or a committee to which the Board of Directors has delegated such authority), or the designee of any of the foregoing shall be entitled to resolve any ambiguity with respect to the manner in which such determination, interpretation, calculation, adjustment or other action is to be made or taken, and shall be entitled to interpret the provisions of this Agreement in such a manner as such Person determines to be fair and equitable, and such resolution or interpretation shall be binding and conclusive on a Member absent manifest error.

 

Section 12.2 Company Counsel. THE COMPANY, THE MANAGING MEMBER AND AFFILIATED ENTITIES MAY BE REPRESENTED BY THE SAME COUNSEL. THE ATTORNEYS, ACCOUNTANTS AND OTHER EXPERTS WHO PERFORM SERVICES FOR THE COMPANY MAY ALSO PERFORM SERVICES FOR THE MANAGING MEMBER AND AFFILIATES THEREOF. THE MANAGING MEMBER MAY, WITHOUT THE CONSENT OF THE MEMBERS, EXECUTE ON BEHALF OF THE COMPANY ANY CONSENT TO THE REPRESENTATION OF THE COMPANY THAT COUNSEL MAY REQUEST PURSUANT TO THE NEW YORK RULES OF PROFESSIONAL CONDUCT OR SIMILAR RULES IN ANY OTHER JURISDICTION. THE COMPANY HAS INITIALLY SELECTED GIBSON, DUNN & CRUTCHER LLP AND CHAMBERLAIN, HRDLICKA, WHITE, WILLIAMS & AUGHTRY, PC (EACH, “COMPANY COUNSEL”) AS LEGAL COUNSEL TO THE COMPANY. EACH MEMBER ACKNOWLEDGES THAT COMPANY COUNSEL DOES NOT REPRESENT ANY MEMBER IN ITS CAPACITY AS SUCH IN THE ABSENCE OF A CLEAR AND EXPLICIT WRITTEN AGREEMENT TO SUCH EFFECT BETWEEN SUCH MEMBER AND COMPANY COUNSEL (AND THEN ONLY TO THE EXTENT SPECIALLY SET FORTH IN SUCH AGREEMENT), AND THAT IN THE ABSENCE OF ANY SUCH AGREEMENT COMPANY COUNSEL SHALL OWE NO DUTIES TO ANY MEMBER. EACH MEMBER FURTHER ACKNOWLEDGES THAT, WHETHER OR NOT COMPANY COUNSEL HAS IN THE PAST REPRESENTED OR IS CURRENTLY REPRESENTING SUCH MEMBER WITH RESPECT TO OTHER MATTERS, UNLESS OTHERWISE EXPRESSLY AGREED BY COMPANY COUNSEL, COMPANY COUNSEL HAS NOT REPRESENTED THE INTERESTS OF ANY MEMBER IN THE PREPARATION AND/OR NEGOTIATION OF THIS AGREEMENT.

 

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Section 12.3 Appointment of Managing Member as Attorney-in-Fact.

 

(a) Execution of Documents. Each Member, including each Additional Member and Substituted Member that is a Member, irrevocably makes, constitutes and appoints the Managing Member, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and Lawful attorney-in-fact with full power and authority in its name, place and stead to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement, including:

 

(i) All certificates and other instruments (including counterparts of this Agreement), and all amendments thereto, that the Managing Member deems appropriate to form, qualify, continue or otherwise operate the Company as a limited liability company (or other entity in which the Members will have limited liability comparable to that provided in the Act) in the jurisdictions in which the Company may conduct business or in which such formation, qualification or continuation is, in the opinion of the Managing Member, necessary or desirable to protect the limited liability of the Members.

 

(ii) All amendments to this Agreement adopted in accordance with the terms of this Agreement, and all instruments that the Managing Member deems appropriate in accordance with the terms of this Agreement.

 

(iii) All conveyances of Company Assets and other instruments that the Managing Member reasonably deems necessary in order to complete a dissolution and termination of the Company pursuant to this Agreement.

 

(b) Power and Interest. The appointment by all Members of the Managing Member as attorney-in-fact shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Members under this Agreement will be relying upon the power of the Managing Member to act as contemplated by this Agreement in any filing and other action by it on behalf of the Company, shall survive the Incapacity of any Person hereby giving such power and the Transfer of all or any portion of such Person’s Units, and shall not be affected by the subsequent Incapacity of the Person.

 

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Section 12.4 Entire Agreement. This Agreement, together with the Tax Receivable Agreement and that certain Registration Rights Agreement dated August 15, 2022, by and among the Managing Member and the stockholders of the Managing Member party thereto, in each case, as amended, supplemented or restated in accordance with its terms, and the other documents contemplated hereby and thereby, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersede any and all prior or contemporaneous agreements or understandings between the parties to this Agreement pertaining to the subject matter hereof, including the Seventh Amended and Restated Operating Agreement.

 

Section 12.5 Further Assurances. Each of the parties to this Agreement does hereby covenant and agree on behalf of itself, its successors, and its assigns, without further consideration, to prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents and statements, and to take such other action as may be required by Law or reasonably necessary to effectively carry out the intent and purposes of this Agreement.

 

Section 12.6 Notices. Any notice, consent, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be (a) delivered personally to the Person or an officer of the Person to whom the same is directed, (b) sent by facsimile, overnight mail or registered or certified mail, return receipt requested, postage prepaid, or (c) (except with respect to notice to the Company or the Managing Member) sent by email, with electronic, written or oral confirmation of receipt, in each case addressed as follows:

 

(i) if to the Company or the Managing Member:

 

c/o Rubicon Technologies Holdings, LLC
950 E. Paces Ferry Road

Suite 1900

Atlanta, GA 30326

Email: bill.meyer@rubicon.com

Attention: William Meyer, General Counsel

 

with a copy (which shall not constitute notice) to:

 

Gibson, Dunn & Crutcher LLP

200 Park Avenue

New York, NY 10166

Email: SMuzumdar@gibsondunn.com;
EDAmico@gibsondunn.com

Attention: Saee Muzumdar; Evan M. D’Amico

 

and

 

Chamberlain, Hrdlicka, White, Williams & Aughtry, PC

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303

Email: Scott.Augustine@chamberlainlaw.com

Attention: Scott A. Augustine

 

or to such other address as the Company may from time to time
specify by notice to the Members;

 

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(ii) if to any Member, to:

 

the address, email, or facsimile number of such Member set forth in the records of the Company.

 

Any such notice shall be deemed to be delivered, given and received for all purposes as of: (A) the date so delivered, if delivered personally, (B) upon receipt, if sent by facsimile or email, or (C) on the date of receipt or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt requested, postage and charges prepaid and properly addressed.

 

Section 12.7 Governing Law. This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties to this Agreement, shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to otherwise governing principles of conflicts of Law.

 

Section 12.8 Jurisdiction and Venue. The parties to this Agreement agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court (the “Selected Courts”), and each of the parties hereby irrevocably consents to the jurisdiction of the Selected Courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any Selected Court. Without limiting the foregoing, each party agrees that service of process on such party in the manner provided for notice in ‎Section 12.6 shall be deemed effective service of process on such party.

 

Section 12.9 Equitable Remedies. The parties to this Agreement agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties to this Agreement shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts, this being in addition to any other remedy to which they are entitled at Law or in equity. Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties to this Agreement. Each party further agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at Law would be adequate.

 

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Section 12.10 Construction. This Agreement shall be construed as if all parties to this Agreement prepared this Agreement.

 

Section 12.11 Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall for all purposes be deemed an original, and all such counterparts shall together constitute but one and the same agreement.

 

Section 12.12 Third-Party Beneficiaries. Except as provided in ‎Section 4.7, nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties to this Agreement (or their respective legal representatives, successors, heirs and distributees) any legal or equitable right, remedy or claim under or in respect of any agreement or provision contained herein, it being the intention of the parties to this Agreement that this Agreement is for the sole and exclusive benefit of such parties (or such legal representatives, successors, heirs and distributees) and for the benefit of no other Person.

 

Section 12.13 Binding Effect. Except as otherwise expressly provided herein, all of the terms and provisions of this Agreement shall be binding on, shall inure to the benefit of and shall be enforceable by the Members, their heirs, executors, administrators, successors and all other Persons hereafter holding, having or receiving an interest in the Company, whether as Substituted Members or otherwise.

 

Section 12.14 Severability. If any provision of this Agreement as applied to any party or any circumstance shall be adjudged by a court to be void, unenforceable or inoperative as a matter of Law, then the same shall in no way affect any other provision in this Agreement, the application of such provision in any other circumstance or with respect to any other party, or the validity or enforceability of the Agreement as a whole.

 

Section 12.15 Survival. The provisions of ‎Section 4.6 (Limitation on Liability), ‎Section 4.7 (Indemnification), ‎Section 12.1 (Conclusive Nature of Determinations), ‎Section 12.3 (Appointment of Managing Member as Attorney-in-Fact), ‎Section 12.4 (Entire Agreement), ‎Section 12.5 (Further Assurances), ‎Section 12.6 (Notices), ‎Section 12.7 (Governing Law), ‎Section 12.8 (Jurisdiction and Venue), ‎Section 4.8 (Survival of Obligations) of ‎Annex C (and this ‎Section 12.15 (Survival)) (and any other provisions of this Agreement necessary for the effectiveness of the enumerated sections) shall survive the termination of the Company and/or the termination of this Agreement.

 

Article XIII

DEFINED TERMS

 

Section 13.1 Definitions. Unless otherwise indicated to the contrary, the following definitions shall be applied to the terms used in this Agreement:

 

Act” means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et seq. (as it may be amended from time to time), and any successor to such statute.

 

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Additional Funds” is defined in ‎Section 2.5(a).

 

Additional Member” means a Person who is admitted to the Company as a Member pursuant to the Act and ‎Section 8.1, who is shown as such on the books and records of the Company, and who has not ceased to be a Member pursuant to the Act and this Agreement.

 

Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that (i) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of any other Member or its parent company or Affiliates and (ii) none of the Members or their parent companies or Affiliates shall be deemed to be an Affiliate of the Company or any of its Affiliates. With respect to any Person who is an individual, “Affiliate” shall also include, without limitation, any Family Member of such Person.

 

Agreement” means this Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC, together with the Schedules and Exhibits to this Agreement, as now or hereafter amended, restated, modified, supplemented, or replaced.

 

Applicable Sale” is defined in Section 7.4(a).

 

Applicable Sale Notice” is defined in ‎Section 7.4(c).

 

Assets” means any assets and property of the Company.

 

Assumed Tax Liability” is defined in ‎Section 3.2(b).

 

Assumed Tax Rate” is defined in ‎Section 3.2(b)(ii).

 

Available Cash” means, after taking into account amounts determined by the Managing Member to be reasonably necessary or advisable to be retained by the Company to meet actual or anticipated, direct or indirect, expenses, capital investments, working capital needs or liabilities (actual, contingent or otherwise) of the Company, including the payment of any Imputed Underpayment or for the operation of the business of the Company, or to create reasonable reserves for any of the foregoing, cash (in United States dollars) of the Company that the Managing Member determines is available for distribution to the Members.

 

Bankruptcy” means, with respect to any Person, the occurrence of any event specified in Section 18-304 of the Act with respect to such Person, and the term “Bankrupt” has a correlative meaning.

 

Board of Directors” means the Board of Directors of the Managing Member.

 

Business Day” means any weekday, excluding any legal holiday observed pursuant to United States federal or New York State Law or regulation.

 

Capital Account” is defined in ‎Annex C.

 

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Capital Contribution” means, with respect to any Member, the aggregate amount of money and the initial Asset Value of property (other than money) in such form as may be permitted by the Act that the Member contributes (or is treated as contributing) to the Company.

 

Capital Stock” means a share of any class or series of stock of the Managing Member now or hereafter authorized.

 

Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Member in an Exchange, multiplied by (y) the price per share, net of underwriting discounts and commissions, at which Class A Common Stock is issued by the Managing Member in an underwritten offering or block trade commenced in anticipation of the applicable Exchange (a “Liquidity Offering”). If the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then the amount specified in clause (y) shall be determined in good faith by a committee of the Board of Directors composed of a majority of the directors of the Managing Member that do not have an interest in the Exchangeable Units and, if the applicable Exchangeable Units are Class B Units, shares of Class V Common Stock being Exchanged.

 

Certificate of Formation” means the Certificate of Formation of Rubicon Technologies Holdings, LLC, as filed with the Delaware Secretary of State on April 11, 2011, as amended from time to time.

 

Certificates” means (A) if certificated, any certificates representing Exchangeable Units, (B) if certificated, any stock certificates representing the shares of Class V Common Stock required to be surrendered in connection with an Exchange of Class B Units, and (C) such other information, documents or instruments as either the Managing Member (or the Managing Member’s transfer agent) or the Company may reasonably require in connection with an Exchange. If any certificate or other document referenced in the immediately preceding sentence is alleged to be lost, stolen or destroyed, the Exchangeable Unit Member shall cooperate with and respond to the reasonable requests of the Managing Member (or the Managing Member’s transfer agent) and the Company and, if required by the Managing Member or the Company, furnish an affidavit of loss and/or an indemnity against any claim that may be made against the Managing Member or the Company on account of the alleged loss, theft or destruction of such certificate or other document.

 

Change of Control” means, as of any date of determination, in one transaction or a series of related transactions, the Transfer of Units (or any beneficial interest therein) of the Company representing more than fifty (50) percent of the outstanding Common Units as of such date of determination.

 

Class A Common Stock” means the Class A common stock of the Managing Member, $0.0001 par value per share.

 

Class A Unit” is defined in ‎Section 2.1(b)(i).

 

Class B Unit” is defined in ‎Section 2.1(b)(ii).

 

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Class V Common Stock” means the Class V Common Stock of the Managing Member, $0.0001 par value per share.

 

Code” means the Internal Revenue Code of 1986, as amended. All references in this Agreement to sections of the Code shall include any corresponding provision or provisions of succeeding Law.

 

Common Stock” means the Class A Common Stock or the Class V Common Stock (and shall not include any additional series or class of the Managing Member’s common stock created after the date of this Agreement).

 

Common Unit” means a Class A Unit, a Class B Unit, and any other Unit designated as a Common Unit by the Company.

 

Company” is defined in the preamble to this Agreement.

 

Company Counsel” is defined in ‎Section 12.2.

 

Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with ‎Article X.

 

control,” including the terms “controlled by” and “under common control with,” means with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the Board of Directors or similar body governing the affairs of such Person.

 

de minimis” shall mean an amount small enough as to make not accounting for it commercially reasonable or accounting for it administratively impractical, in each case as determined by the Managing Member.

 

Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; and (iii) obligations of such Person as lessee under capital leases.

 

Designated Member” means, with respect to each Fiscal Year, a Member who holds, as of the first day of such Fiscal Year, at least one percent (1%) of the Units outstanding that are held by Members other than the Managing Member.

 

Drag-Along Right” is defined in Section 7.4(a).

 

Earnout Share” has the meaning given to it in Section 3.4 of the Merger Agreement.

 

Elective Exchange” is defined in ‎Section 11.1(a).

 

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Elective Exchange Date” means the effective date of an Elective Exchange.

 

Elective Exchange Notice” is defined in Annex B.

 

Equivalent Units” means Units with preferences, conversion and other rights (other than voting rights), restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption (the “Terms”) that are (a) relative to the Common Units and the other classes and series of Units that correspond to classes and series of Capital Stock, and (b) substantially the same as (or corresponding to) the Terms that any new Capital Stock or New Securities (except Debt described in clause (ii) of the definition of New Securities) have relative to the Common Stock and other classes and series of Capital Stock or New Securities. The foregoing shall not apply to matters such as voting for members of the Board of Directors that are not applicable to the Company. In comparing the economic rights of any Preferred Stock with the economic rights of any Units, the effect of taxes may be taken into account.

 

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

 

Exchange” means any Elective Exchange or Mandatory Exchange.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.

 

Exchange Consideration” shall mean, in the case of any Exchange, (x) the number of shares of Class A Common Stock that is equal to the product of the number of Exchangeable Units surrendered in the Exchange multiplied by the Exchange Rate (the “Stock Consideration”), (y) the Cash Settlement, plus, in the case of an Exchange of Class B Units under either subclause (x) or (y), an amount that is equal to $0.0001 multiplied by the number of shares of Class V Common Stock included in the Exchange, or (z) a combination of the Stock Consideration and the Cash Settlement.

 

Exchange Date” means an Elective Exchange Date or Mandatory Exchange Date.

 

Exchange Rate” means, in respect of any Exchange, subject to ‎Section 11.4, a ratio, expressed as a fraction, the numerator of which shall be the number of shares of Class A Common Stock outstanding immediately before the Exchange and the denominator of which shall be the number of Class A Units owned by the Managing Member immediately before the Exchange. On the date of this Agreement, the Exchange Rate shall be 1.

 

Exchangeable Unit” means each Class B Unit pursuant to ‎Article XI, and any other Unit designated as an Exchangeable Unit by the Company.

 

Exchangeable Unit Member” means (i) each Member, other than the Managing Member and any of its wholly owned Subsidiaries, that holds an Exchangeable Unit or (ii) each holder of an interest in a Member that holds a Unit that is an Exchangeable Unit pursuant to ‎Article XI.

 

Fair Market Value” of Units or other property, means the cash price that a third party would pay to acquire all of such Units (computed on a fully diluted basis after giving effect to the exercise of any and all outstanding conversion rights, exchange rights, warrants and options) or other property, as the case may be, in an arm’s-length transaction. Unless otherwise determined by the Company, the following assumptions will be made when determining the Fair Market Value of Units:

 

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(a) that the Company was being sold in a manner reasonably designed to solicit all possible participants and permit all interested Persons an opportunity to participate and achieve the best value reasonably available to the Members at the time; and

 

(b) that all existing circumstances are taken into account, including the terms and conditions of all agreements (including this Agreement) to which the Company is then a party or by which it is otherwise benefited or affected, determined.

 

Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or by adoption) and inter vivos or testamentary trusts of which only such Person and his spouse, ancestors (whether by blood or by adoption), descendants (whether by blood or by adoption), brothers and sisters (whether by blood or adoption) are beneficiaries.

 

Fiscal Year” is defined in ‎Section 6.2.

 

Incapacity” or “Incapacitated” means, (i) as to any Member who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Member incompetent to manage his or her Person or his or her estate; (ii) as to any Member that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Member that is a partnership, the dissolution and commencement of the winding up of the partnership; (iv) as to any Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company; (v) as to any trustee of a trust that is a Member, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Member, the Bankruptcy of such Member.

 

Incentive Compensation Plan” means any plan, agreement or other arrangement that provides for the grant or issuance of equity or equity-based awards and that is now in effect or is hereafter adopted by the Managing Member for the benefit of the employees or other service providers (including directors, advisers, and consultants) of the Company, or any Subsidiaries of the Company.

 

Incentive Units” means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to “Incentive Units” in the Seventh Amended and Restatement Operating Agreement and includes both Restricted Incentive Units and Unrestricted Incentive Units, as defined in the Seventh Amended and Restatement Operating Agreement.

 

Indemnitee” means the Managing Member, each Affiliate of the Managing Member, the Tax Representative, the Designated Individual and each officer or director of the Managing Member, the Company or their respective Affiliates, in all cases in such capacity.

 

IRS” means the United States Internal Revenue Service, or, if applicable, a state or local taxing agency.

 

42

 

 

Law” means any applicable statute, Law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any governmental authority. The term “Lawful” has a correlative meaning.

 

Liquidating Event” is defined in ‎Section 9.2(b).

 

Liquidator” is defined in ‎Section 9.3(a).

 

Majority-in-Interest of the Members” means Members (excluding the Managing Member) entitled to vote on or consent to any matter holding more than fifty percent (50%) of all outstanding Common Units held by all Members (excluding the Managing Member) entitled to vote on or consent to such matter.

 

Managing Member” is defined in the preamble to this Agreement.

 

Mandatory Exchange” is defined in ‎Section 11.1(c).

 

Mandatory Exchange Date” is defined in ‎Section 11.1(c).

 

Mandatory Exchange Notice” is defined in ‎Section 11.1(c).

 

Member” means any Person named as a member of the Company on the Register of this Agreement (as amended from time to time) and any Person admitted as an Additional Member of the Company or a Substituted Member of the Company, in each case, in such Person’s capacity as a member of the Company, until such time as such Person has ceased to be a Member.

 

Member Representative” is defined in Section 7.8.

 

Merger” means the merger of Ravenclaw Merger Sub LLC with and into the Company, pursuant to the Merger Agreement.

 

Merger Agreement” means the Agreement and Plan of Merger, by and among the Company, the Managing Member, and other parties thereto, dated December 15, 2021.

 

New Securities” means any equity security as defined in Rule 3a11-1 under the Securities Exchange Act of 1934, as amended, excluding grants under the Incentive Compensation Plans, including (i) rights, options, warrants, or convertible or exchangeable securities that entitle the holder thereof to subscribe for or purchase, convert such securities into, or exchange such securities for, Common Stock or Preferred Stock and (ii) any Debt issued by the Managing Member or any of its Subsidiaries (other than the Company and its Subsidiaries), including Debt that provides any of the rights described in clause (i).

 

Percentage Interest” means, with respect to each Member, as to any class or series of relevant Units, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Units of such class or series held by such Member and the denominator of which is the total number of Units of such class or series held by all Members, in each case determined as of the date of determination. If not otherwise specified, “Percentage Interest” shall be deemed to refer to Common Units.

 

43

 

 

Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, syndicate, person, trust, association, organization or other entity, including any governmental authority, and including any successor, by merger or otherwise, of any of the foregoing.

 

Permitted Lender Party” has the meaning given to it in Section 7.10 of this Agreement.

 

Pledge Transaction” has the meaning given to it in Section 7.10 of this Agreement.

 

Policy Regarding Exchanges” is defined in ‎Section 11.1(a).

 

Pre-Closing Taxes” means any (a) U.S. federal, state, or local or non-U.S. tax obligations owed by the Blocker Companies (as defined in the Merger Agreement) for any taxable period (or portion thereof) ending at or before the date of this Agreement in excess of (b) any cash on hand (including cash equivalents and temporary investments of cash) of the Blocker Companies as of the Step 1 Effective Time (as defined in the Merger Agreement) to the extent such cash is not contributed to the Company substantially contemporaneously with the Effective Time (as defined in Merger Agreement).

 

Preferred Stock” means shares of preferred stock of the Managing Member now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Common Stock.

 

Record Date” means the record date established by the Company for the purpose of determining the Members entitled to notice of or vote at any meeting of Members or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Members for any other proper purpose, which, in the case of a record date fixed for the determination of Members entitled to receive any distribution, shall (unless otherwise determined by the Company) generally be the same as the record date established by the Managing Member for a distribution to the Members of its Capital Stock of some or all of its portion of such distribution.

 

Register” is defined in ‎Section 5.1(b)(i).

 

Registration Rights Agreement” means the Registration Rights Agreement, effective on or about the date hereof, among the Managing Member and the other Persons party thereto, as the same may be amended, modified, supplemented or restated from time to time.

 

Regulations” means the income tax regulations, including temporary regulations and, to the extent taxpayers are permitted to rely on them, proposed regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). References to “Treas. Reg. §” are to the sections of the Regulations.

 

Related-Party Transfer” means a Transfer by a Member of all or part of its Units to any Related-Party Transferee.

 

44

 

 

Related-Party Transferee” means, with respect to a Member, (i) any Family Member of that Member, (ii) any direct or indirect member or equityholder of that Member or any Affiliate of that Member, (iii) any Family Member of any direct or indirect member or equityholder described in (ii), or (iv) the Managing Member or any Subsidiary of the Managing Member.

 

SEC” means the Securities and Exchange Commission.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

Selected Courts” is defined in ‎Section 12.8.

 

SPAC Transactions” means the series of transactions effectuated pursuant to the Merger Agreement.

 

Subsidiary” means, with respect to any Person, any corporation or other entity if a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

 

Substituted Member” means a Person who is admitted as a Member to the Company pursuant to ‎Section 7.3.

 

Tax Distribution” is defined in ‎Section 3.2(a).

 

Tax Distribution Shortfall Amount” is defined in ‎Section 3.2(d).

 

Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of August 15, 2022, entered into by and among the Managing Member, the Company, each of the parties thereto identified as a “TRA Holder” or the “TRA Representative” and each of the successors and assigns thereto, and any other similar tax receivable (or comparable) agreements entered after the date of this Agreement.

 

Termination Transaction” means any direct or indirect Transfer of all or any portion of the Managing Member’s Units in connection with, or the other occurrence of, (a) a merger, consolidation or other combination involving the Managing Member, on the one hand, and any other Person, on the other, (b) a sale, lease, exchange or other transfer of all or substantially all of the assets of the Managing Member not in the ordinary course of its business, whether in a single transaction or a series of related transactions, (c) a reclassification, recapitalization or change of the outstanding Class A Common Stock (other than a change in par value, or from par value to no par value, or as a result of a stock split or reverse stock split, stock dividend or similar subdivision), (d) the adoption of any plan of liquidation or dissolution of the Managing Member, or (e) a Transfer of all or any portion of the Managing Member’s Units (other than to a wholly owned Affiliate).

 

Terms” is defined in the definition of “Equivalent Units.

 

Transfer” means, in respect of any Units, property or other assets, any sale, assignment, hypothecation, lien, encumbrance, transfer, distribution or other disposition thereof or of a participation therein, or other conveyance of legal or beneficial interest therein, including rights to vote and receive dividends or other income with respect thereto, or any short position in a security or any other action or position otherwise reducing risk related to ownership through hedging or other derivative instruments, whether voluntarily or by operation of Law, or any agreement or commitment to do any of the foregoing. Neither (i) an Exchange nor (ii) a hypothecation, lien, or encumbrance satisfying the requirements of Section 7.10 shall constitute a Transfer under this Agreement.

 

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Unit” means a fractional share of the limited liability company interest in the Company, which may be a Class A Unit or Class B Unit, and shall be deemed to include any equity security received in connection with any recapitalization, merger, consolidation, or other reorganization, or by way of any distribution in respect of Units, in any such case, after the date of this Agreement.

 

Unit Designation” is defined in ‎Section 2.4(a).

 

Section 13.2 Interpretation. In this Agreement and in the exhibits to this Agreement, except to the extent that the context otherwise requires:

 

(a) the headings are for convenience of reference only and shall not affect the interpretation of this Agreement;

 

(b) defined terms include the plural as well as the singular and vice versa;

 

(c) words importing gender include all genders;

 

(d) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been or may from time to time be amended, extended, re-enacted or consolidated and all statutory instruments or orders made under it;

 

(e) any reference to a “day” or “Business Day” means the whole of such day, being the period of 24 hours running from midnight to midnight;

 

(f) references to Articles, Sections, subsections, clauses and Exhibits are references to Articles, Sections, subsections, clauses and Exhibits to this Agreement;

 

(g) the words “including” and “include” and other words of similar import shall be deemed to be followed by the phrase “without limitation”; and

 

(h) unless otherwise specified, references to any party to this Agreement or any other document or agreement shall include its successors and permitted assigns.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

 

  MANAGING MEMBER
     
  Rubicon Technologies, Inc.
     
  By: /s/ Nathaniel R. Morris
    Name: Nate Morris
    Title: Chief Executive Officer

 

[Signature Page to Amended and Restated LLCA of Rubicon Technologies Holdings, LLC]

 

47

 

 

  MEMBER
     
  By:  
  Name:
  Title:

 

[Signature Page to Amended and Restated LLCA of Rubicon Technologies Holdings, LLC]

 

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ANNEX B: ELECTIVE EXCHANGE NOTICE

 

Elective Exchange Notice

 

_____________________________ (the “Exchanging Holder”) hereby gives notice to Rubicon Technologies Holdings, LLC of its intention to exchange the number of Exchangeable Units set forth in the signature block hereto for shares of Class A Common Stock of Rubicon Technologies, Inc., pursuant to the terms of the Policy Regarding Exchanges of Rubicon Technologies Holdings, LLC, dated August 15, 2022 (the “Exchange Policy”). Capitalized terms that are not defined in this Elective Exchange Notice have the meanings given to them in the Eighth Amended and Restated Limited Liability Company Agreement of Rubicon Technologies Holdings, LLC (the “LLC Agreement”).

 

The Exchanging Holder hereby acknowledges that:

 

1. Exchange Date. The Exchanges governed under this Elective Exchange Notice shall be effective on the first Quarterly Exchange Date after the date of this Elective Exchange Notice;

 

2. Primacy of Exchange Policy and LLC Agreement. This Elective Exchange Notice is subject to the terms of the Exchange Policy and the LLC Agreement; and

 

3. Method of Delivery of Notice. The Elective Exchange Notice must be delivered to _________________________________ no later than thirty (30) days before the relevant Quarterly Exchange Date.

 

  Exchanging Holder
     
  By:  
     
  Name:  
     
  Title:  

 

  Number of Exchangeable Units:
     
  Tax ID:  
     
  Email:  
     
  Address:  
     
     
     
     

 

Annex B-1

 

 

ANNEX C: TAX MATTERS

 

Article I

Definitions

 

Asset Value” means, with respect to any Asset, the adjusted basis of such Asset for federal income tax purposes; provided, however, that:

 

(i) the initial Asset Value of any Asset (other than cash) contributed or deemed contributed by a Member to the Company shall be the gross Fair Market Value of such Asset as determined by the Company;

 

(ii) the Asset Values of all Assets shall be adjusted to equal their respective gross Fair Market Values as determined by the Company as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member, in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(g); (D) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of becoming a Member; or (E) any other instance in which such adjustment is permitted under Treas. Reg. § 1.704-1(b)(2)(iv); provided, however, that any adjustment pursuant to clause (A), (B), (D), or (E) above shall be made only if the Company determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

 

(iii) the Asset Value of any Asset distributed to any Member shall be the gross Fair Market Value of such Asset on the date of distribution, as determined by the Company; and

 

(iv) the Asset Values of all Assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such Assets pursuant to Code section 734(b) or Code section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(m); provided, however, that Asset Values shall not be adjusted pursuant to this paragraph (iv) to the extent that the Company determines that an adjustment pursuant to paragraph (ii) of this definition of Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (iv).

 

If the Asset Value of an Asset has been determined or adjusted to paragraph (i), (ii), or (iv) of this definition of Asset Value, then such Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such Asset for purposes of computing Net Profits and Net Losses.

 

Annex C-1

 

 

Company Minimum Gain” has the meaning set forth as “partnership minimum gain” in Treas. Reg. § 1.704-2(b)(2) and is computed in accordance with Treas. Reg. § 1.704-2(d).

 

Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or other period; provided, however, that if the Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be determined in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(g)(3), or Treas. Reg. § 1.704-3(d)(2), as appropriate.

 

Designated Individual” is defined in ‎Section 4.3(a)(ii) of this ‎Annex C.

 

Imputed Underpayment” is defined in ‎Section 4.4(b) of this ‎Annex C.

 

Imputed Underpayment Share” is defined in ‎Section 4.4(c)(i) of this ‎Annex C.

 

Member Nonrecourse Debt” has the meaning given to the term “partner nonrecourse debt” in Treas. Reg. § 1.704-2(b)(4).

 

Member Nonrecourse Debt Minimum Gain” means, with respect to each Member Nonrecourse Debt, an amount equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treas. Reg. § 1.704-2(i)(3).

 

Member Nonrecourse Deductions” has the meaning given to the term “partner nonrecourse deduction” in Treas. Reg. §§ 1.704-2(i)(l) and 1.704-2(i)(2).

 

Net Profits” and “Net Losses” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Code section 703(a) and, where appropriate (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code section 703(a)(1)), with the following adjustments:

 

(i) any income of the Company exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be added to such taxable income or loss;

 

(ii) any expenditures of the Company described in Code section 705(a)(2)(B) (or treated as expenditures described in Code section 705(a)(2)(B) pursuant to Treas. Reg. § 1.704 1(b)(2)(iv)(i)) and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition shall be subtracted from such taxable income or loss;

 

(iii) in the event the Asset Value of any Asset of the Company is adjusted in accordance with paragraph (ii) or paragraph (iii) of the definition of “Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Net Profits or Net Losses;

 

Annex C-2

 

 

(iv) gain or loss resulting from any disposition of any Asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Asset Value of the Asset disposed of, notwithstanding that the adjusted tax basis of such Asset differs from its Asset Value;

 

(v) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year;

 

(vi) to the extent an adjustment to the adjusted tax basis of any Asset pursuant to Code section 734(b) is required pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases the basis of the Asset) from the disposition of the Asset and shall be taken into account for purposes of computing Net Profits and Net Losses;

 

(vii) notwithstanding any other provision of this definition of Net Profits and Net Losses, any items that are specially allocated pursuant to ‎Section 3.2 and ‎Section 3.3 of this ‎Annex C shall not be taken into account in computing Net Profits or Net Losses, but shall be determined by applying rules analogous to those set forth in paragraphs (i) through (vi) above; and

 

(viii) where appropriate, references to Net Profits and Net Losses shall refer to specific items of income, gain, loss, deduction, and credit comprising or otherwise comprising Net Profits or Net Losses.

 

Nonrecourse Deductions” has the meaning set forth in Treas. Reg. § 1.704-2(b)(1).

 

Nonrecourse Liability” has the meaning set forth in Treas. Reg. § 1.752-1(a)(2).

 

Push Out Election” means the election under Code section 6226 or Code section 6227 (or, in each case, any similar provision under the Bipartisan Budget Act of 2015 or other applicable federal, state, or local law) to “push out” an adjustment to the Members or former Members, including filing IRS Form 8988 (Election for Alternative to Payment of the Imputed Underpayment), or any successor or similar form, and taking any other action necessary to give effect to such election.

 

Tax Representative” means, as applicable, and including the Designated Individual as the context requires, (a) for U.S. federal income tax purposes, with respect to each taxable year beginning after December 31, 2017, the Member or other Person (including the Company) designated as the “partnership representative” of the Company under Code section 6223 for such taxable year, (b) for U.S. federal income tax purposes, with respect to each taxable year beginning on or before December 31, 2017 the Member designated as the “tax matters partner” for the Company under Code section 6231(a)(7) (as in effect before 2018 and before amendment by Title XI of the Bipartisan Budget Act of 2015, H.R. 1314, Public Law No. 114-74), and/or (c) for state, local, or non-U.S. tax purposes, with respect to each applicable taxable period, the Member or other Person serving in a similar capacity under any similar provisions of state, local or non-U.S. Laws, in each case, acting solely at the direction of the Company to the maximum extent permitted under Law.

 

Annex C-3

 

 

Article II

Member’s Capital Accounts.

 

The Company or Managing Member shall establish and maintain a capital account for each Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv) (each, a “Capital Account”). The Company may maintain Capital Account subaccounts for different classes of Units, and any provisions of this Agreement pertaining to Capital Account maintenance shall apply, mutatis mutandis, to those subaccounts.

 

Article III

Allocations

 

Section 3.1 Allocations Generally. Each Fiscal Year, after adjusting each Member’s Capital Account for all contributions and distributions with respect to such Fiscal Year and after giving effect to the allocations under ‎Section 3.2 of this ‎Annex C for the Fiscal Year, Net Profits and Net Losses shall be allocated among the Members in a manner such that, after such allocations have been made, each Member’s Capital Account balance (which may be a positive, negative, or zero balance) will equal (proportionately) (a) the amount that would be distributed to each such Member, determined as if the Company were to (i) sell all of its Assets for their Asset Values, (ii) satisfy all of its liabilities in accordance with their terms with the proceeds from such sale (limited, with respect to Nonrecourse Liabilities, to the Asset Values of the Assets securing such liabilities), and (iii) distribute the remaining proceeds pursuant to the applicable provision of this Agreement, minus (b) the sum of (x) such Member’s share of the Company Minimum Gain and Member Nonrecourse Debt Minimum Gain and (y) the amount, if any (without duplication of any amount included under clause (x)), that such Member is obligated (or is deemed for U.S. tax purposes to be obligated) to contribute, in its capacity as a Member, to the capital of the Company as of the last day of such Fiscal Year.

 

Section 3.2 Priority Allocations.

 

(a) Minimum Gain Chargeback, Qualified Income Offset, and Stop Loss Provisions. Each of (i) the “minimum gain chargeback” provision of Treas. Reg. § 1.704-2(f), (ii) the “chargeback of partner nonrecourse debt minimum gain” provision of Treas. Reg. § 1.704-2(i)(4), (iii) the “qualified income offset” provision in Treas. Reg. § 1.704-1(b)(2)(ii)(d)(3), and (iv) the requirement in the flush language immediately following Treas. Reg. § 1.704-1(b)(2)(ii)(d)(3) that an allocation “not cause or increase a deficit balance” in a Member’s Capital Account is hereby incorporated by reference as a part of this Agreement. The Company shall make such allocations as are necessary to comply with those provisions and shall make any determinations with respect to such allocations (to the extent consistent with clauses (i) – (iv) of the preceding sentence).

 

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(b) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members pro rata in accordance with their Units, unless otherwise determined by the Company.

 

(c) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss (within the meaning of Treas. Reg. § 1.752-2) with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treas. Reg. § 1.704-2(i)(l).

 

(d) Special Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any Company Asset, pursuant to Code section 734(b) or Code section 743(b) is required, pursuant to Treas. Reg. §§ 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the Asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treas. Reg. § 1.704-1(b)(2)(iv)(m)(4) applies.

 

(e) Ameliorative Allocations. Any allocations made (as well as anticipated reversing or offsetting regulatory allocations to be made) pursuant to ‎Section 3.2(a)-‎(d) of this ‎Annex C shall be taken into account in computing subsequent allocations pursuant to this Agreement, so that the net amount for any item so allocated and all other items allocated to each Member pursuant to this Agreement shall be equal, to the extent possible, to the net amount that would have been allocated to each Member pursuant to the provisions of this Agreement if those allocations had not occurred.

 

Section 3.3 Other Allocation Rules.

 

(a) In General. Except as otherwise provided in this ‎Section 3.3 of this ‎Annex C, for income tax purposes under the Code and the Regulations, each Company item of income, gain, loss, deduction, and credit shall be allocated among the Members in the same manner as its correlative item of income, gain, loss, deduction, and credit (as calculated for purposes of allocating Net Profits or Net Loss) is allocated pursuant to ‎Section 3.1 and ‎Section 3.2 of this ‎Annex C.

 

(b) Section 704(c) Allocations. Notwithstanding the provisions of ‎Section 3.3(a) of this ‎Annex C to the contrary, in accordance with Code section 704(c)(1)(A) (and the principles of those provisions) and Treas. Reg. § 1.704-3, Company items of income, gain, loss, deduction, and credit with respect to any property contributed to the capital of the Company, or after Company property has been revalued under Treas. Reg. § 1.704-1(b)(2)(iv)(f) or (s), shall, solely for U.S. federal, state and local tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such Company property to the Company for U.S. federal income tax purposes and its value as so determined at the time of the contribution or revaluation of Company property. The Company shall use the “traditional method” with respect to (i) any property contributed to the Company before the SPAC Transactions and (ii) “reverse section 704(c) allocations” (within the meaning of Treas. Reg. § 1.704-3(a)(6)) arising before or in connection with the SPAC Transactions. With respect to property contributed or section 704(c) amounts arising from revaluations made after the SPAC Transactions, the Company may use any method permitted under Treas. Reg. § 1.704-3. Allocations pursuant to ‎‎Section 3.3(a) and this ‎Section 3.3(b) of this ‎Annex C are solely for U.S. federal, state, and local tax purposes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of profit, loss, or other items, pursuant to any provision of this Agreement.

 

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(c) Allocations in Respect of Varying Interests. If any Member’s interest in the Company varies (within the meaning of Code section 706(d)) within a Fiscal Year, whether by reason of a Transfer of a Unit, redemption of a Unit by the Company, or otherwise, Net Profits and Net Losses for that Fiscal Year will be allocated so as to take into account such varying interests in accordance with Code section 706(d) using the daily proration method and/or such other permissible method, methods, or conventions selected by the Company.

 

(d) Timing and Amount of Allocations of Net Profits and Net Loss. Net Profits and Net Loss of the Company shall be determined and allocated with respect to each Fiscal Year as of the end of each such year, or at such other time or times determined by the Company.

 

(e) Modification of Allocations. The allocations set forth in ‎Section 3.1 and ‎‎Section 3.2 of this ‎Annex C are intended to comply with certain requirements of the Regulations. The Company shall be authorized to make, in its reasonable discretion, appropriate modifications to the allocations of Net Profits and Net Losses pursuant to this Agreement in order to comply with Code section 704 or applicable Regulations. Notwithstanding any provision of this Agreement to the contrary, if the Company reasonably determines an allocation other than the allocations that would otherwise be made pursuant to this Agreement would more appropriately reflect the Members’ interests in the Company, the Company may in its discretion make appropriate adjustments to such allocations.

 

(f) Allocation of Liabilities under Code Section 752. Notwithstanding anything in this Agreement to the contrary, no Member will take, or permit any Affiliate to take, any action that would change the allocation of liabilities for purposes of Code section 752 without the consent of the Company.

 

Article IV

Certain Tax Matters

 

Section 4.1 Provision of Information.

 

(a) Information to Be Provided by Company to Members. No later than thirty (30) days after the filing by the Company of the Company’s federal tax return (Federal Form 1065), the Company shall provide to each Member a copy of Schedule K-1 of Federal Form 1065 reporting that Member’s allocable share of items of income, gain, loss, deduction, or credit for such Fiscal Year, and such additional information as is required to be provided on Schedule K-1 or as such Member may reasonably request for tax purposes, each as determined by the Company. The Member hereby consents to receive each Schedule K-1 in respect of the Member’s Units through electronic delivery.

 

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(b) Information to Be Provided by Members to Company.

 

(i) Notice of Audit or Tax Examination. Each Member shall notify the Company within five (5) days after receipt of any notice regarding an audit or tax examination of the Company and upon any request for material information related to the Company by U.S. federal, state, local, or other tax authorities.

 

(ii) Other Relevant Tax Information. Each Member shall provide to the Company upon request tax basis information about Assets contributed by it to the Company and such other tax information as reasonably requested by the Company and necessary for it to prepare its financial reports or any tax returns and such other information and/or tax forms as the Company reasonably requests.

 

(c) No Right to Member Tax Returns. Notwithstanding anything to the contrary in this Agreement or any right to information under the Act, with respect to the financial statements or tax returns of a Member or its Affiliates, none of the Company, the other Members, such other Member’s Affiliates or any of their respective representatives, will be entitled to review such financial statements or tax returns for any purpose, including in connection with any proceeding or other dispute (whether involving the Company, between the Members, or involving any other Persons).

 

Section 4.2 Tax Elections. The Company shall have in effect (and shall cause each Subsidiary that is classified as a partnership for U.S. federal income tax purposes to have in effect) an election pursuant to Code section 754 (and any similar provisions of applicable U.S. state or local law) for the Company for the Fiscal Year that includes the date of the Merger and each Fiscal Year in which a sale or exchange (whether partial or complete) occurs. The Company shall determine whether to make any other available election pursuant to the Code or Regulations that is not otherwise expressly provided for in this Agreement, and the Members hereby consent to all such elections.

 

Section 4.3 Tax Representative.

 

(a) Appointment and Replacement of Tax Representative.

 

(i) Tax Representative. For each taxable year, including Fiscal Years before the date of this Agreement, the Company shall act as the Tax Representative, but the Company may designate another Person to act as the Tax Representative and may remove, replace, or revoke the designation of any Person serving as the Tax Representative, or require that Person to resign. For any jurisdiction with respect to which the Company cannot serve as the Tax Representative, however, the Managing Member shall act as the Tax Representative, unless otherwise determined by the Company.

 

(ii) Designated Individual. If the Tax Representative is not an individual, the Company shall appoint a “designated individual” for each taxable year (as described in Treas. Reg. § 301.6223-1(b)(3)(ii)) (a “Designated Individual”).

 

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(iii) Approval by Members. For each taxable year since the formation of the Company, each Member agrees to execute, certify, acknowledge, deliver, swear to, file, and record at the appropriate public offices such documents as may be deemed necessary or appropriate to evidence the appointments described in ‎Section 4.3(a)(i) and ‎Section 4.3(a)(ii) of this ‎Annex C, including statements required to be filed with the tax returns of the Company in order to effect the designation of the Tax Representative or Designated Individual (and any successor).

 

(b) Authority of the Tax Representative; Delegation of Authority. The Tax Representative shall have all of the rights, duties, powers, and obligations provided for under the Code, Regulations, or other applicable guidance; provided, that, if a Person other than the Company is the Tax Representative, the Tax Representative shall in all cases act solely at the direction of the Company. The Tax Representative may delegate its authority under this ‎Section 4.3(b) of this ‎Annex C to a Designated Individual who shall in all cases act solely at the direction of the Company.

 

(c) Costs and Indemnification of Tax Representative and Designated Individual. Without duplication of the provisions of ‎Section 4.3(b) of this ‎Annex C, the Company shall pay, or to the extent the Tax Representative or Designated Individual pays, indemnify and reimburse, to the fullest extent permitted by Law, the Tax Representative or Designated Individual for all costs and expenses, including legal and accounting fees (as such fees are incurred) and any claims incurred in connection with any tax audit or judicial review proceeding with respect to the tax liability of the Company.

 

Section 4.4 Tax Audits.

 

(a) Determinations with Respect to Audits and Other Tax Controversies. Except to the extent otherwise required by applicable tax Law (including Code section 6241(11)), the Company (acting directly and/or through the Tax Representative or Designated Individual) shall have the sole authority to make all decisions and determinations with respect to, and shall have sole authority with respect to the conduct of, tax audits or other tax controversies with respect to the Company, and any action taken by the Company (acting directly and/or through the Tax Representative or Designated Individual) in connection with any such audits or controversies shall be binding upon the Company and the Members and former Members.

 

(b) Determinations with Respect to Elections. The Company may make the election “out” under Code section 6221(b) if such an election is available, unless otherwise determined by the Company. If the Company does not make the election described in the preceding sentence, the Company (acting directly and/or through the Tax Representative or Designated Individual) shall have the sole authority to determine whether to cause the Company to make a Push Out Election with respect to any adjustment that could result in an imputed underpayment (within the meaning of Code section 6225) (an “Imputed Underpayment”). Notwithstanding any provision of this Agreement to the contrary, the Company shall not make any Push Out Election with respect to any taxable periods ending on or before the effective date of the SPAC Transaction, including the portion of any taxable period through the end of the effective date of the SPAC Transaction.

 

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(c) Responsibility for Payment of Tax; Former Members.

 

(i) Imputed Underpayment Share. To the extent the Company is liable for any Imputed Underpayment, the Company shall determine the liability of the Members for a share of such Imputed Underpayment, taking into account the Members’ Units and the status and actions of the Members (including those described in Code section 6225(c)) (such share, an “Imputed Underpayment Share”).

 

(ii) Payment of Imputed Underpayment Share. The Company may (A) require a Member who is liable for an Imputed Underpayment Share to pay the amount of its Imputed Underpayment Share to the Company within ten (10) days after the date on which the Company notifies the Member (and in the manner required by the notice) and/or (B) reduce future distributions to the Member, such that the amount determined under clauses (A) and (B) equals the Member’s Imputed Underpayment Share, provided, however, that no Member shall have an obligation to make any contribution to the capital of the Company with respect to any Imputed Underpayment. If a Member fails to pay any amount that it is required to pay the Company in respect of an Imputed Underpayment Share within such ten (10) day period, that amount shall be treated as a loan to the Member, bearing interest at ten (10) percent annually (which interest shall increase the Member’s Imputed Underpayment Share). Such loan shall be repayable upon demand by the Company. If the Member fails to repay the loan upon demand, the full balance of the loan shall be immediately due (including accrued but unpaid interest) and the Company shall have the right to collect the balance in any manner it determines, including by reducing future distributions to that Member; provided, however, that no Member may have any Imputed Underpayment Share treated as a loan to the extent it would violate Section 402 of the Sarbanes-Oxley Act of 2002. Any Member not permitted to treat its Imputed Underpayment Share as a loan due to the provisions of the previous sentence shall pay any Imputed Underpayment Share within ten (10) days after the date of the notice referred to in the first sentence of this ‎Section 4.4(c)(ii) of this ‎Annex C.

 

Section 4.5 No Independent Actions or Inconsistent Positions. Except as required by Law or previously authorized in writing by the Company (which authorization may be withheld in the sole discretion of the Company), no Member shall (i) independently act with respect to tax matters (including, but not limited to, audits, litigation and controversies) affecting or arising from the Company, or (ii) treat any Company item inconsistently on such Member’s income tax return with the treatment of the item on the Company’s tax return and/or the Schedule K-1 (or other written information statement) provided to such Member. Solely to the extent required by Law, this ‎Section 4.5 of this ‎Annex C shall not apply with respect to any “special enforcement matter” described in Code section 6241(11).

 

Section 4.6 United States Person. Except as permitted by the Company, each Member represents and covenants that, for U.S. federal income tax purposes, it is and will at all times remain a “United States Person,” within the meaning of Code section 7701, or is a disregarded entity the assets of which are treated as owned by a United States Person under Treas. Reg. §§ 301.7701-1, 301.7701-2, and 301.7701-3.

 

Section 4.7 State, Local, and Non-U.S. Tax Law. The provisions of this Agreement with respect to U.S. federal income tax shall apply, mutatis mutandis, with respect to any similar provisions of state, local, or non-U.S. tax law as determined by the Company.

 

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Section 4.8 Survival of Obligations. For purposes of this ‎Article IV of this ‎Annex C, the term “Member” shall include a former Member to the extent determined by the Company. The rights and obligations of each Member and former Member under this ‎Article IV of this ‎Annex C shall survive the Transfer by such Member of its Units (or withdrawal by a Member or redemption of a Member’s Units) and the dissolution of the Company until ninety (90) days after the applicable statute of limitations. ‎Section 4.3 (Tax Representative), ‎Section 4.4 (Tax Audits), and this ‎Section 4.8 (Survival of Obligations) of this ‎Annex C shall not be amended without the prior written consent of any Member or former Member that would be adversely impacted by such amendment.

 

Section 4.9 Tax Classification. The parties intend that the Company shall be classified as a partnership for United States federal, state, and local tax purposes. The parties intend that the Subsidiaries of the Company currently classified either as disregarded entities or as partnerships for United States federal, state, and local tax purposes as of the date of this Agreement shall remain classified either as disregarded entities or as partnerships for United States federal, state, and local tax purposes. No Person shall take any action inconsistent with such classifications.

 

Section 4.10 Withholding.

 

(a) Withholding Generally. Each Member acknowledges and agrees that the Company may be required by Law to deduct and withhold taxes or to fulfill other similar obligations of such Member on any amount paid, distributed, disbursed, or allocated by the Company to that Member, including upon liquidation, and any transferee of a Member’s interest or a Substituted Member shall, by reason of such Transfer or substitution, acknowledge, and agree to any such withholding by the Company, including withholding to discharge obligations of the Company with respect to prior distributions, allocations, or an Imputed Underpayment Share (to the extent not otherwise borne by the transferor Member pursuant to ‎Section 4.4 of this ‎Annex C). All amounts withheld pursuant to this ‎Section 4.10 of this ‎Annex C shall, except as otherwise determined by the Company pursuant to ‎Section 4.4(c)(ii) of this ‎Annex C, be treated as amounts distributed to such Person pursuant to the provision of this Agreement that would have applied if such amount had actually been distributed.

 

(b) Additional Provisions with Respect to a Transfer of Units. A Member transferring Units permitted by this Agreement shall, unless otherwise determined by the Company, (i) deliver to the Company, between ten (10) days and thirty (30) days before the Transfer, an affidavit of non-foreign status with respect to such transferor Member that satisfies the requirements of Code section 1446(f)(2) or other documentation establishing a valid exemption from withholding pursuant to Code section 1446(f) or (ii) ensure that, contemporaneously with the Transfer, the transferee of such interest properly withholds and remits to the IRS the amount of tax required to be withheld upon the Transfer by Code section 1446(f) (and promptly provide evidence to the Company of such withholding and remittance). If a Member transferring Units will not satisfy clause (i) in connection with any such Transfer unless the transferor Member and transferee of such interest shall agree to jointly and severally indemnify and hold harmless the Company against any loss (including taxes, interest, penalties, and any related expenses) arising out of any failure to comply with the provisions of this ‎Section 4.10(b) of this ‎Annex C.

 

(c) Additional Provisions with Respect to an Exchange of Units.

 

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(i) Withholding of Cash or Class A Common Stock Permitted. If (x) the Company or the Managing Member shall be required to withhold any amounts by reason of any federal, state, local, or non-U.S. tax laws or regulations in respect of any Exchange or (y) the applicable Member has unpaid amounts described in Section 4.4(c) of this Annex C, the Company, or the Managing Member, as the case may be, shall be entitled to take such action as it deems appropriate in order to ensure compliance with such withholding requirements or satisfy such payment obligations, including, at its option, withholding cash from the Cash Settlement or shares of Class A Common Stock with a Fair Market Value equal to the amount of any taxes that the Company or the Managing Member, as the case may be, may be required to withhold or the Member may be required to pay with respect to such Exchange. To the extent that amounts are (or property is) so withheld and, if required, paid over to the appropriate taxing authority, such withheld amounts (or property) shall be treated for all purposes of this Agreement as having been paid (or delivered) to the applicable Member.

 

(ii) Notice of Withholding. If the Company or the Managing Member determines that any amounts by reason of any federal, state, local, or non-U.S. tax laws or regulations are required to be withheld in respect of any Exchange, the Company or the Managing Member, as the case may be, shall use commercially reasonable efforts to promptly notify the Exchangeable Unit Member and shall consider in good faith any positions or alternative arrangements that such Member raises (reasonably in advance of the date on which the Company or the Managing Member believes withholding is required) as to why withholding is not required or that may avoid the need for such withholding, provided, that neither the Company nor the Managing Member is required to incur additional costs as a result of such obligation, and this ‎Section 4.10(c)(ii) of this ‎Annex C shall not in any manner limit the authority of the Company or the Managing Member to withhold taxes with respect to an Exchangeable Unit Member pursuant to ‎Section 4.10(c)(i) of this ‎Annex C.

 

(iii) Reimbursement of Taxes by Exchangeable Unit Member. If, within the three-year period beginning at the start of the date of an Exchange, (i) the Company or the Managing Member withholds or otherwise pays any amount on account of taxes in respect of exchanged Units, which amount is attributable to the three-year period ending at the end of the date of such Exchange, and (ii) the Company, the Managing Member or any person other than the applicable Exchangeable Unit Member otherwise would bear the economic burden of such withholding or other payment (including by reason of such amount being treated as having been distributed to the Managing Member in respect of the Exchangeable Units pursuant to ‎Section 4.10 of this ‎Annex C), the Exchangeable Unit Member shall, upon notice by the Company and/or the Managing Member, promptly reimburse the Company and/or the Managing Member for such amount; provided, however, that the Exchangeable Unit Member’s reimbursement obligation under this ‎Section 4.10(c)(iii) of this ‎Annex C shall not exceed the amount of cash and Fair Market Value (determined as of the date of receipt) of other consideration received by the Exchangeable Unit Member in connection with such Exchange. Unless otherwise required by Law, any amount paid by an Exchangeable Unit Member pursuant to this ‎Section 4.10(c)(iii) of this ‎Annex C shall be treated as an adjustment to the proceeds received by the Exchangeable Unit Member in respect of the applicable Exchange. The Company and the Managing Member shall have the right to reduce any amounts due to such Exchangeable Unit Member from the Managing Member or any of its Affiliates by the amount owed by such Exchangeable Unit Member under this ‎Section 4.10(c)(iii) of this ‎Annex C.

 

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ANNEX E: POLICY REGARDING EXCHANGES

 

Effective as of August 15, 2022

 

This Policy Regarding Exchanges (the “Policy”) of Rubicon Technologies Holdings, LLC (the “Company”) sets forth certain rules applicable to the exchange of Exchangeable Units for shares of Class A Common Stock of Rubicon Technologies, Inc. (the “Common Stock”) and/or cash, at the option of the Managing Member (each, an “Exchange”), pursuant to the Company’s Eighth Amended and Restated Limited Liability Company Agreement (the “Agreement”). Capitalized terms that are not defined in this Policy have the meanings given to them in the Agreement. This Policy is made pursuant to, and supplements the provisions of, Article XI of the Agreement. Except as modified by the rules set forth in the Special Exchange Policy, this Policy shall apply to Special Exchanges.

 

Article I

EXCHANGE DATES; PROVISIONS REGARDING EXCHANGEABLE AMOUNT

 

Section 1.1 Quarterly Exchange Date. There shall be one (1) date per quarter of each Fiscal Year on which an Elective Exchange may occur (each, a “Quarterly Exchange Date”) for a holder of Exchangeable Units (each holder, an “Exchanging Holder”). The Quarterly Exchange Date for Exchanging Holders that are required to file reports pursuant to Section 16(a) of the Exchange Act may be different than the Quarterly Exchange Date for Exchanging Holders that are not required to file reports pursuant to Section 16(a) of the Exchange Act. The Company shall use commercially reasonable efforts to notify the applicable Exchanging Holders at least forty-five (45) days before a relevant Quarterly Exchange Date (such notice, a “Quarterly Exchange Date Notice”).

 

Section 1.2 Minimum Exchangeable Amount. The Company may set a minimum number or dollar value of Exchangeable Units that may be exchanged by Exchanging Holders on a Quarterly Exchange Date, which minimum amount shall, except as provided in Section 3.2(c), except as provided in Section 3.2(c), be the same for all holders of Exchangeable Units (the “Minimum Exchangeable Amount”) and shall include the applicable Minimum Exchangeable Amount in the applicable Quarterly Exchange Date Notice. If an Exchanging Holder delivers an Elective Exchange Notice pursuant to Section 3.1 requesting to exchange all of its Exchangeable Units, the number or dollar value, as applicable, of the Exchanging Holder’s Exchangeable Units shall be deemed to satisfy the Minimum Exchangeable Amount requirement.

 

Section 1.3 Maximum Exchangeable Amount. The Company may set a maximum aggregate number or dollar value of Exchangeable Units that may be exchanged by the Exchanging Holders on a Quarterly Exchange Date (the “Maximum Exchangeable Amount”) and shall include the applicable Maximum Exchangeable Amount in the applicable Quarterly Exchange Date Notice. If the aggregate number or dollar value of Exchangeable Units that the Exchanging Holders propose to exchange on the Quarterly Exchange Date (as set forth on the Elective Exchange Notices) exceeds the Maximum Exchangeable Amount, then the number or dollar value of Exchangeable Units that each Exchanging Holder specified in its Elective Exchange Notice shall be reduced by the same percentage by which the aggregate number or dollar value of Exchangeable Units of all Exchanging Holders is reduced so that the aggregate number or dollar value of Exchangeable Units does not exceed the Maximum Exchangeable Amount.

 

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Article II

ADDITIONAL RIGHTS TO EXCHANGE

 

Section 2.1 Rights to Exchange.

 

(a) Right to Exchange Before Certain Transactions. If the Company or the Managing Member consolidates, merges, combines or consummates any other transaction in which shares of Class A Common Stock are exchanged for or converted into other stock or securities, or the right to receive cash and/or any other property, no other provisions of this Policy shall limit the right of any Exchangeable Unit Member to effect an Elective Exchange in order to receive Class A Common Stock in advance of consummation of any such consolidation, merger or other such transaction unless in connection with any such consolidation, merger, combination or other transaction each Class B Unit shall be entitled to be exchanged for or converted into the stock, cash, securities or other property that such holder of a Class B Unit would have received had it exercised its right to Exchange pursuant to this Policy and received Class A Common Stock in exchange for its Class B Units immediately before such consolidation, merger, combination or other transaction (subject to any differences in the kind and amount of stock or securities, cash and/or any other property as are intended (as determined by the Company in good faith) to maintain the relative voting power of each share of Class V Common Stock relative to each share of Class A Common Stock in effect before such transaction). This Article II shall not apply to any action or transaction (including any consolidation, merger, or combination) approved by a Majority-in-Interest of the Members.

 

(b) Right to Exchange Before an Applicable Sale or Termination Transaction. Upon the occurrence of an Applicable Sale or a Termination Transaction, no other provisions of this Policy shall limit the right of any Exchangeable Unit Member to effect an Elective Exchange in order to receive Class A Common Stock in advance of consummation of any such Applicable Sale or Termination Transaction.

 

Article III

ELECTIVE EXCHANGE NOTICE

 

Section 3.1 Timing of Elective Exchange Notice.

 

(a) Elective Exchange Notice. Each holder that elects to Exchange some or all of its Exchangeable Units must deliver notice of an election in respect of the Exchangeable Units to be exchanged (an “Elective Exchange Notice”) to the Company, in a method determined by the Company at least thirty (30) days before the relevant Quarterly Exchange Date. The Company shall provide to each Exchangeable Unit Holder the form of Elective Exchange Notice and the means for delivery of that Elective Exchange Notice.

 

(b) Acceptance of Elective Exchange Notice. After the Elective Exchange Notice has been delivered to the Company, and unless the Company or Managing Member, as applicable, has refused to honor the request in full pursuant to Section 1.2 (Minimum Exchangeable Amount), Section 1.3 (Maximum Exchangeable Amount), Section 3.1(c) (Cancellation of Quarterly Exchange Window), Section 3.2(c) (Post-Retraction Limitations on Exchange), or Article IV (Other Restrictions), the Company or Managing Member, as applicable, will effect the Elective Exchange on the applicable Quarterly Exchange Date in accordance with this Policy.

 

(c) Cancellation of Quarterly Exchange Date. The Company may at any time, in its sole discretion, cancel a Quarterly Exchange Date for any or no reason. If the Company cancels a Quarterly Exchange Date, then no holder of Exchangeable Units shall be permitted to Exchange those Exchangeable Units on the cancelled Quarterly Exchange Date.

 

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Section 3.2 Retraction of Elective Exchange Notice.

 

(a) Ability to Retract; Retraction Deadline. If, at any time between the close of trading on the date of delivery of an Elective Exchange Notice and the close of trading on the date that is two (2) Business Days before the applicable effective date of such Elective Exchange (the “Elective Exchange Date”), the reported closing trading price of a share of the Common Stock on the principal United States securities exchange or automated or electronic quotation system on which the Common Stock trades decreases by five (5) percent or more, an Exchanging Holder may retract its Elective Exchange Notice in whole (but not in part) by delivering a notice to the Company in a manner determined by the Company not later than the Retraction Deadline (a “Retraction Notice” and the Exchangeable Units that are the subject of the Retraction Notice, the “Retracted Units”) not later than the close of trading on the date that is two (2) Business Days before the applicable Elective Exchange Date (the “Retraction Deadline”) pursuant to ‎Section 3.2(b). The Company shall have no obligation to notify the Exchanging Holders of any decrease in the Common Stock trading price. A Retraction Notice shall not be effective if the Exchanging Holder delivering the Retraction Notice has previously delivered a valid Retraction Notice with respect to any of the seven (7) immediately preceding Quarterly Exchange Dates.

 

(b) Retraction Notice. An Exchanging Holder’s delivery of a Retraction Notice shall be irrevocable and shall terminate all of the Exchanging Holder’s, Company’s, and Managing Member’s rights and obligations with respect to the Retracted Units, and all actions taken to effect the Elective Exchange contemplated by that retracted Elective Exchange Notice shall be deemed rescinded and void with respect to the Retracted Units.

 

(c) Post-Retraction Limitations on Exchange. If an Exchanging Holder delivers a Retraction Notice for a Quarterly Exchange Date pursuant to ‎Section 3.2(b), (i) the retracting Exchanging Holder shall not be entitled to participate in the Exchange on the Quarterly Exchange Date for which the Retraction Notice was delivered and (ii) the number of Exchangeable Units that the Exchangeable Holder shall be permitted to Exchange on each of the next two (2) Quarterly Exchange Dates on which the Exchangeable Holder Exchanges Exchangeable Units shall not exceed fifty percent (50%) of the number of Retracted Units. The Minimum Exchangeable Amount, if any, with respect to any such limited Exchange by such Exchangeable Unitholder shall be deemed to equal fifty percent (50%) of the number of Retracted Units.

 

Article IV

OTHER RESTRICTIONS

 

Notwithstanding any provision of this Policy to the contrary (including the provisions of Article II), the Company may prohibit an Exchange by one or more holders of Exchangeable Units under any of the following conditions and determinations made by the Company based on the advice of counsel (which may be external or internal counsel):

 

(a) If an Exchange is (or is reasonably likely to be) prohibited under applicable law, regulation, or agreement to which the Company or an affiliate is a party or could reasonably be expected to result in a bona fide lawsuit against the Company or its affiliates; or

 

(b) If there is a material risk that the Company would be a “publicly traded partnership” under section 7704 of the Code as a result of an Exchange.

 

Article V

EXEMPTIONS FROM AND MODIFICATIONS TO POLICY

 

The Company may, in its discretion and based on the advice of counsel (which may be external or internal counsel), consider and grant requests from holders of Exchangeable Units, including for (i) additional Exchange Dates, (ii) Exchanges of less than the Minimum Exchangeable Amount, (iii) Exchanges in excess of the Maximum Exchangeable Amount, (iv) an Exchange to be subject to one or more contingencies relating to the Company or the Managing Member, or (v) any other matter with respect to Exchanges (to the extent permitted by the Agreement and applicable Law). A holder of Exchangeable Units may request an exemption from this Policy by submitting a written request to the Company and following the delivery requirements set forth in ‎Article III as if the written request were an Elective Exchange Notice.

 

Annex E-3

 

 

Article VI

MISCELLANEOUS

 

Section 6.1 Continuing Application of Company’s Policies and Securities Laws. Nothing in this Policy shall affect, and each holder of Exchangeable Units shall remain subject to, the Company’s Policies, including those addressing insider trading and any other Company policies regarding trading or the holding of investments. All holders of Exchangeable Units shall comply with all applicable securities laws and rules.

 

Section 6.2 Independent Nature of Rights and Obligations. Nothing in this Policy or in any other agreement or document or any action taken by any holder of Exchangeable Units shall be deemed to cause the holders of Exchangeable Units to have formed a partnership, association, joint venture, or any other kind of entity or create a presumption that the holders of Exchangeable Units are in any way acting in concert as a group.

 

Section 6.3 Mandatory Exchanges. This Policy shall not apply to any Exchange of Exchangeable Units pursuant to a Mandatory Exchange, as described in, and pursuant to, the Agreement.

 

Section 6.4 Notice Delivery Deadlines on Non-Business Days. If the date on or before which the Company or an Exchanging Holder is required to deliver a notice pursuant to this Policy is not a Business Day, then that notice will be deemed to be timely delivered on that date if that notice is received on the Business Day immediately following that date.

 

Section 6.5 Notifications Under This Policy. The Company will be deemed to have satisfied any notification requirement in this Policy by making available such notification on any system accessible by Exchanging Holders.

 

Section 6.6 Modification of Policy. The Company may modify this Policy at any time without notice. The Company will deliver or make available a copy of the revised Policy to the holders of Exchangeable Units at least forty-five (45) days before the next Quarterly Exchange Date.

 

*        *        *

 

Annex E-4

 

Exhibit 10.10

 

 

 

 

 

 

 

 

 

 

TAX RECEIVABLE AGREEMENT

 

 

dated as of

 

August 15, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
Article I DETERMINATION OF REALIZED TAX BENEFIT   2
     
  Section 1.01   Realized Tax Benefit and Realized Tax Detriment   2
  Section 1.02   Assumptions, Conventions, and Principles for Calculations   2
  Section 1.03   Procedures Relating to Calculation of Tax Benefits   3
           
Article II TAX BENEFIT PAYMENTS, THE CONSOLIDATED GROUP, AND TRANSFERS OF CORPORATE ASSETS   6
     
  Section 2.01   Payments   6
  Section 2.02   No Duplicative Payments   7
  Section 2.03   Order of Payments   7
  Section 2.04   No Escrow or Clawback; Reduction of Future Payments   7
           
Article III EARLY TERMINATIONS   8
     
  Section 3.01   Early Termination Events   8
  Section 3.02   Early Termination Notice and Early Termination Schedule   9
  Section 3.03   Early Termination Payment   10
  Section 3.04   Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets   11
           
Article IV SUBORDINATION AND LATE PAYMENTS   12
     
  Section 4.01   Subordination   12
  Section 4.02   Late Payments by the Corporation   12
  Section 4.03   Manner of Payment   12

 

i

 

 

TABLE OF CONTENTS
(continued)

 

      Page
Article V PREPARATION OF TAX RETURNS; COVENANTS; TRA REPRESENTATIVE   12
     
  Section 5.01   No Participation by TRA Holder in the Corporation’s and the Company’s Tax Matters   12
  Section 5.02   Consistency   13
  Section 5.03   Cooperation   13
  Section 5.04   Section 754 Election   13
  Section 5.05   Available Cash   13
  Section 5.06   TRA Representative   13
           
Article VI MISCELLANEOUS   14
     
  Section 6.01   Notices   14
  Section 6.02   Bank Account Information   16
  Section 6.03   Counterparts   16
  Section 6.04   Entire Agreement   16
  Section 6.05   Governing Law   16
  Section 6.06   Severability   16
  Section 6.07   Assignment; Amendments; Waiver of Compliance; Successors   17
  Section 6.08   Titles and Subtitles   18
  Section 6.09   Dispute Resolution   18
  Section 6.10   Withholding   20
  Section 6.11   Confidentiality   20
  Section 6.12   LLC Agreement   21
  Section 6.13   Joinder   21
  Section 6.14   Survival   21
           
Article VII DEFINITIONS   22

 

ii

 

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of August 15, 2022, is entered into by and among Rubicon Technologies, Inc., a Delaware corporation (“Rubicon Technologies, Inc.”, together with each of its Subsidiaries that is classified as a corporation for U.S. federal income tax purposes, and each successor thereto, the “Corporation”), Rubicon Technologies Holdings, LLC, a Delaware limited liability company that is classified as a partnership for U.S. federal income tax purposes (the “Company”), each of the TRA Holders, and the TRA Representative.

 

RECITALS

 

WHEREAS, the Company’s Class B Units are held directly by the Unblocked TRA Holders;

 

WHEREAS, the Blocked TRA Holders hold, and will continue to hold until the effective time of the Blocker Mergers, the Class B Units indirectly through the Blockers;

 

WHEREAS, the Corporation is the managing member of the Company;

 

WHEREAS, pursuant to the Transaction Agreement, Merger Sub LLC will merge with and into the Company, with the Company surviving (the “Merger”);

 

WHEREAS, pursuant to and following the consummation of the transactions set forth in the Transaction Agreement (including the Merger), the Corporation will become the owner of the Class B Units held by the Blockers (the “Blocker Mergers”);

 

WHEREAS, the Class B Units held by the Unblocked TRA Holders are exchangeable with the Company or the Corporation in certain circumstances for Class A Shares and/or cash pursuant to the exchange provisions of the Eighth Amended and Restated Limited Liability Company Agreement of the Company (the “LLC Agreement”);

 

WHEREAS, each of the Company and any of its direct or indirect Subsidiaries classified as partnerships for United States federal income tax purposes shall have in effect an election under section 754 of the Code for each Taxable Year that includes the effective date of the Blocker Mergers and the Merger Date and each Taxable Year in which an Exchange occurs, which election is intended to result in an adjustment to the tax basis of the assets owned by the Company and such Subsidiaries, solely with respect to the Corporation;

 

WHEREAS, the liability of the Corporation in respect of Taxes may be reduced by the Tax Assets;

 

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the benefits attributable to the effect of the Tax Assets on the liability for Taxes of the Corporation;

 

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NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, the undersigned parties agree as follows:

 

Article I
DETERMINATION OF REALIZED TAX BENEFIT

 

Section 1.01 Realized Tax Benefit and Realized Tax Detriment. Except as otherwise expressly provided in this Agreement, the parties intend that, for a Taxable Year, the excess, if any, of (a) the Hypothetical Tax Liability over the Actual Tax Liability (such excess, the “Realized Tax Benefit”) or (b) the Actual Tax Liability over the Hypothetical Tax Liability (such excess, the “Realized Tax Detriment”) shall measure the decrease or increase (respectively) in the Actual Tax Liability for such Taxable Year that is attributable to the Tax Assets, determined using a “with and without” methodology (that is, treating the Tax Assets as the last tax attributes used in such Taxable Year). If all or a portion of the Actual Tax Liability for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit or Realized Tax Detriment unless and until there has been a Determination with respect to that portion of the Actual Tax Liability.

 

Section 1.02 Assumptions, Conventions, and Principles for Calculations. The “Actual Tax Liability” shall be the Tax liability of the Corporation as reflected on the relevant Corporate Tax Return calculated (y) using such reasonable methods as the Corporation determines and (z) substituting the Basis Adjustment for any adjustment under sections 732, 734, 743, or 1012 of the Code (as applicable) as a result of (i) an Exchange or (ii) the Blocker Mergers (including any adjustment under section 743 of the Code that the Corporation directly or indirectly owns as a result of the Blocker Mergers). In making the calculations required by this Agreement, the Corporation shall use the following assumptions, conventions, and principles:

 

(a) Treatment of Tax Benefit Payments. Tax Benefit Payments shall be treated in part as Imputed Interest and in part as additional purchase price for (i) interests in the Blockers in the case of the Blocker Mergers, (except as otherwise required by the Code) or (ii) Units in the case of an Exchange. Tax Benefit Payments (other than amounts accounted for as Imputed Interest) arising as a result of an Exchange shall be treated as upward purchase price adjustments that give rise to further Basis Adjustments to Adjusted Assets for the Corporation in the year of payment, and, as a result, such additional Basis Adjustments shall be incorporated into the current year calculation and into future year calculations, as appropriate.

 

(b) Imputed Interest. The Actual Tax Liability shall take into account the deduction of the portion of each Tax Benefit Payment that is accounted for as Imputed Interest under the Code due to the characterization of such Tax Benefit Payments as additional consideration payable by the Corporation for the Units acquired in connection with an Exchange or the Blocker Mergers.

 

(c) Carryovers and Carrybacks. Carryovers or carrybacks of any income, gain, loss (including any NOLs), deduction, or credit attributable to the Tax Assets shall be considered to be subject to the rules of the Code and the Treasury Regulations governing the use, limitation and expiration of carryovers or carrybacks of the relevant type (including sections 382, 383 and 384 of the Code). If a carryover or carryback of any Tax item includes a portion that is attributable to a Tax Asset and another portion that is not, the portion attributable to the Tax Asset shall be considered to be used in accordance with the “with and without” methodology (that is, treating the Tax Assets as the last tax attributes used in such Taxable Year).

 

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(d) State and Local Taxes. For purposes of calculating the Actual Tax Liability with respect to a Taxable Year, the Corporation may, but shall not be required to, assume that the Corporation’s state and local Tax liability (the “Assumed SALT Liability”) equals (x) the product of (i) the taxable income and gain determined for the Taxable Year in accordance with this Agreement and (ii) four percent (4%) or (y) if the Corporation determines in its sole discretion (but, in any case, not more frequently than annually) that the percentage described in clause (x) materially differs from the actual state and local liability, then, in consultation with the TRA Representative, the Corporation will use such other percentage as the Corporation reasonably determines from time to time reflects its blended state and local tax rate (using the apportionment factors set forth on the relevant Corporate Tax Returns for that Taxable Year unless otherwise determined by the Corporation after consultation with the TRA Representative). Notwithstanding the provisions of clause (y) of the preceding sentence, the Corporation shall not use a rate that is materially lower than the rate initially used to calculate the Assumed SALT Liability without the consent of the TRA Representative, such consent not to be unreasonably withheld, conditioned, or delayed.

 

(e) Treatment of State and Local and Non-United States Taxes. The provisions of this Agreement, including the assumption, conventions, and principles with respect to the determination of income and gain, shall apply to state and local and non-United States tax matters mutatis mutandis.

 

Section 1.03 Procedures Relating to Calculation of Tax Benefits.

 

(a) Preparation and Delivery of Schedules.

 

(i) Exchange Basis Schedule and Merger Date Asset Schedule.

 

(A) Merger Date Asset Schedule. The Merger Date Asset Schedules are attached as Annex A with respect to the Blockers. The calculations required by this Agreement shall be made in accordance with the Merger Date Asset Schedules. If any calculation is required to be made before the finalized Merger Date Asset Schedules are agreed upon in accordance with this Section 1.03(a)(i)(A) and Section 1.03(b), reasonable estimates shall be used. Within 75 days after the filing of the U.S. federal income Tax Return of the Corporation for the Taxable Year in which the Blocker Mergers and the Merger occurred, the Corporation shall deliver draft Merger Date Asset Schedules to the TRA Representative and the Blocked TRA Holders. Within 120 days after the filing of the U.S. federal income Tax Return of the Corporation for the Taxable Year in which the Blocker Mergers and the Merger occurred, the Corporation shall deliver to the TRA Representative and the Blocked TRA Holders the finalized Merger Date Asset Schedule, as determined in accordance with ‎Section 1.03(b) (the “Finalized Merger Date Asset Schedules”). The Merger Date Asset Schedules shall show, in reasonable detail, (v) summary of Tax Assets resulting from the Blocker Mergers, (w) the actual common tax basis of the Adjusted Assets as of the Merger Date, (x) any Basis Adjustment with respect to the Adjusted Assets as a result of the Blocker Mergers, (y) the period or periods, if any, over which the common tax basis of the Adjusted Assets are amortized and/or depreciable, and (z) the period or periods, if any, over which each Basis Adjustment is amortizable and/or depreciable.

 

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(B) Exchange Basis Schedule. Within 120 days after the filing of the U.S. federal income Tax Return of the Corporation for each Taxable Year in which any Exchange has occurred, the Corporation shall deliver to the TRA Representative and Blocked TRA Holders a schedule (the “Exchange Basis Schedule”) that shows, in reasonable detail, (w) the actual common tax basis of the Adjusted Assets as of each Exchange Date, (x) the Basis Adjustment with respect to the Adjusted Assets as a result of the Exchanges effected in such Taxable Year and all prior Taxable Years ending after the date of this Agreement, calculated (1) in the aggregate and (2) with respect to Exchanges by each TRA Holder, (y) the period or periods, if any, over which the common tax basis of the Adjusted Assets are amortizable and/or depreciable, and (z) the period or periods, if any, over which each Basis Adjustment is amortizable and/or depreciable. The calculations required by this Agreement, shall be made in accordance with the Exchange Basis Schedule. If any calculation is required to be made before the Exchange Basis Schedule is agreed upon, reasonable estimates shall be used.

 

(ii) Tax Benefit Schedule. Within 120 days after the filing of the U.S. federal income Tax Return of the Corporation for any Taxable Year ending after the date of this Agreement, the Corporation shall provide to the TRA Representative and the Blocked TRA Holders either (A) (x) a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”), and (y) Amended Merger Date Asset Schedules and/or Exchange Basis Schedule, as applicable, reflecting the cumulative use of Tax Assets through the end of such Taxable Year, or, (B) if there is no Realized Tax Benefit or Realized Tax Detriment for that Taxable Year, notice to that effect.

 

(iii) Supporting Material; Review Right. Each time the Corporation delivers to the TRA Representative or the Blocked TRA Holders the Merger Date Asset Schedules, Exchange Basis Schedule, Early Termination Schedule or a Tax Benefit Schedule (or at such other times as the TRA Representative or the Blocked TRA Holders may reasonably request), the Corporation shall also deliver to the TRA Representative and the Blocked TRA Holders schedules and work papers providing reasonable detail regarding the preparation of the schedules and a Supporting Letter confirming the calculations and allow the TRA Representative and the Blocked TRA Holders reasonable access, at no cost to the TRA Representative or the Blocked TRA Holders, to the appropriate representatives at the Corporation and, if applicable, the Advisory Firm in connection with a review of such schedules or workpapers. Without limiting the generality of the preceding sentence, the Corporation shall ensure that any schedule that is delivered to the TRA Representative and Blocked TRA Holders identifies any material assumptions or operating procedures or principles that were used for purposes of preparing such schedule.

 

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(iv) Provision of Information to TRA Holders. Upon the reasonable request of a TRA Holder, the TRA Representative shall provide to that TRA Holder, in a reasonably prompt manner, such information that the TRA Representative receives pursuant to this Agreement (including the schedules described in this Section 1.03), but only to the extent that the TRA Representative determines that such information is material, relevant, and relates to that TRA Holder.

 

(b) Objection to, and Finalization of, Schedules. Each Merger Date Asset Schedule, Exchange Basis Schedule, or Tax Benefit Schedule, including any Amended Schedule delivered pursuant to ‎Section 1.03(c), shall become final and binding on all parties unless the TRA Representative or the Blocked TRA Holders, within 30 days after receiving an Merger Date Asset Schedule, an Exchange Basis Schedule, or a Tax Benefit Schedule, provides the Corporation with notice of a material objection to such schedule made in good faith (an “Objection Notice”). If the Corporation and the TRA Representative and/or the Blocked TRA Holders, as applicable, are unable to successfully resolve the issues raised in the Objection Notice within 30 days after receipt by the Corporation of the Objection Notice, the Corporation and the TRA Representative and/or the Blocked TRA Holders, as applicable, shall employ the dispute resolution procedures as described in ‎Section 6.09 (the “Dispute Resolution Procedures”).

 

(c) Amendment of Schedules. After finalization of an Merger Date Asset Schedule, Exchange Basis Schedule, or a Tax Benefit Schedule in accordance with ‎Section 1.03(b), any Merger Date Asset Schedule, Exchange Basis Schedule, or Tax Benefit Schedule shall be amended from time to time by the Corporation (i) in accordance with ‎Section 1.03(a)(ii), (ii) to correct material inaccuracies in any such schedule, (iii) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year, including any such change attributable to either a carryback or carryforward of a Tax Item to such Taxable Year or to an amended Tax Return filed with respect to such Taxable Year, (iv) to adjust the Exchange Basis Schedule to take into account material payments made pursuant to this Agreement, (v) to reflect the cumulative use of Tax Assets through the end of such Taxable Year, (vi) to comply with the Arbitrators’ determinations under the Dispute Resolution Procedures, or (vii) in connection with a material Determination affecting such schedule (any schedule amended in accordance with this ‎Section 1.03(c), an “Amended Schedule” or, as applicable, an “Amended Merger Date Asset Schedule”, “Amended Exchange Basis Schedule”, or “Amended Tax Benefit Schedule”). Any Amended Schedule shall (x) be subject to the finalization procedures set forth in ‎Section 1.03(b) and the Dispute Resolution Procedures set forth in ‎Section 6.09, and (y) delivered to the TRA Representative and Blocked TRA Holders.

 

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Article II
TAX BENEFIT PAYMENTS, THE CONSOLIDATED GROUP, AND

TRANSFERS OF CORPORATE ASSETS

 

Section 2.01 Payments.

 

(a) General Rule. The Corporation shall pay to each TRA Holder for each Taxable Year the Tax Benefit Payment that is attributable to that TRA Holder at the times set forth in ‎Section 2.01(c). For purposes of this ‎‎Section 2.01(a), the amount of a Tax Benefit Payment that is attributable to a TRA Holder shall be determined by multiplying (i) the aggregate Tax Benefit Payment for the Taxable Year by (ii) a fraction (x) the numerator of which is the aggregate number of Units held by the TRA Holder immediately after the Merger (but before the Blocker Mergers), and (y) the denominator of which is the aggregate number of Units held by all TRA Holders immediately after the Merger (but before the Blocker Mergers). For purposes of this Section 2.01, the Units held by any Blocker are treated as held by the Blocked TRA Holders that were owners of the Blocker immediately before the applicable Blocker Merger in proportion to their ownership interest in the Blocker as set forth in Schedule 2.01(a).

 

(b) Determination of Tax Assets. The Tax Assets shall be determined separately with respect to (i) each separate Exchange, on a Unit-by-Unit basis by reference to the Exchange of a Unit and the resulting Tax Assets with respect to the Corporation and (ii) the Blocker (or, after the Blocker Mergers, the Corporation).

 

(c) Timing of Tax Benefit Payments. The Corporation shall make each Tax Benefit Payment not later than 10 days after a Tax Benefit Schedule delivered to the TRA Representative and the Blocked TRA Holders become final in accordance with ‎Section 1.03(b). The Corporation may, but is not required to, make one or more estimated payments at other times during the Taxable Year and reduce future payments so that the total amount paid to a TRA Holder in respect of a Taxable Year equals the amount calculated with respect to such Taxable Year pursuant to ‎Section 2.01(a). Notwithstanding the provision of the two preceding sentences, no TRA Holder shall receive any Tax Benefit Payment until such TRA Holder has exchanged at least five (5) percent or more of the aggregate number of Units held by the TRA Holder on the day of the Merger (the “Minimum Exchanged Units”). Any Tax Benefit Payments not paid to a TRA Holder by reason of the preceding sentence shall be paid to the TRA Holder once it has exchanged at least the Minimum Exchanged Units.

 

(d) Optional Cap on Payments. Notwithstanding any provision of this Agreement to the contrary, any Unblocked TRA Holders may elect with respect to any Exchange to limit the aggregate Tax Benefit Payments made to such TRA Holder in respect of that Exchange to a specified dollar amount, a specified percentage of the amount realized by the TRA Holder with respect to the Exchange, or a specified portion of the Basis Adjustment with respect to the Adjusted Assets as a result of the Exchange. The TRA Holder shall exercise its rights under the preceding sentence by including a notice of its desire to impose such a limit and the specified limitation and such other details as may be reasonably necessary (including whether such limitation includes the Additional Amounts in respect of any such Exchange) in the Elective Exchange Notice delivered in accordance with Section 12.01(b) of the LLC Agreement.

 

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Section 2.02 No Duplicative Payments. The provisions of this Agreement are not intended to, and shall not be construed to, result in duplicative payment of any amount (including interest) required under this Agreement.

 

Section 2.03 Order of Payments. If for any reason (including, but not limited to, the lack of sufficient Available Cash to satisfy the Corporation’s obligations to make all Tax Benefit Payments due in a particular Taxable Year under this Agreement) the Corporation does not fully satisfy its obligations to make all payments due under this Agreement in a particular Taxable Year, then (i) the TRA Holders shall receive payments under this Agreement in respect of such Taxable Year in the same proportion as they would have received if the Corporation had been able to fully satisfy its payment obligations, without favoring one TRA Holder over the other TRA Holders, and (ii) no payment under this Agreement shall be made in respect of any subsequent Taxable Year until all such payments under this Agreement in respect of the current and all prior Taxable Years have been made in full.

 

Section 2.04 No Escrow or Clawback; Reduction of Future Payments. No amounts due to a TRA Holder under this Agreement shall be escrowed, and no TRA Holder shall be required to return any portion of any Tax Benefit Payment previously made to it. No TRA Holder shall be required to make a payment to the Corporation on account of any Realized Tax Detriment. If a TRA Holder receives amounts in excess of its entitlements under this Agreement (including as a result of an audit adjustment or Realized Tax Detriment), future payments under this Agreement shall be reduced until the amount received by the TRA Holder equals the amount the TRA Holder would have received had it not received the amount in excess of such entitlements.

 

Section 2.05 Limits on Aggregate Tax Benefit Payment.

 

(a) Calculation of Tax Benefit Payment Reduction Amount. If, but for the application of this Section 2.05, this Agreement would require the Corporation to make Tax Benefit Payments with respect to any Taxable Year such that the sum of (i) such Tax Benefit Payments plus (ii) the Actual Tax Liability for such Taxable Year paid by the Corporation, exceeds the Hypothetical Tax Liability for such Taxable Year, then the Tax Benefit Payments for that Taxable Year shall be reduced so that the aggregate Tax Benefit Payments for that Taxable Year do not result in any such excess (the amount of that reduction, if any, the “Tax Benefit Payment Reduction Amount”).

 

(b) Impact of Tax Benefit Payment Reduction Amount. The Tax Benefit Payment Reduction Amount shall be borne by the TRA Holders in the same proportion as the Tax Benefit Payments they would have received if this Section 2.05 were not in this Agreement, without favoring one TRA Holder over the other TRA Holders. The Corporation shall pay the Tax Benefit Payment Reduction Amount as a Tax Benefit Payment in subsequent years to the TRA Holders whose Tax Benefit Payments were reduced by reason of this Section 2.05, with the limitation contained in this Section 2.05 being applied to each such payment. No payment under this Agreement shall be made in respect of any subsequent Taxable Year until all Tax Benefit Payment Reduction Amounts have been paid in full.

 

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Article III
EARLY TERMINATIONS

 

Section 3.01 Early Termination Events.

 

(a) Early Termination Election by Corporation. The Corporation may terminate all or a portion of the rights under this Agreement with respect to the Blocked TRA Holders and/or all or a portion of the Units held (including those previously Exchanged) by all TRA Holders at any time by (A) delivering an Early Termination Notice as provided in Section 3.02(a) and (B) paying the Early Termination Payment as provided in ‎Section 3.03(a). If the Corporation terminates less than all of the rights under this Agreement with respect to the TRA Holders, such termination shall be made among the TRA Holders in such manner that it results in each TRA Holder receiving the same proportion of the Early Termination Payment made at that time as each TRA Holder would have received had the Corporation terminated all of the rights of the TRA Holders under this Agreement at that time.

 

(b) Deemed Early Termination.

 

(i) Deemed Early Termination Event. Upon a Material Uncured Breach of this Agreement with respect to a TRA Holder (an “Affected TRA Holder”) or as soon as reasonably practicable before a Change of Control (each, a “Deemed Early Termination Event”), (A) the Corporation (or the TRA Representative (with a copy to the Corporation)) shall deliver, (x) in the case of a Material Uncured Breach, to the Affected TRA Holder(s) or, (y) in the case of a Change of Control, to all TRA Holders, an Early Termination Notice as provided in ‎Section 3.02(a), and (B) all obligations under this Agreement with respect to such TRA Holder(s) shall be accelerated on the date of such Material Uncured Breach or on the effective date of such Change of Control, as applicable.

 

(ii) Payment upon Deemed Early Termination Event. The amount payable to the applicable TRA Holder as a result of an acceleration contemplated in ‎Section 3.01(b)(i) shall equal the sum of:

 

(A) an Early Termination Payment calculated with respect to such TRA Holder(s) pursuant to this Article III as if an Early Termination Notice had been delivered on the date of the Deemed Early Termination Event using the Valuation Assumptions but substituting the phrase “the date of the Deemed Early Termination Event” in each place where the phrase “Early Termination Date” appears;

 

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(B) any Tax Benefit Payment agreed to by the Corporation and such TRA Holder(s) as due and payable but unpaid as of the date of such Deemed Early Termination Event; and

 

(C) any Tax Benefit Payment due to such TRA Holder(s) for the Taxable Year ending with or including the date of such Deemed Early Termination Event (except to the extent that any amounts described in clauses (B) or (C) are included in the amount payable upon early termination).

 

(iii) Waiver of Deemed Early Termination. A TRA Holder may elect to waive the acceleration of obligations under this Agreement triggered by a Deemed Early Termination Event by submitting a waiver in writing to the Corporation within 30 days after the date of the Early Termination Notice. If a TRA Holder elects to waive the acceleration of obligations pursuant to the preceding sentence, this Agreement shall continue to apply with respect to that TRA Holder as though no Deemed Early Termination Event had occurred, and, if there are any due and unpaid amounts with respect to that TRA Holder, the Corporation shall pay those amounts to the TRA Holder in the manner provided in this Agreement.

 

Section 3.02 Early Termination Notice and Early Termination Schedule.

 

(a) Notice; Schedule.

 

(i) Delivery of Early Termination Notice and Early Termination Schedule. If the Corporation chooses to exercise its right of early termination under ‎Section 3.01(a) above, or if there is a Deemed Early Termination Event under ‎Section 3.01(b) above, the Corporation shall, within 30 days after the Corporation elects to terminate this Agreement or the effective date of the Deemed Early Termination Event, deliver to each TRA Holder whose rights are being terminated a notice (an “Early Termination Notice”) specifying (x) such early termination and (y) the date on which the termination of rights is to be effective (the “Early Termination Date”), which date shall be (I) the date of the Material Uncured Breach of this Agreement, in the case of a Material Uncured Breach, (II) the effective date of the Change of Control in the case of a Change of Control, and (III) not less than 30 days and not more than 120 days after the date of the Early Termination Notice in the case of a termination pursuant to ‎Section 3.01(a). Within 60 days after the Corporation delivers an Early Termination Notice, the Corporation shall deliver to the applicable TRA Holder(s) a schedule showing in reasonable detail the calculation of the Early Termination Payment with respect to each TRA Holder as determined in accordance with ‎Section 3.01(b)(ii)(A), (B) and (C) (the “Early Termination Schedule”), together with a Supporting Letter in respect of such schedule.

 

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(ii) Finalization of Early Termination Schedule; Disputes. The applicable Early Termination Schedule delivered to a TRA Holder pursuant to ‎Section 3.02(a)(i) shall become final and binding on the Corporation and such TRA Holder unless that TRA Holder, within 30 days after receiving the Early Termination Schedule, provides the Corporation with notice of a material objection to such schedule made in good faith (“Material Objection Notice”). If the Corporation and such TRA Holder are unable to successfully resolve the issues raised in the Material Objection Notice within 30 days after receipt by the Corporation of the Material Objection Notice, the Corporation and the TRA Holder shall employ the Dispute Resolution Procedures set forth in ‎Section 6.09.

 

(iii) Withdrawal of Early Termination Notice. The Corporation may withdraw an Early Termination Notice delivered in connection with ‎Section 3.01(a) before the Early Termination Payment is due and payable to any applicable TRA Holder(s).

 

(b) Amendment of Early Termination Schedule. After finalization of an Early Termination Schedule in accordance with ‎Section 3.02(a)(ii), any Early Termination Schedule shall be amended by the Corporation at any time before the Early Termination Payment is made (i) in connection with a Determination materially affecting such schedule, (ii) to correct material inaccuracies in any such schedule, or (iii) to comply with the Arbitrators’ determinations under ‎Section 6.09. Any amendment shall be subject to the procedures of ‎Section 3.02(a)(ii) and the Dispute Resolution Procedures set forth in ‎Section 6.09.

 

Section 3.03 Early Termination Payment.

 

(a) Amount and Timing of Early Termination Payment. The payment due to a TRA Holder in connection with an early termination described in ‎Section 3.01(a) or 3.01(b) (the “Early Termination Payment”) shall be an amount equal to the present value, discounted at the Early Termination Rate as of the Early Termination Date, of all Tax Benefit Payments that the Corporation would be required to pay to the TRA Holder beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied. Not later than 10 days after an Early Termination Schedule delivered to a TRA Holder becomes final in accordance with ‎Section 3.02(a)(ii), the Corporation shall pay to the TRA Holder the Early Termination Payment (including, for the avoidance of doubt, any other amounts due pursuant to ‎Section 3.01(b)(ii)(B) and Section 3.01(b)(ii)(C)) due to that TRA Holder.

 

(b) Effect of Early Termination Payment. Upon payment of the Early Termination Payment by the Corporation under Section 3.03, neither the TRA Holder nor the Corporation shall have any further rights or obligations under this Agreement in respect of the payments that otherwise would be due pursuant to this Agreement or the Units (including those previously Exchanged) with respect to which the rights under this Agreement have been terminated in accordance with Section 3.01, other than for any (i) payment under this Agreement that is due and payable but has not been paid as of the Early Termination Date and (ii) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Date (except to the extent that the amounts described in clauses (i) or (ii) are included in the Early Termination Payment). For the avoidance of doubt, if an Exchange occurs after the Corporation has made an Early Termination Payments with respect to all Units (including those previously Exchanged), the Corporation shall have no obligations under this Agreement with respect to such Exchange other than any obligations described in clause (i) or clause (ii) of the preceding sentence.

 

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Section 3.04 Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets.

 

(a) Admission of the Corporation into a Consolidated Group. If the Corporation is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to sections 1501 et seq. of the Code or any corresponding provisions of state, local or non-U.S. law (a “Consolidated Group”), then: (i) the provisions of this Agreement shall be applied with respect to the Consolidated Group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items in this Agreement shall be computed with reference to the consolidated taxable income of the Consolidated Group as a whole. Nothing in this Section 3.04(a) shall be interpreted to alter the circumstances that give rise to an early termination as described in Section 3.01(a) or 3.01(b).

 

(b) Transfers of Assets by Corporation.

 

(i) General Rule. If the Company or any of its Subsidiaries or the Corporation transfers one or more assets to a corporation with which the transferor does not file a consolidated Tax Return pursuant to section 1501 et. seq. of the Code, then, for purposes of calculating the amount of any payment due under this Agreement, the transferor shall be treated as having disposed of such asset(s) in a fully taxable transaction on the date of the transfer.

 

(ii) Rules of Application. For purposes of this Section 3.04(b):

 

(A) Except as provided in Section 3.04(b)(ii)(B), the consideration deemed to be received by the transferor in the transaction shall be deemed to equal the fair market value of the transferred asset(s) (taking into account the principles of section 7701(g) of the Code);

 

(B) The consideration deemed to be received by the transferor in exchange for a partnership interest shall be deemed to equal the fair market value of the partnership interest increased by any liabilities (as defined in Treasury Regulation § 1.752-1(a)(4)) of the partnership allocated to the transferor with regard to such transferred interest under section 752 of the Code immediately after the transfer; and

 

(C) A transfer to a “corporation” (other than the Corporation) includes a transfer to any entity or arrangement classified as a corporation for U.S. federal income tax purposes, and “partnership” includes any entity or arrangement classified as a partnership for U.S. federal income tax purposes

 

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Article IV
SUBORDINATION AND LATE PAYMENTS

 

Section 4.01 Subordination; Priority. Any Tax Benefit Payment or Early Termination Payment required to be paid by the Corporation to a TRA Holder under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any current or future obligations in respect of indebtedness for borrowed money of the Corporation and its Subsidiaries and shall, except as otherwise provided in this Agreement, rank pari passu with all current or future unsecured obligations of the Corporation that are not principal, interest or other amounts due and payable in respect of any current or future obligations in respect of indebtedness for borrowed money of the Corporation and its Subsidiaries and shall be senior to equity interests in the Corporation.

 

Section 4.02 Late Payments by the Corporation. The amount of all or any portion of any amount due under the terms of this Agreement that is not paid to any TRA Holder when due shall be payable, together with any interest thereon computed at the Default Rate commencing from the date on which such payment was due and payable. Notwithstanding the preceding sentence, the Default Rate shall not apply (and the Agreed Rate shall apply) to any late payment that is late solely as a result of (a) a prohibition, restriction or covenant under any credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation or (b) restrictions under applicable law.

 

Section 4.03 Manner of Payment. All payments required to be made to a TRA Holder pursuant to this Agreement will be made by electronic payment of immediately available funds to a bank account previously designated and owned by such TRA Holder or, if no such account has been designated, by check payable to such TRA Holder.

 

Article V
PREPARATION OF TAX RETURNS; COVENANTS; TRA REPRESENTATIVE

 

Section 5.01 No Participation by TRA Holder in the Corporation’s and the Company’s Tax Matters.

 

(a) General Rule. Except as otherwise provided in this Article V, the Corporation shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporation and the Company, including, without limitation, the preparation, filing and amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes.

 

(b) Notification of TRA Representative. The Corporation shall notify the TRA Representative and Blocked TRA Holders of, and keep the TRA Representative and Blocked TRA Holders reasonably informed with respect to, the portion of any audit of the Corporation and the Company by a Taxing Authority the outcome of which is reasonably expected to affect the TRA Holders’ rights and obligations under this Agreement.

 

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Section 5.02 Consistency. The Corporation and the TRA Holders agree to report and cause to be reported for all purposes, including U.S. federal, state, local and non-U.S. tax purposes and financial reporting purposes, all tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by the Corporation in any schedule provided by or on behalf of the Corporation under this Agreement unless the Corporation or a TRA Holder receives a written opinion from an Advisory Firm that reporting in such manner should result in an imposition of penalties pursuant to the Code. Any Dispute concerning such written opinion shall be subject to the Dispute Resolution Procedures set forth in ‎Section 6.09.

 

Section 5.03 Cooperation. Each TRA Holder shall (a) furnish to the Corporation in a timely manner such information, documents and other materials, not to include such TRA Holder’s personal Tax Returns, as the Corporation may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the Corporation and its representatives to provide explanations of documents and materials and such other information as the Corporation or its representatives may reasonably request in connection with any of the matters described in clause (a) of this ‎Section 5.03, and (c) reasonably cooperate in connection with any such matter. The Corporation shall reimburse each TRA Holder for any reasonable and documented third-party costs and expenses incurred by the TRA Holder in complying with this Section 5.03.

 

Section 5.04 Section 754 Election. The Corporation shall (i) ensure that the Company and each of its Subsidiaries that is classified as a partnership for U.S. federal income Tax purposes shall have in effect an election pursuant to section 754 of the Code (and any similar provisions of applicable U.S. state or local law) for each Taxable Year that includes the effective date of each of the Blocker Mergers and the Merger Date and each Taxable Year in which an Exchange occurs and (ii) use commercially reasonable efforts to ensure that, on and after the date of this Agreement and continuing throughout the term of this Agreement, any entity in which the Company holds a direct or indirect interest that is classified as a partnership for U.S. federal income Tax purposes that is not a “Subsidiary” as defined in this Agreement will have in effect an election pursuant to section 754 of the Code (and any similar provisions of applicable U.S. state or local law).

 

Section 5.05 Available Cash. The Corporation shall use reasonable best efforts to ensure that it has sufficient Available Cash to make all payments due under this Agreement, including using reasonable best efforts to determine that there is Available Cash and to cause the Company to make distributions to the Corporation to make such payments so long as such distributions do not violate (a) a prohibition, restriction or covenant under any credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation or (b) restrictions under applicable law.

 

Section 5.06 TRA Representative.

 

(a) Power of the TRA Representative; Reliance by Corporation. A decision, act, consent, or instruction of the TRA Representative shall constitute a decision of all TRA Holders and shall be final, binding and conclusive upon each TRA Holder. The Corporation may rely upon any decision, act, consent, or instruction of the TRA Representative as being the decision, act, consent, or instruction of each TRA Holder.

 

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(b) Scope of Liability. The TRA Representative shall not be liable to any TRA Party for any act of the TRA Representative arising out of, or in connection with, the reasonable and good faith administration of its rights and duties under this Agreement.

 

(c) Expenses and Indemnification of the TRA Representative. To the fullest extent permitted by law, the Corporation shall pay, or to the extent the TRA Representative pays, indemnify and reimburse, the TRA Representative for all liability and loss and all reasonable and contemporaneously documented costs and expenses, including legal and accounting fees, in connection with the TRA Representative’s reasonable and good faith exercise of its rights and duties under this Agreement.

 

(d) Successor TRA Representative. If at any time the TRA Representative is unable or unwilling to serve in such capacity, the person then-serving as the TRA Representative shall be entitled to appoint its successor. If the TRA Representative fails to appoint a successor that will serve as of the effective date of the termination of the then-serving TRA Representative’s tenure, the Corporation shall be entitled to appoint the successor. In either case, such successor shall be subject to the approval of the TRA Holders who would be entitled to receive at least fifty percent (50%) of the total amount of the Early Termination Payments that would be payable to all TRA Holders if the Corporation had exercised its right of early termination under Section 3.01(a) on the date of the most recent Exchange as of the effective date of the resignation of the then-serving TRA Representative. If such successor does not receive the requisite approval, the Corporation and the TRA Holders shall attempt to resolve the matter in good faith. If no such resolution has occurred by the earlier of (i) 90 days following the termination of tenure and (ii) five (5) days before a TRA Representative will be required to take an action or make a decision under this Agreement, the Corporation shall be entitled to appoint the successor, who shall serve as the TRA Representative.

 

Article VI
MISCELLANEOUS

 

Section 6.01 Notices. All notices, requests, claims, demands and other communications with respect to this Agreement shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by e-mail if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service. All notices under this Agreement shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

 

if to the Corporation, to:

 

Rubicon Technologies, Inc.

950 E. Paces Ferry Road

Suite 1900

Atlanta, GA 30326

Attention: William Meyer, General Counsel

E-mail: bill.meyer@rubicon.com

 

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with a copy to:

 

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Phone: +1.212.351.2340
Fax: +1.212.351.5220
Attention: Eric Sloan

E-mail: esloan@gibsondunn.com

 

Chamberlain, Hrdlicka, White, Williams & Aughtry, PC

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303

Email: Scott.Augustine@chamberlainlaw.com

Attention: Scott A. Augustine

 

if to the Company, to:

 

Rubicon Technologies Holdings, LLC

950 E. Paces Ferry Road

Suite 1900

Atlanta, GA 30326

Attention: William Meyer, General Counsel

E-mail: bill.meyer@rubicon.com

 

with a copy to:

 

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Phone: +1.212.351.2340
Fax: +1.212.351.5220
Attention: Eric Sloan

E-mail: esloan@gibsondunn.com

 

Chamberlain, Hrdlicka, White, Williams & Aughtry, PC

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303

Email: Scott.Augustine@chamberlainlaw.com

Attention: Scott A. Augustine

 

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if to the TRA Representative, to:

 

the address provided to the Corporation at the time of the TRA Representative’s appointment in accordance with the definition of “TRA Representative.”

 

if to the TRA Holder(s), to:

 

the address set forth for such TRA Holder in the records of the Company.

 

Any party may change its address by giving the other party written notice of its new address, fax number, or e-mail address in the manner set forth in this ‎Section 6.01.

 

Section 6.02 Bank Account Information. The Corporation may require each TRA Holder to provide its bank account information to facilitate wire transfers. The Corporation shall be entitled to rely on the bank account information provided by a TRA Holder absent actual knowledge that such bank account information is incorrect.

 

Section 6.03 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed in two or more counterparts by manual, electronic or facsimile signature, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed signature page to this Agreement by electronic transmission or facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

 

Section 6.04 Entire Agreement. The provisions of this Agreement, the LLC Agreement, the Transaction Agreement, and the other writings referred to in this Agreement or delivered pursuant to this Agreement which form a part of this Agreement contain the entire agreement among the parties hereto with respect to the subject matter of this Agreement and supersede all prior oral and written agreements and memoranda and undertakings among the parties to this Agreement with regard to such subject matter. This Agreement does not create any rights, claims or benefits inuring to any person that is not a party to this Agreement nor create or establish any third party beneficiary hereto.

 

Section 6.05 Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the state of Delaware (and, to the extent applicable, federal law), without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

 

Section 6.06 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (i) the remainder of this Agreement shall not be affected thereby, and each other provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law, (ii) as to such Person or circumstance or in such jurisdiction such provision shall be reformed to be valid and enforceable to the fullest extent permitted by law and (iii) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby. In addition, if any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable as written, each Person party hereto shall take all necessary action to cause this Agreement to be amended so as to provide, to the maximum extent reasonably possible, that the purposes of the Agreement can be realized, and to modify this Agreement to the minimum extent reasonably possible.

 

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Section 6.07 Assignment; Amendments; Waiver of Compliance; Successors and Assigns.

 

(a) Assignment. No TRA Holder may, directly or indirectly, assign or otherwise transfer its rights under this Agreement to any person without the express prior written consent of the Corporation, such consent not to be unreasonably withheld, conditioned, or delayed; provided, however, that, the Corporation may withhold, condition, or delay its consent in its sole discretion to any transfer by a TRA Holder (i) if the TRA Holder is an original signatory to this Agreement and that TRA Holder seeks to transfer a portion of its rights, in the aggregate, to more than three transferees, and (ii) if the TRA Holder is not an original signatory to this Agreement and that TRA Holder seeks to transfer less than all of its rights. Notwithstanding the provisions of the preceding sentence, to the extent Units are transferred in accordance with the terms of the LLC Agreement, the transferring TRA Holder may assign to the transferee all, but not less than all, of that TRA Holder’s rights under this Agreement with respect to such transferred Units. Any assignment or transfer effected pursuant to this Section 6.07 shall be void unless the assignee or transferee, as applicable, executes and delivers a joinder to this Agreement agreeing to become a “TRA Holder” for all purposes of this Agreement (except as otherwise provided in such joinder), with such joinder being, in form and substance, reasonably satisfactory to the Corporation. Notwithstanding the preceding provisions of this ‎Section 6.07(a), no TRA Holder shall have any right to assign or otherwise transfer, directly or indirectly, any of its rights under this Agreement to any person unless the TRA Holder (together with its Affiliates) held at least 10 percent of the total Units outstanding immediately before the Blocker Mergers.

 

(b) Amendments.

 

(i) General Rule. No provision of this Agreement may be amended unless such amendment is approved in writing by the Corporation, the Company, and the TRA Holders who would be entitled to receive (x) in the case of an amendment in connection with a Change of Control, at least seventy five percent (75%) or, and (y) in connection with any amendment not described in clause (x), at least two-thirds of, the Early Termination Payments payable to all TRA Holders (as determined by the Corporation) if the Corporation had exercised its right of early termination under ‎Section 3.01(a) on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any TRA Holder pursuant to this Agreement since the date of such most recent Exchange).

 

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(ii) Amendments with Disproportionate Adverse Effect. In addition to the requirements in ‎Section 6.07(b)(i), if a proposed amendment would have a disproportionate adverse effect on the payments one or more TRA Holders will or may receive under this Agreement, such amendment shall not be effective without the written consent of at least two-thirds of the TRA Holders who would be disproportionately and adversely affected (with such two-thirds threshold being measured as set forth in ‎Section 6.07(b)(i) and if there are fewer than three affected TRA Holders, the written consent of all such TRA Holders).

 

(c) Waiver of Compliance. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

(d) Successors and Assigns. Except as otherwise provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and permitted assigns of the parties hereto. The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation, division, conversion or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

 

Section 6.08 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

Section 6.09 Dispute Resolution.

 

(a) Disputes as to Interpretation and Calculations. Any Dispute as to the interpretation of, or calculations required by, this Agreement shall be resolved by the Corporation and the TRA Representative, acting reasonably and in good faith; provided, that such resolution shall reflect a reasonable interpretation of the provisions of this Agreement, consistent with the goal that the provisions of this Agreement result in the TRA Holders receiving eighty-five percent (85%) of the Cumulative Net Realized Tax Benefit and the Additional Amount thereon; provided, further, that, notwithstanding the preceding provisions of this ‎Section 6.09(a), any Dispute as to the interpretation of, or calculations required by, this Agreement that involve the Blocked TRA Holders shall, at the request of Blocked TRA Holders, be resolved in accordance with ‎Section 6.09(b), ‎Section 6.09(c), ‎Section 6.09(d), ‎Section 6.09(e), and ‎Section 6.09(f) and not pursuant to this ‎Section 6.09(a).

 

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(b) Dispute Resolution; Arbitration. If any dispute is not resolved in accordance with Section 6.09(a), the parties shall negotiate in good faith to resolve any dispute, controversy, or claim arising out of or in connection with this Agreement, or the interpretation, breach, termination or validity thereof (“Dispute”). To the extent any Dispute is not resolved through good faith negotiations between the Corporation, the TRA Representative, and the Blocked TRA Holders, as applicable, Disputes shall be finally resolved by arbitration before a panel of three independent tax lawyers at major law firms who are resident in New York, New York and are mutually acceptable to the parties (the “Arbitrators”). The Arbitrators, with the consent of the parties, may, or, at the direction of the parties, shall, delegate some or all of the issues under dispute (including Disputes under ‎Section 1.03, ‎Section 2.01(c), ‎Article III, or ‎Section 5.02) to a nationally recognized accounting firm selected by the Arbitrators and agreed to by the Corporation, the TRA Representative, and the Blocked TRA Holders, as applicable. Notwithstanding anything to the contrary in this Agreement, in any Dispute proceeding (i) the TRA Representative shall represent the interests of any TRA Holder(s) other than the Blocked TRA Holders in any Dispute and no TRA Holder other than the Blocked TRA Holders shall individually have the right to participate in any proceeding and (ii) the Blocked TRA Holders shall represent the interest of the Blocked TRA Holders.

 

(c) Selection of Arbitrators; Timing. There shall be three Arbitrators who shall be appointed by the parties within 20 days of receipt by a party of a copy of the demand for arbitration. The Corporation shall appoint one arbitrator and the TRA Representative and, if the arbitration involves the Blocked TRA Holders, the Blocked TRA Holders, shall appoint one arbitrator (with the appointment being subject, in each case, to the reasonable objection of the other party), and the parties shall jointly appoint the third arbitrator. If any of the Arbitrators is not appointed within 20 days, and the parties have not agreed to extend the 20-day time period, such arbitrator shall be appointed by JAMS in accordance with the listing, striking and ranking procedure in the JAMS Comprehensive Arbitration Rules and Procedures, with each party being given a limited number of strikes, except for cause. Any arbitrator appointed by JAMS shall be a retired judge or a practicing attorney with no less than fifteen years of experience with corporate and partnership tax matters and an experienced arbitrator. In rendering an award, the Arbitrators shall be required to follow the laws of the state of Delaware, notwithstanding any Delaware choice-of-law rules. The costs of arbitration shall be split equally between the parties participating in the arbitration.

 

(d) Arbitration Award; Damages; Attorney Fees. The arbitral award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. The Arbitrators shall not be permitted to award punitive, non-economic, or any non-compensatory damages. The award shall be final and binding upon the parties and shall be the sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or accounting presented to the Arbitrators. Judgment upon the award may be entered in any court having jurisdiction over any party or any of its assets. Any costs or fees (including all attorneys’ fees and expenses) incident to enforcing the award shall be charged against the party resisting such enforcement. Each party shall bear its own attorney’s fees incurred in the underlying arbitration.

 

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(e) Confidentiality. All Disputes shall be resolved in a confidential manner. The Arbitrators shall agree to hold any information received during the arbitration in the strictest of confidence and shall not disclose to any non-party the existence, contents or results of the arbitration or any other information about such arbitration. The parties to the arbitration shall not disclose any information about the evidence adduced or the documents produced by the other party in the arbitration proceedings or about the existence, contents or results of the proceeding except as may be required by law, regulatory or governmental authority or as may be necessary in an action in aid of arbitration or for enforcement of an arbitral award. Before making any disclosure permitted by the preceding sentence (other than private disclosure to financial regulatory authorities), the party intending to make such disclosure shall use reasonable efforts to give the other party reasonable written notice of the intended disclosure and afford the other party a reasonable opportunity to protect its interests.

 

(f) Discovery. Barring extraordinary circumstances (as determined in the sole discretion of the Arbitrators), discovery shall be limited to pre-hearing disclosure of documents that each side shall present in support of its case, and non-privileged documents essential to a matter of import in the proceeding for which a party has demonstrated a substantial need. The parties agree that they shall produce to each other all such requested non-privileged documents, except documents objected to and with respect to which a ruling has been or shall be sought from the Arbitrators. The parties agree that information from the Corporate Tax Return (including by way of a redacted Corporate Tax Return) shall be sufficient, and that the Corporation shall not be compelled to produce any unredacted Tax Returns. There will be no depositions or live witness testimony.

 

Section 6.10 Withholding. The Corporation shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts, if any, as the Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or non-U.S. tax law. To the extent that amounts are so withheld and are (or, when due, will be) paid over to the appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such withholding was made. Each TRA Holder shall promptly provide the Corporation or other applicable withholding agent with any necessary tax forms, in form and substance reasonably acceptable to the Corporation, as the Corporation may request from time to time in determining whether any such deductions and withholdings are required under any applicable law, including Internal Revenue Service Form W-9 or the appropriate Form W-8, as applicable. Before any withholding is made pursuant to this ‎Section 6.10, the Corporation shall use commercially reasonable efforts to (a) notify the applicable TRA Holder and (b) cooperate in good faith with such TRA Holder to avoid such withholding, unless the TRA Holder has failed to comply with the provisions of the preceding sentence.

 

Section 6.11 Confidentiality.

 

(a) General Rule. Each TRA Holder and each of their assignees acknowledges and agrees that the information of the Corporation is confidential and, except in the course of performing any duties as necessary for the Corporation and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters or information of the Corporation or the Company, or the Affiliates or successors of the Corporation or the Company, and the other TRA Holders acquired pursuant to this Agreement, including marketing, investment, performance data, credit and financial information and other business affairs of the Corporation or the Company, or the Affiliates or successors of the Corporation or the Company, or the other TRA Holders.

 

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(b) Exceptions. This Section 6.11 shall not apply to (i) any information that has been made publicly available by the Corporation or any of its Affiliates, becomes public knowledge (except as a result of an act of such TRA Holder in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for a TRA Holder to prepare and file his or her Tax Returns, to respond to any inquiries regarding such Tax Returns from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such Tax Returns. Notwithstanding anything to the contrary in this Section 6.11, each TRA Holder and assignee (and each employee, representative or other agent of such TRA Holder or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of (x) the Corporation, the Company, the TRA Holders and their Affiliates and (y) any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the TRA Holders relating to such tax treatment and tax structure.

 

(c) Enforcement. If a TRA Holder or assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 6.11, the Corporation shall have the right and remedy to have the provisions of this Section 6.11 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporation or any of its Affiliates or the other TRA Holders and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

 

Section 6.12 LLC Agreement. For U.S. federal income Tax purposes, to the extent this Agreement imposes obligations upon the Company or a member of the Company, this Agreement shall be treated as part of the LLC Agreement as described in section 761(c) of the Code and sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

 

Section 6.13 Joinder. The Company shall have the power and authority (but not the obligation) to permit any Person who becomes a member of the Company to execute and deliver a joinder to this Agreement promptly upon acquisition of membership interests in the Company by such Person, and such Person shall be treated as a “TRA Holder” for all purposes of this Agreement.

 

Section 6.14 Survival. If this Agreement is terminated pursuant to ‎Article III, this Agreement shall become void and of no further force and effect, except for the provisions set forth in ‎Section 6.05 (Governing Law), ‎Section 6.09 (Dispute Resolution), Section 6.11 (Confidentiality), and this Section 6.14 (Survival).

 

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Article VII
DEFINITIONS

 

As used in this Agreement, the terms set forth in this Article VII shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

 

Actual Tax Liability” is defined in ‎Section 1.02.

 

Additional Amount” for a given Taxable Year shall be the additional amount (calculated in the same manner as interest) payable on the Net Tax Benefit for such Taxable Year, reduced by the Tax Benefit Payment Reduction Amount for such Taxable Year (if any), calculated at the Agreed Rate from the due date (without extensions) for filing the Corporate Tax Return with respect to Taxes for the most recently ended Taxable Year until the date on which the payment is required to be made. In the case of a Tax Benefit Payment made in respect of an Amended Schedule, the “Additional Amount” shall equal the additional amount (calculated in the same manner as interest) payable on the Net Tax Benefit for such Taxable Year, reduced by the Tax Benefit Payment Reduction Amount for such Taxable Year (if any), calculated at the Agreed Rate from the date of such Amended Schedule becoming final in accordance with ‎Section 1.03(b) until the date on which the payment is required to be made, reduced to account for any payment of Additional Amount made in respect of the original Tax Benefit Schedule. Except to the extent that it is treated as Imputed Interest, the Additional Amount shall be treated as additional consideration for Tax purposes.

 

Adjusted Asset” means any asset with respect to which a Basis Adjustment is made.

 

Advisory Firm” means any accounting firm or any law firm, in each case, that is nationally recognized as being expert in Tax matters and that is selected by the Board.

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

 

Agreed Rate” means the LIBOR plus 300 basis points.

 

Agreement” is defined in the preamble of this Agreement.

 

Amended Schedule” is defined in ‎Section 1.03(c).

 

Arbitrators” is defined in ‎Section 6.09(b).

 

Assumed SALT Liability” is defined in ‎Section 1.02(d).

 

Available Cash” means all cash and cash equivalents of the Corporation on hand, less (i) the amount of cash reserves reasonably established in good faith by the Corporation to provide for the proper conduct of business of the Corporation (including paying creditors) and (ii) any amount the Corporation cannot pay to a TRA Holder by reason of (A) a prohibition, restriction or covenant under any credit agreement, loan agreement, note, indenture or other agreement governing indebtedness of the Company or any of its Subsidiaries or the Corporation or (B) restrictions under applicable law.

 

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Basis Adjustment” means any adjustment under sections 732, 734, 743, or 1012 of the Code (as applicable) as a result of (a) an Exchange or (b) the Blocker Mergers (including any adjustment under section 743 of the Code that the Corporation directly or indirectly owns as a result of the Blocker Mergers). For purposes of calculating the amount of a Basis Adjustment, each Merger Date Asset shall be treated as having a basis for U.S. federal income tax purposes equal to zero as of immediately before the Merger.

 

Beneficial Ownership” (including correlative terms) shall have the meaning ascribed to that term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934.

 

Blocked TRA Holders” means the holders of Units set forth on Schedule 7 or their successors and assigns.

 

Blocker” means an entity classified as a corporation for U.S. federal income tax purposes and listed on Schedule 7.

 

Blocker Mergers” is defined in the recitals to this Agreement.

 

Board” means the board of directors of the Corporation.

 

Business Day” means any day other than a Saturday, Sunday or any other day on which commercial banks located in New York City, New York are authorized or required to close.

 

Change of Control” means the occurrence of any of the following events:

 

(a) any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, or any successor provisions thereto, excluding any TRA Party or any group of TRA Parties, becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation representing more than fifty percent (50%) of the combined voting power of the Corporation’s then outstanding voting securities; or

 

(b) the following individuals cease for any reason to constitute a majority of the directors of the Corporation then serving: (i) individuals who, on the Merger Date, constitute the Board, and (ii) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation) whose appointment by the Board or nomination for election by the Corporation’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Merger Date or whose appointment or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); or

 

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(c) there is consummated a merger or consolidation of the Corporation or any direct or indirect Subsidiary of the Corporation with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (i) the members of the Board immediately prior to the merger or consolidation do not constitute at least a majority of the board of directors of the company surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (ii) all of the Persons who were the respective Beneficial Owners of the voting securities of the Corporation immediately prior to such merger or consolidation do not Beneficially Own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Person resulting from such merger or consolidation; or

 

(d) the shareholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation, or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Corporation of all or substantially all of the Corporation’s assets, other than the sale or other disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Beneficially Owned by shareholders of the Corporation in substantially the same proportions as their Beneficial Ownership of such securities of the Corporation immediately before such sale.

 

Class A Shares” is defined in the recitals of this Agreement.

 

Class B Unit” has the meaning given to it in the LLC Agreement.

 

Code” means the Internal Revenue Code of 1986, as amended, and any successor or replacement statute.

 

Company” is defined in the preamble to this Agreement.

 

Consolidated Group” is defined in Section 3.04(a).

 

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

Corporate Tax Return” means a Tax Return of the Corporation.

 

Corporation” is defined in the preamble of this Agreement.

 

Cumulative Net Realized Tax Benefit” for a Taxable Year means the excess, if any, of (a) the cumulative amount of Realized Tax Benefits, if any, for all Taxable Years of the Corporation, including such Taxable Year, over (b) the cumulative amount of Realized Tax Detriments, if any, for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.

 

day” means a calendar day.

 

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Deemed Early Termination Event” is defined in ‎Section 3.01(b)(i).

 

Default Rate” means LIBOR plus 500 basis points.

 

Determination” shall have the meaning ascribed to such term in section 1313(a) of the Code or similar provision of state or local tax law, as applicable, or any other event (including the execution of a Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

 

Dispute” is defined in ‎Section 6.09(b).

 

Dispute Resolution Procedures” is defined in ‎Section 1.03(b).

 

Early Termination Date” is defined in ‎Section 3.02(a)(i).

 

Early Termination Notice” is defined in ‎Section 3.02(a)(i).

 

Early Termination Payment” is defined in ‎Section 3.03(a).

 

Early Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 400 basis points.

 

Early Termination Schedule” is defined in ‎Section 3.02(a)(i).

 

Elective Exchange Notice” has the meaning given to it in the LLCA.

 

Exchange” means an exchange pursuant to the LLC Agreement, and any other transfer of Units for cash or otherwise, and “Exchanged” shall have a correlative meaning.

 

Exchange Basis Schedule” is defined in Section 1.03(a)(i)(B), including any Amended Exchange Basis Schedule.

 

Exchange Consideration” has the meaning given to it in the LLCA.

 

Exchange Date” is the date of any Exchange.

 

Exchangeable Unit” has the meaning given to it in the LLCA.

 

Finalized Merger Date Asset Schedule” is defined in Section 3.02(a)(i).

 

Hypothetical Tax Liability” means Actual Tax Liability, except that all Tax Assets shall be disregarded (i.e. treated as if they do not exist) in calculating Hypothetical Tax Liability. For the avoidance of doubt, the Assumed SALT Liability used to determine the Hypothetical Tax Liability shall be calculated by disregarding all Tax Assets.

 

Imputed Interest” means any interest imputed under sections 1272, 1274, or 483 or other provision of the Code with respect to the Corporation’s payment obligations under this Agreement.

 

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LIBOR” means during any period, the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market or such other commercially available source providing quotations of such rates as may be designated by Corporation from time to time), or the rate which is quoted by another source selected by the Corporation as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the first day of such period as the London interbank offered rate for U.S. dollars having a borrowing date and a maturity comparable to such period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by the Corporation and the TRA Representative at such time, which determination shall be conclusive absent manifest error); provided, that at no time shall LIBOR be less than zero percent (0%). If the Corporation has made the determination (such determination to be conclusive absent manifest error) that (i) LIBOR is no longer a widely recognized benchmark rate for newly originated loans in the U.S. loan market in U.S. dollars or (ii) the applicable supervisor or administrator (if any) of LIBOR has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for loans in the U.S. loan market in U.S. dollars, then the Corporation and the TRA Representative shall (as determined by the Corporation and the TRA Representative to be consistent with market practice generally), establish a replacement interest rate (the “Replacement Rate”), in which case, the Replacement Rate shall, subject to the next two sentences, replace LIBOR for all purposes under this Agreement. In connection with the establishment and application of the Replacement Rate, this Agreement shall be amended solely with the consent of the Corporation, the Company, and the TRA Representative, as may be necessary or appropriate, in the reasonable judgment of the Corporation and the TRA Representative, to effect the provisions of this section. The Replacement Rate shall be applied in a manner consistent with market practice; provided, that in each case, to the extent such market practice is not administratively feasible for the Corporation, such Replacement Rate shall be applied as otherwise reasonably determined by the Corporation and the TRA Representative.

 

LLC Agreement” is defined in the recitals of this Agreement.

 

Market Value” means the closing price of the Class A Shares on the applicable Exchange Date on the national securities exchange or interdealer quotation system on which the Class A Shares are then traded or listed, as reported by the Wall Street Journal; provided, that if the closing price is not reported by the Wall Street Journal for the applicable Exchange Date, then the “Market Value” means the closing price of the Class A Shares on the Business Day immediately preceding such Exchange Date on the national securities exchange or interdealer quotation system on which the Class A Shares are then traded or listed, as reported by the Wall Street Journal; provided, further, that if the Class A Shares are not then listed on a national securities exchange or interdealer quotation system, “Market Value” means the cash consideration paid for Class A Shares, or the fair market value of the other property delivered for Class A Shares, as determined by the Board in good faith.

 

Material Objection Notice” is defined in ‎Section 3.02.

 

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Material Uncured Breach” means the occurrence of any of the following events:

 

(a) the Corporation fails to make any payment required by this Agreement within 180 days after the due date for that payment (except for a failure to make any payment due pursuant to this Agreement as a result of a lack of Available Cash);

 

(b) this Agreement is rejected in a case commenced under the Bankruptcy Code and the Corporation does not cure the rejection within 90 days after such rejection; or

 

(c) the Corporation breaches any of its material obligations under this Agreement other than an event described in clause (a) or (b) with respect to one or more TRA Holders and the Corporation does not cure such breach within 90 days after receipt of notice of such breach from such TRA Holder(s).

 

Merger” is defined in the recitals of this Agreement.

 

Merger Date” means the date of the Merger.

 

Merger Date Asset” means the assets of the Company and any of its direct or indirect Subsidiaries that is not classified as a corporation for U.S. federal income tax purposes as of the Merger Date.

 

Merger Date Asset Schedule” means the Schedule attached as Annex A, including the Finalized Merger Date Asset Schedule and any Amended Merger Date Asset Schedule.

 

Merger Sub LLC” means Ravenclaw Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Founder SPAC.

 

Net Tax Benefit” means, for each Taxable Year, the amount equal to the excess, if any, of eighty-five percent (85%) of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under ‎Section 2.01, excluding payments attributable to any Additional Amount.

 

NOLs” means the net operating losses, capital losses, or other loss carrybacks and carryforwards of the Blockers, if any, existing at the time of the Blocker Mergers, including any such losses that the Corporation succeeds to pursuant to Section 381 of the Code (and any corresponding provision of applicable state, local and/or non-U.S. Tax law).

 

Objection Notice” is defined in ‎Section 1.03(a).

 

Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity, or other entity.

 

Realized Tax Benefit” is defined in ‎Section 1.01

 

Realized Tax Detriment” is defined in ‎Section 1.01.

 

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Subsidiary” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise Controls more than 50% of the voting shares or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

 

Supporting Letter” means a letter prepared by (i) the Corporation, and certified by the Corporation’s chief financial officer, or (ii) an Advisory Firm, in either case that states that the relevant schedules to be provided to the TRA Representative and Blocked TRA Holders pursuant to ‎Section 1.03(a)(iii) or 3.02(a) were prepared in a manner that is consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date such schedules were delivered by the Corporation to the TRA Representative and the Blocked TRA Holders.

 

Tax Assets” means, without duplication, (a) the Basis Adjustments, (b) Imputed Interest, (c) the basis for U.S. federal income tax purposes of any Merger Date Asset (except to the extent such basis is treated as equaling zero pursuant to the final sentence of the definition of the definition of Basis Adjustment), (d) NOLs, and (e) any other item of loss, deduction or credit, including carrybacks and carryforwards, attributable to any item described in clauses (a) to (d) of this definition.

 

Tax Benefit Payment” means, for each Taxable Year, an amount, not less than zero, equal to the sum of the Net Tax Benefit and the Additional Amount.

 

Tax Benefit Payment Reduction Amount” has the meaning given to it in Section 2.05(a).

 

Tax Benefit Schedule” is defined in ‎Section 1.03(a)(ii), including any Amended Tax Benefit Schedule.

 

Tax Return” means any return, declaration, report, or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return, declaration of estimated Tax, and any declaration, report, or similar statement prepared or filed in connection with any Determination (including any attached schedules).

 

Taxable Year” means, for the Corporation or the Company, as the case may be, a taxable year as defined in section 441(b) of the Code or comparable section of state or local tax law, as applicable, ending on or after the closing date of the Merger.

 

Taxes” means any and all non-U.S., U.S. federal, state, and local taxes, assessments, or similar charges that are based on or measured with respect to net income or profits (including any franchise taxes based on or measured with respect to net income or profits), and any interest, penalties, or additions related to such amounts imposed in respect thereof under applicable law.

 

Taxing Authority” means any U.S. or non-U.S., federal, national, state, county, or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

 

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TRA Holder” means any Person (other than the Corporation, its Subsidiaries, and the TRA Representative, solely in their capacity as TRA Representative) that is a party to this Agreement. For purposes of ‎Section 1.03(a)(iv), the term “TRA Holder” shall not include any person (including that person’s Affiliates) that holds less than 10 percent of the total Class B Units immediately prior to the Blocker Mergers.

 

TRA Party” means the Corporation, the Company, each of the TRA Holders, the TRA Representative, and any person who becomes a party to this Agreement from time to time.

 

TRA Representative” means Michael Heller, as Chief Administrative Officer of the Corporation, or, if he is unable or unwilling to serve as the TRA Representative, the person designated pursuant to ‎Section 5.06(d).

 

Transaction Agreement” means the Agreement and Plan of Merger, dated December 15, 2021, by and among Founder SPAC, the Company, and the other parties thereto.

 

Treasury Regulations” means the final, temporary, and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

Unblocked TRA Holder” means the Persons listed on Annex B that hold Units on the date of this Agreement (other than the Corporation or its Subsidiaries and the Blocker).

 

Valuation Assumptions” means, as of the Early Termination Date, the assumptions that

 

(a) in each Taxable Year ending on or after such Early Termination Date, the Corporation will have sufficient taxable income such that the Corporation would be obligated to make a Tax Benefit Payment in respect of all available Tax Assets in such Taxable Year;

 

(b) any NOLs and items of loss, deduction, or credit generated by a Basis Adjustment or Imputed Interest arising in a Taxable Year preceding the Taxable Year that includes the Early Termination Date will be used by the Corporation ratably from the Taxable Year that includes the Early Termination Date through the earlier of (i) the scheduled expiration of such Tax Item or (ii) 15 years (provided that in any year in which the Corporation is unable to use the full amount of an NOL because of sections 382, 383, or 384 of the Code (or any successor provision or other similar limitation) that it otherwise would be deemed to use under this clause (b), the amount deemed to be used for purposes of this clause (b) shall equal the amount permitted to be used in such year under sections 382, 383, or 384 of the Code, or any successor provision or similar limitation);

 

(c) if, at the Early Termination Date, there are Exchangeable Units that have not been Exchanged, then each such Unit shall be deemed to be Exchanged for the Exchange Consideration that would be received if the Exchange occurred on the Early Termination Date;

 

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(d) any non-amortizable assets are deemed to be disposed of in a fully taxable transaction for U.S. federal income Tax purposes on the fifteenth anniversary of the earlier of the Basis Adjustment and the Early Termination Date; and

 

(e) the federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, taking into account any scheduled or imminent tax rate increases. For the avoidance of doubt, an “imminent” tax rate increase is one for which both the amount and the effective time can be determined with reasonable accuracy.

 

[Signature page follows]

 

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In witness whereof, the undersigned have executed this Agreement as of the date first set forth above.

 

  THE CORPORATION
       
  Rubicon Technologies, Inc.
       
  By: /s/ Nate Morris
    Name: Nate Morris
    Title: Chief Executive Officer
       
  THE COMPANY
       
  Rubicon Technologies Holdings, LLC
       
  By: /s/ Nate Morris
    Name: Nate Morris
    Title: Chief Executive Officer
       
  TRA REPRESENTATIVE
       
  Michael Heller
       
  By: /s/ Michael Heller
    Name: Michael Heller
    Title: Chief Administrative Officer of Rubicon Technologies, Inc.

 

[Signature Page to Tax Receivable Agreement]

 

-31-

 

 

  TRA HOLDER
       
  By:  
    Name:  
    Title:  

 

[Signature Page to Tax Receivable Agreement]

 

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Exhibit 10.11

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (this “Agreement”) is made and entered into by and between Rubicon Global Holdings, LLC, a Delaware limited liability company (the “Company”), and Nathaniel R. Morris, an individual (“Executive”) (Company and Executive collectively referred to as “Parties”, and each individually as a “Party”), effective as of February 9th, 2021 (the “Effective Date”).

 

Whereas, Executive co-founded the Company and has served as the Chief Executive Officer of the Company for several years and, in that capacity, has been responsible for, among many other things, raising investment capital without incurring the usual and customary fees related to the use of investment banks, developing the Company’s vision as a technology Company, developing and implementing brand strategy and public relations strategies, and recruiting high-profile Board members, investors, executives, and other key talent, thereby significantly increasing the Company’s value;

 

Whereas, the Parties entered into an Employment Agreement dated August 15, 2018 (the “Prior Agreement”);

 

Whereas, the Parties wish to amend and restate the Prior Agreement to better reflect Executive’s value to the Company and to resolve a scrivener’s error in the Prior Agreement;

 

Whereas, the Parties desire to enter into this Agreement in order to provide for the rights and obligations of the Parties with respect to Executive’s employment with the Company following the Effective Date; and

 

Whereas, the Parties desire to enter into this Agreement in order to ensure that Executive is fairly compensated for Executive’s past, current and future contributions and receives fair market value.

 

In consideration of the promises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1. Employment and Duties. Pursuant to the terms and provisions of this Agreement, the Company hereby agrees to continue to employ Executive as its Chief Executive Officer and Executive hereby agrees to continue to be employed by the Company in such capacity. Executive shall report to and serve at the discretion of the Company’s Board. The Executive shall have such duties, authority, and responsibility as shall be determined from time to time by the Company’s Board, which duties, authority, and responsibility are consistent with the Executive’s position.

 

2. Term. The term of Executive’s employment under this Agreement (the “Term”) shall be deemed to have commenced as of the Effective Date and shall continue unless terminated in accordance with Section 7 of this Agreement.

 

 

 

 

3. Compensation.

 

(a) Base Salary. For all services to be rendered during the Term, the Company shall pay Executive an annual base salary (“Annual Base Salary”) in the amount of $614,692.52 per year, less applicable withholdings, payable in substantially equal monthly or more frequent installments as is customary under the Company’s normal payroll practices from time to time for its senior management employees. Executive’s Annual Base Salary for any partial year will be pro-rated based upon the actual number of days Executive was employed and provided services in the partial year. The Company’s Compensation Committee shall review Executive’s Annual Base Salary no less frequently than annually, and may adjust upward Executive’s Annual Base Salary from time to time during the Term, in its sole discretion, after taking into account such factors as they deem relevant including, without limitation, changes in the cost of living, Executive’s performance and the performance of the Company. Notwithstanding the foregoing, Executive’s Annual Base Salary shall be increased annually, as August 15, 2021 and each anniversary thereof, by a minimum of fifteen percent (15%) over the prior year’s Annual Base Salary.

 

(b) Annual Performance Bonus. In addition to discretionary bonuses that the Company’s Board may award to Executive from time to time, Executive shall be eligible to receive an annual performance bonus “Annual Performance Bonus”. Executive’s Annual Performance Bonus target shall be equal to sixty five percent (65%) of Executive’s Annual Base Salary, less required withholdings, and in no event shall the payout of the Annual Performance Bonus paid to Executive be less than thirty percent (30%) of Executive’s Annual Base Salary, less required withholdings, based on achievement of the performance standards as set forth below. The Annual Performance Bonus shall be determined according to the Company’s “Fiscal Year” (currently January 1st to December 31) and shall be paid to Executive in a lump sum payment within three (3) months following the end of the Company’s Fiscal Year (i.e., no later than March 31st) and shall be subject to applicable withholdings. Executive shall be entitled to receive a prorated portion of the Annual Performance Bonus, for which he is otherwise eligible, if Executive is not employed during the entire Fiscal Year on which the Annual Performance Bonus is based, regardless of the reason for Executive’s termination. Executive does not have to be employed by the Company on the date that the Annual Performance Bonus shall be paid in order to be eligible to receive the Annual Performance Bonus. Seventy five percent (75%) of the Annual Performance Bonus shall be determined and awarded based on achievement of Key Performance Indicators (“KPI’s”), as determined by the executive team Compensation Committee for the Fiscal Year. Twenty five percent (25%) of the Annual Performance Bonus shall be awarded according to factors determined in advance by the Compensation Committee in consultation with Executive, which may include, for example: Executive’s leadership and adherence to the Company’s mission and values; capital fundraising; recruiting talent; managing the Company’s Business; and Company achievement of net revenue goals established by the Compensation Committee.

 

(c) Special Performance Bonus. Immediately upon the completion of a Sale Event or an IPO that is consummated no later than the second anniversary of the Effective Date, the Company shall pay Executive a cash bonus (the “Special Performance Bonus”), less required deductions, determined as follows: (i) two percent (2%) of the Transaction Value if the Transaction Value is at least $1,200,000,000 but is less than $1,500,000,000; (ii) four percent (4%) of the Transaction Value if the Transaction Value is at least $1,500,000,000 but is less than $1,850,000,000; or (iii) six percent (6%) of the Transaction Value if the Transaction Value is $1,850,000,000 or more. The Special Performance Bonus shall be paid by the Company to Executive in a lump sum cash payment on the closing date of the Sale Event or the IPO, as applicable. Executive shall be entitled to receive the Special Performance Bonus regardless of whether he is employed by the Company through completion of the Sale Event or an IPO, unless Executive is terminated for Cause as defined in Section 12(a)(v)(B) or (C) of this Agreement or unless Executive resigns without Good Reason prior to the closing date of the Sale Event or the IPO. If a Sale Event or an IPO does not occur on or before the second anniversary of the Effective Date, Executive and the Company shall negotiate in good faith a replacement arrangement for this Section 3(c).

 

2

 

 

4. Benefits and Expenses.

 

(a) Fringe Benefits and Perquisites. During the Employment Period, the Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.

 

(b) Health, Life, and Disability Insurance. During the Employment Period, Executive shall be entitled to participate in all employee benefit plans, practices, and programs maintained by the Company for its senior management (including but not limited to medical, disability, and life insurance), to the extent consistent with applicable law and pursuant to the terms of the plans and programs. To the extent not already provided in the foregoing, the Company also shall provide Executive, at Company expense, throughout the Employment Period: (i) term life insurance in the amount of two (2) million dollars (with the beneficiary to be named by Executive) with a reputable carrier; and (ii) short-term and long-term “own occupation” disability insurance (the latter providing no less than 60% earned income replacement through age 65) with a reputable carrier.

 

(c) Vacation. During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation during each calendar year and to paid holidays and other paid leave as set forth in the Company’s policies in effect from time to time. The Parties acknowledge Executive’s intensive work and travel schedule and agree that any vacation not used during a calendar year may be carried over to subsequent calendar years, shall not be forfeited, and shall be paid upon termination of employment regardless of the reason for Executive’s termination. The number of paid vacation days in any partial year will be pro-rated based upon the actual number of days Executive was employed in the partial year, shall not be forfeited and shall be paid to Executive upon termination of employment regardless of the reason for Executive’s termination.

 

(d) Liability Insurance, Indemnification, and Defense. The Company agrees to maintain at least $20,000,000 of (“Director and Officer ‘D&O’ Liability Insurance”) with a reputable carrier at all times during Executive’s employment to cover Executive in his capacity as an officer and director of the Company and any of the Rubicon Affiliates. In addition, the Company agrees to indemnify Executive and hold Executive harmless to the maximum extent allowable for any claim against the Company or Affiliate or against Executive relating to Executive’s employment with the Company, service on the Board, or service for any parent, subsidiary, or Affiliate of the Company or any such entity’s governing or advisory board. Further, in the event of any such claim against Executive, and to the extent not otherwise provided under any applicable insurance policy, the Company shall provide and pay for separate counsel of Executive’s choosing to advise and represent Executive with regard to such claim to the extent separate counsel is deemed appropriate in Executive’s sole discretion.

 

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(e) Expense Reimbursement. The Company will reimburse Executive for all Reasonable Out-of-Pocket Business Expenses, as defined in Section 12(a) of this Agreement, incurred by Executive during the Employment Period in the course of performing Executive’s duties and responsibilities under this Agreement. Executive shall be eligible to travel first class and entitled to reimbursement by the Company for a first class airline ticket for all business-related air travel of four (4) hours or more of scheduled flight time. For reimbursement, Executive must file expense reports with respect to such expenses and such expenses (and expense reports therefor) shall comply with the Company’s written policies in effect at the time such expenses are incurred. However, in the event of a discrepancy between such policies and this Agreement regarding reimbursable expenses, this Agreement shall control. Any such reimbursements shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred; the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year; and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit. Further, to the extent any reimbursements are deemed taxable to Executive, the Company shall make a gross-up payment to Executive for any applicable taxes with respect to such reimbursements no later than the end of the tax year following the year in which the taxes are remitted.

 

5. Retention Bonus. The Company has determined that Executive will be necessary to support a planned or unplanned Sale Event. Accordingly, and subject to the terms and conditions below, due to a planned or unplanned Sale Event, or significant corporate reorganization (the “Event”), Executive will be eligible to receive a “Retention Bonus” equal to 100% of his Base Salary, in addition to any other benefits set forth in this Agreement. The Company shall notify Executive in writing of the planned Event and specific Retention Bonus given the Executive’s then-applicable Base Salary, along with expected contributions of the Executive for the transaction (the “Event Notification”). Except as otherwise provided in subsections 5.1 and 5.2, the Retention Bonus will be earned upon issuance of the Event Notification and provided the Executive (a) is in continuous employment during the Event unless Company terminates him for Cause as defined in Section 12(a)(v)(B) or (C), and (b) meets its specific objectives relative to the Event as established in the Event Notification. The Retention Bonus shall be paid within thirty (30) days of the Event’s consummation, subject to standard deductions and withholdings.1

 

5.1 If Executive incurs a termination of employment due to death after receipt of an Event Notification but prior to payment of the Retention Bonus, the Executive’s Beneficiary shall be paid a pro rata percentage of the Retention Bonus that would become due and owing upon the closing/consummation of the Event based on the date of Executive’s death in relation to the period of time between the date on the Event Notification and the consummation of the Event.

 

 

1It is recognized that not every Event closes or is completed as expected. For the avoidance of doubt, the Company’s obligation to pay the Retention Bonus is established by virtue of issuing the Event Notification, even if the Event does not conclude as expected (i.e., a prospective buyer fails to close as established in a definitive purchase agreement or an IPO is pulled due to changes in market or business conditions).

 

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5.2 If Executive incurs a termination of employment due to Disability after receipt of an Event Notification but prior to payment of the Retention Bonus, the Executive shall be paid a pro rata percentage of the Retention Bonus that would become due and owing upon the closing/consummation of the Event based on the date of Executive’s termination of employment in relation to the period of time between the date on the Event Notification and the consummation of the Event. Notwithstanding the foregoing, if Executive recovers from his Disability and returns to active employment with the Company prior to the first anniversary of his Disability, any Retention Bonus that was unpaid that occurred during the period of the Disability shall be paid on the first payroll date following the date on which the Executive returns to active employment provided that the Event has completed. In addition, for purposes of this subsection 5.2, the Executive will be treated as having been continuously employed by the Company during the period of his Disability.

 

6. INTENTIONALLY OMITTED.

 

7. Termination of Employment.

 

(a) Termination by Either Party: General Provisions. Executive’s employment by the Company shall terminate (i) immediately upon Executive’s death or Disability, (ii) on a date of termination set forth in a written notice of termination delivered to Executive by the Company’s Board for any reason (whether for Cause or without Cause), or (iii) on a date of termination set forth in a written notice of Executive’s resignation delivered to the Company by Executive for any reason (whether for Good Reason or otherwise), which date shall be no less than 30 days after the Company’s receipt of such written notice, unless waived by the Company in writing (the date the Employment Period terminates or expires for any reason is the “Termination Date”). The Company shall pay Executive the following:

 

(i) Executive’s earned but unpaid Annual Base Salary through the Termination Date, to be paid to Executive on the next regular payroll cycle following the Termination Date, which the Parties agree is due and owing to Executive (and in any event by March 15 of the year following the Fiscal Year in which the termination occurred);

 

(ii) All Reasonable Out-of-Pocket Business Expenses incurred on or prior to the Termination Date, to be paid to Executive within thirty (30) days from the date the expenses are submitted to the Company (and in any event by March 15 of the year following the Fiscal Year in which the termination occurred);

 

(iii) All accrued but unused vacation through the Termination Date, to be paid to Executive on the next regular payroll cycle following the Termination Date (and in any event by March 15 of the year following the Fiscal Year in which the termination occurred); and

 

(iv) Executive’s Annual Performance Bonus (prorated to the extent Executive was not employed during the entire Fiscal Year on which the Annual Performance Bonus is based), to be paid in a cash lump sum as provided in Section 3(b) above.

 

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(b) Termination for Cause or Resignation without Good Reason.

 

(i) Termination of the Executives employment shall not be deemed to be for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board (after reasonable written notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that the Executive has engaged in the conduct described in Section 12(a). Except for a failure, breach, or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have ten (10) business days from the delivery of written notice by the Company within which to cure any acts constituting Cause; provided however, that, if the Company reasonably expects irreparable injury from a delay of ten (10) business days, the Company may give the Executive notice of such shorter period within which to cure as is reasonable under the circumstances, which may include the termination of the Executive’s employment without notice and with immediate effect.

 

(ii) If the Company terminates Executive’s employment for Cause, or if Executive terminates his employment with the Company for any reason other than Good Reason, the payments due to Executive shall be limited to the amounts described in Section 7(a) and the amounts described in Section 7(c)(v) to the extent Executive has been terminated for Cause for actions other than as described in Sections 12(a)(v)(C) or (D).

 

(c) Termination Without Cause or Resignation for Good Reason.

 

The Executive cannot terminate his employment for Good Reason, as defined in Section 12(a), unless he has provided written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within ninety (90) business days of the initial existence of such grounds and the Company has had at least 10 business days from the date on which such notice is provided to cure such circumstances.

 

(i) If the Company terminates Executive’s employment without Cause, or if Executive resigns for Good Reason, and subject in all events to the provisions of Section 7(d), the Company shall pay Executive the following “Special Separation Payments” on the 60th day following termination (the “Special Separation Payment Date”):

 

(ii) In addition to but without duplication of those amounts set forth in Section 7(a), an amount equal to eighteen (18) months of Executive’s Annual Base Salary as of the Termination Date, less required deductions, which amount shall be payable by the Company in a lump sum no later than the Special Separation Payment Date, with no reduction, mitigation, or duty to mitigate;

 

(iii) Executive’s Annual Performance Bonus, less required deductions, in an amount equal to 65% of Executive’s Annual Base Salary as of the Termination; and

 

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(iv) If the Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the difference between the monthly COBRA premium paid by the Executive for himself and his dependents and the monthly premium amount paid by similarly situated active executives. Such reimbursement shall be paid to the Executive on the last day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive receives/becomes eligible to receive substantially similar coverage from another employer or other source. Notwithstanding the foregoing, if the Company’s making payments under this Section 7(c) would violate the nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the “ACA”), or result in the imposition of penalties under the ACA and the related regulations and guidance promulgated thereunder, the Parties agree to reform this Section 7(c) in a manner as is necessary to comply with the ACA.

 

(v) Executive shall be entitled to receive the Special Performance Bonus described in Section 3(c) above upon the completion of the Sale Event or IPO, less required deductions, to the extent otherwise payable regardless of whether Executive continues employment through completion of such event, unless Executive is terminated for Cause as defined in Section 12(a)(v)(C) or (D) of this Agreement or unless Executive resigns without Good Reason.

 

(d) Release. Notwithstanding the foregoing, (A) Executive shall not be entitled to receive any payments or benefits pursuant to Section 5 or Section 7(e) (other than the Special Performance Bonus, if applicable) unless Executive has executed and delivered to the Company a release agreement in form and substance as attached hereto as Exhibit A or otherwise agreed to by the Company and the Executive (the “Release”), and such Release remains in full force and effect, has not been revoked and is no longer subject to revocation, as of the Special Separation Payment Date (sixty (60) days after the Termination Date), and (B) Executive shall be entitled to receive such payments only so long as Executive has not breached any of the provisions of the Release or this Agreement.

 

(e) Termination on Disability or Death. If at any time during the Employment Period, the Executive has a Disability, as defined in section 12(a), or dies, the Employment Period shall terminate with payments as provided in Section 7(a) and the Company shall continue payment of Executive’s Annual Base Salary during the remainder of the calendar month during which Executive’s death occurs. In the event of termination due to a Disability, Executive shall be entitled to the payments as set forth in Section 7(c), provided that Executive satisfied the definition of Disability and expected to remained disabled during the twelve (12) month period following the Termination Date and executes a Release as provided in Section 7(d) without revocation.

 

(f) No Other Benefits. Except as otherwise expressly provided in this Agreement or as provided in Company’s employee retirement or other benefit plans with regard to vested benefits as applicable, Executive shall not be entitled to any other salary, bonuses, employee benefits or compensation from the Company after the Termination Date.

 

(g) Offset. The Company may offset any bona fide amounts that Executive owes the Company against any amounts it owes Executive hereunder.

 

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8. Restrictive Covenants.

 

(a) Non-Competition/Non-Solicitation. Executive acknowledges that, in the course of the Executive’s service with the Company for the Company’s Business, Executive’s services will be of special, unique and extraordinary value to the Company and its Affiliates. Executive further acknowledges that it is of vital importance for the Company to protect its various trade secrets and confidential information, relationships, good will, and investments in training and other resources, among other assets. Therefore, in further consideration of the Company entering into this Agreement, Executive covenants and agrees that, without limiting any other obligation pursuant to this Agreement, during the Employment Period and for a period of twenty-four (24) months following the Termination Date (the “Restrictive Period”), Executive will not:

 

(i) provide services, products, or activities similar to those provided by Executive for the Company, in furtherance of any business competitive with the Business of the Company, including, without limitation, to: SLM Waste and Recycling, Discovery Refuse Management, Inc. (d/b/a DRM Waste Management); Quest Recycling Services LLC; Resource Management Group, Inc.; International Environmental Alliance (TEA); Environmental Waste Solutions, LLC (EWS); Ecova, Inc.; New Market Waste Solutions; Waste Harmonics, LLC; Waste Management, Inc.; Republic Services, Inc.; Advanced Disposal, LLC; Clean, HarborsStericycle, Inc.; Progressive Waste Solutions Ltd.; Waste Connections, Inc.; Recology, Inc.; Rumpke Consolidated Companies, Inc.; Casella Waste Systems, Inc.; Waste Industries USA, Inc.; Waste Pro USA, Inc.; WestRock Company; or any affiliate of or successor to any such entity;

 

(ii) perform any activities or services similar to those provided by Executive for the Company that are competitive with the Business of the Company anywhere within the Territory (other than in the performance of services for the Company);

 

(iii) engage in ownership or financing of any Person in furtherance of any business that is competitive with the Business of the Company anywhere within the Territory (other than as a passive investor with less than a 1% ownership interest in any such business and otherwise complying with this Section 7(a));

 

(iv) solicit, attempt to solicit, or hire, directly or by assisting others, any Person who performed services for the Company during the twelve (12) month period prior to the Termination Date to terminate his/her engagement with the Company; or

 

(v) solicit, or attempt to solicit, directly or by assisting others, any of the Company’s customers with whom Executive had Material Contact during the twelve (12) month period prior to the Termination Date for purposes of providing products or services that are competitive with the Business of the Company.

 

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(b) Confidential Information or Trade Secrets. Executive will have access to and may become familiar with Confidential Information and/or Trade Secrets, and Executive acknowledges that the continued success of the Company depends upon the use and protection of Confidential Information and/or Trade Secrets. Executive agrees that at all times during Executive’s service with the Company and thereafter, Confidential Information and Trade Secrets (a) will be kept confidential by Executive, (b) will be used by Executive solely in the course of, and consistent with, Executive’s performance services for the Company, and (c) without limiting the foregoing, will not be disclosed by Executive to any person other than Executive’s legal counsel, except with the specific prior written consent of the Company in its discretion, and except to the extent disclosure is required by a valid court order or other valid judicial, administrative or regulatory process, or as otherwise required by law. Executive shall take all reasonable and appropriate steps to safeguard Confidential Information and/or Trade Secrets and to protect it against disclosure, misuse, espionage, loss and theft. Executive agrees to deliver to the Company at the end of Executive’s service with the Company, or at any other time the Company may request, all copies and embodiments, in whatever form or media, of memoranda, notes, plans, records, reports and other documents (and all copies thereof), relating to the Business or affairs of the Company (including, without limitation, all Confidential Information and/or Trade Secrets) that Executive may then possess or have under his control.

 

(c) Board of Managers/Board of Advisors. Executive acknowledges that he may have access to, and that there may be disclosed to such Executive, information of a confidential, nonpublic, proprietary and/or trade secret nature that has great value to the individual members of the Company’s Board because such information is not generally known to business competitors or to the general public (the “Board Confidential Information”). Board Confidential Information does not include information that is in, or has entered, the public domain through no fault of the Executive. During Executive’s service with the Company, and thereafter in perpetuity, and without in any way limiting the provisions of Section 7(b) above, Executive will hold Board Confidential Information in confidence and will not use or disclose Board Confidential Information to anyone other than Executive’s legal counsel or as may be necessary in the performance of Executive’s duties pursuant to this Agreement and as may be consistent with the purpose for which such Board Confidential Information was disclosed to Executive, except to the extent disclosure is required by a valid court order or other valid judicial, administrative or regulatory process, or as otherwise required by law.

 

(d) Property. All files, records, memoranda, notes, or other documents reasonably relating to the Business of the Company, whether prepared by Executive or otherwise coming into his possession, and whether constituting Confidential Information, Board Confidential Information, or otherwise, in any and all forms and media, including, without limitation, all letters, memoranda, reports, notes, notebooks, books of account, data, drawings, prints, plans, specifications, and all other documents or writings, including those documents or writings on electronic data storage devices, and all copies thereof containing or relating to such information, shall be immediately delivered to the Company and not retained by Executive upon the termination of Executive’s service with the Company, or upon the Company’s request, and shall at all times be and remain the sole and exclusive property of the Company.

 

(e) Intellectual Property. With respect to Intellectual Property made or conceived by Executive reasonably relating to the Business of the Company, whether or not during the hours of his service with the Company or with the use or assistance of Company Facilities, Materials, or Personnel, either solely or jointly with others during the Employment Period:

 

(i) During the Employment Period, Executive shall inform the Company promptly and fully of all such Intellectual Property by written reports, setting forth in detail the procedures employed and the results achieved. Executive shall submit a report promptly after completion of any studies or research projects, whether or not in Executive’s opinion a given project has resulted in any Invention;

 

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(ii) Executive hereby assigns and agrees to assign to the Company all of his right to and title and interest in all Intellectual Property, including Inventions, and to applications for United States and foreign letters patent and United States and foreign letters patent granted upon such Inventions and to all copyrightable material reasonably related thereto, without royalty or other additional consideration beyond that set forth in this Agreement;

 

(iii) Executive agrees for himself and his heirs, personal representatives, successors, and assigns, upon request of the Company, at all times to do such acts, such as giving testimony in support of the Executive’s inventorship, and to execute and deliver promptly to the Company such papers, instruments, and documents, without expense to him, as from time to time may be necessary or useful in the Company’s opinion to apply for, secure, maintain, reissue, extend, or defend the Company’s worldwide rights in the Intellectual Property or in any or all U.S. letters patent and in any and all letters patent in any country foreign to the United States, so as to secure to the Company the full benefits of the Inventions or discoveries and otherwise to carry into full force and effect the text and the intent of the assignment set out in Section 8(e)(ii) above, without royalty or other additional consideration beyond that set forth in this Agreement;

 

(iv) The Executive hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Intellectual Property; and

 

(v) Executive warrants and represents to the Company that he is not subject to any agreement or policy inconsistent with the Agreement regarding Intellectual Property set forth herein. Executive agrees not to conduct any research or other work subject to this Agreement other than at the Company’s facilities.

 

(f) Shop Right. Notwithstanding any provision of this Agreement creating greater rights, the Company shall have the royalty-free right to use in its Business, and to make, have made, use, sell, and import products, processes, and services derived from any inventions, discoveries, concepts, and ideas, whether or not patentable, including but not limited to processes, methods, formulae, techniques, as well as improvements thereof and know-how related thereto, as well as trade secrets, trademarks, trade dress and copyrights that are not Intellectual Property as defined herein, but that are made or conceived by Executive during his service with the Company or with the use or assistance of the Company’s Facilities, Materials, or Personnel. Notwithstanding the foregoing or any other provision in this Agreement, and for purposes of clarity and not limitation, Executive shall not be limited or restricted with respect to his use of information about Executive’s childhood, background, upbringing, life experiences, education, personal, religious, or political opinions or views, his mentors or mentees, his involvement with non-profit organizations, global organizations, thought leaders, educational institutions or forums, environmental organizations, and his personal story about his investment, involvement, vision, growth, development and expansion of the Company or observations or insights about business, leadership, success, or other general topics (“Executive’s Insights”).

 

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(g) Ownership; Goodwill. Executive acknowledges and agrees that the Company’s Business and services are highly specialized; that its Confidential Information and/or Trade Secrets are not generally known and are secret; that the Company has provided and will provide such Executive with access to information about the Company’s counterparties, vendors, sales partners, clients, actual and potential developments, business lines or acquisitions, which is Confidential Information and/or a Trade Secret; and that the value of this Confidential Information and/or Trade Secrets cannot adequately be compensated by damages in an action at law; that the Company has earned goodwill with its counterparties, vendors, sales partners and clients; that the Company has provided and will continue to provide Executive with the Company’s goodwill for use in developing relationships for the Company; that Executive could not develop these relationships without using the Company’s goodwill; that this goodwill is valuable; that the Company is the owner of the goodwill; and that the value of this goodwill cannot adequately be compensated by damages in an action at law.

 

(h) Blue-Pencil; Modification. If, at the time of enforcement of this Section 8, a court of competent jurisdiction shall hold that the duration, scope or territory restrictions are unreasonable under circumstances then existing, then the Parties agree that the court may modify such terms in conformity with applicable law to the extent necessary to render such restrictions reasonable and enforceable under applicable law. The Parties intend that the provisions of this Agreement be enforced to the fullest extent permitted by applicable law and modified only to the extent necessary for enforcement.

 

9. Enforcement; Additional Acknowledgements. The Parties hereto agree that, in the event of a breach by the other Party of any of the provisions of this Agreement, the non-breaching Party (and its Affiliates) would suffer irreparable harm and money damages would be an inadequate remedy therefor, and in addition and supplementary to other rights and remedies, the non-breaching Party shall be entitled to seek specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof, as well as recovery of its costs and reasonable attorneys’ fees. Nothing herein shall be construed as prohibiting the non-breaching Party from pursuing any other remedies available to it for such breach or threatened breach including the recovery of damages from the breaching Party. Each Party waives any requirements that a Party seeking an injunction post a bond or any other security.

 

10. Survival. Certain provisions in this Agreement, in accordance with their terms, shall survive the termination of this Agreement and the Employment Period.

 

11. Notices. Any notice provided for in this Agreement must be in writing and may be sent electronically via email or personally delivered, mailed by certified first class mail (postage prepaid and return receipt requested), or sent by overnight courier service (with a tracking number and charges prepaid) to the recipient at the address below indicated:

 

If to the Company:

 

Rubicon Global Holdings, LLC
950 East Paces Ferry Road, Suite 1900
Atlanta, GA 30326
Attn: General Counsel, Personal & Confidential

 

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If to Executive:

 

Nathaniel R. Morris
5913 Marina View Court
Prospect, Kentucky 40059

 

or such other address or to the attention of such other persons as the recipient Party shall have specified by prior written notice to the sending Party. Any notice under this Agreement shall be deemed to have been given when so electronically sent or personally delivered, five (5) days after deposit in the U.S. mail, or the next business day if sent for overnight delivery by an overnight courier service (such as UPS or FedEx).

 

12. General Provisions.

 

(a) Definitions. For the purposes of this Agreement, the following terms have the meanings set forth below:

 

(i) “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.

 

(ii) “Board” or “Board of Managers” means the Board or Board of Managers of the Company as constituted under the Operating Agreement.

 

(iii) “Board of Advisors” means the Board of Advisors of the Company as constituted under the Operating Agreement.

 

(iv) “Business” means the municipal solid waste business.

 

(v) “Cause” means any of the following after the Effective Date:

 

(A) the Executive’s willful engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, is materially injurious to the Company or its affiliates; (B) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company; (C) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving dishonesty which has a material effect on the Company or its Affiliate; (D) the Executive’s willful unauthorized disclosure of Confidential Information (as defined below) which has a material effect on the Company of its Affiliate; or (E) Executive’s violation of the confidentiality restrictions or any violation of the Company’s non-solicit or non-compete restrictions applicable to Executive. “Cause” shall only be met provided that any basis for “Cause” shall have occurred on or after the Effective Date and, further, that the Company notifies Executive in writing of the particularities of such condition within ninety (90) days of the Company’s initial knowledge of its existence, and such condition continues without cure at the conclusion of a period of thirty (30) days following the Company’s written notice of the same to Executive.

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For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

 

(vi) “Company Facilities, Materials, or Personnel” means facilities, materials, or personnel owned, leased, occupied, or controlled by the Company, or any of its successors and assigns, and any of its present or future Affiliates, as well as the facilities, materials, or personnel of third parties rented, leased, or otherwise hired by the Company for the conduct of aspects of the Business of the Company.

 

(vii) “Compensation Committee” means the committee established pursuant to the Operating Agreement and compensation charter as approved by the Board on February 15, 2018, as amended.

 

(viii) “Confidential Information” means data and information as defined in O.C.G.A. §§13-8-51(3), in any form or media, including, without limitation, all plans, products, and services, including, without limitation, relating to research, development, inventions, manufacturing, purchasing, accounting, engineering, marketing, merchandising, selling, source codes, software programs, computer systems, logos, designs, graphics, writings or other materials, algorithms, formulae, works of authorship, techniques, documentation, models and systems, products, sales and pricing techniques, procedures, inventions, products, improvements, modifications, methodology, processes, concepts, records, files, memoranda, reports, plans, proposals, price lists, services, client, customer and supplier lists, client, customer and supplier information or financing, of the Company, or any of its successors and assigns, and any of its present or future Affiliates, disclosed to or known by the Executive as a consequence of or through his engagement by the Company. Confidential Information does not include information that is in, or has entered, the public domain through no fault of the Executive. Confidential Information also does not include Executive’s Insights as defined elsewhere in this Agreement.

 

(ix) “Disability” shall be deemed to have occurred if, as a result of incapacity due to physical or mental illness, Executive is considered disabled under the Company’s long-term disability insurance plans or, in the absence of such plan, Executive has been unable, for a period of six (6) months within any twelve (12) month period, to perform the essential duties of Executive’s position even with reasonable accommodations of such disability or incapacity provided by the Company or if providing such accommodations would be unreasonable, all as determined by a medical doctor selected by the Company. Executive shall cooperate reasonably and in all material respects with the Company if a question arises as to whether Executive has a Disability (including, without limitation, submitting to an examination by such medical doctor or such other health care specialists selected by the Company and authorizing such medical doctor or such other health care specialist to discuss Executive’s condition with the Company).

 

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(x) “Good Reason” means (A) reduction in Executive’s Annual Base Salary (other than a reduction in Base Salary applicable to the Company’s executive officers generally), (B) a material reduction in the Executive’s Annual Performance Bonus; (C) a relocation of the Executive’s principal place of employment by more than 50 miles of Metro Atlanta; (D) a material breach by the Company of any of the other terms or provisions of this Agreement; provided that Executive notifies the Company in writing of such condition within ninety (90) days of Executive’s initial knowledge of its existence, and such condition continues without cure at the conclusion of a period of thirty (30) days following Executive’s written notice of the same to the Company; (v) the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law; (E) the Company’s failure to nominate the Executive for election to the Board and to use its best efforts to have him elected and reelected; (F) a material, adverse change in the Executive’s position, title, authority, duties, or reporting responsibilities (other than in connection with a Sale Event or an IPO and other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law); or (G) a material adverse change in the reporting structure applicable to the Executive.

 

(xi) “Intellectual Property” means Trade Secrets, trademarks, trade dress, copyrights, Inventions, discoveries, concepts, and ideas, whether patentable or not, including but not limited to processes, methods, formulae, software, techniques, as well as improvements thereof or know-how related thereto concerning any present or prospective activities of the Company, or any of its successors and assigns, and any of its present or future subsidiaries, or organizations controlled by, controlling, or under common control with the Company, with which the Executive becomes acquainted as a result of his engagement by the Company. Intellectual Property does not include Executive’s Insights as defined elsewhere in this Agreement.

 

(xii) “Invention” means inventions, discoveries, concepts, and ideas, whether patentable or not, including but not limited to processes, methods, formulae, software, techniques, as well as improvements thereof or know-how related thereto concerning any present or prospective activities of the Company, or any of its successors and assigns, and any of its present or future subsidiaries, or organizations controlled by, controlling, or under common control with the Company, with which the Executive becomes acquainted as a result of his engagement by the Company. Invention does not include Executive’s Insights as defined elsewhere in this Agreement.

 

(xiii) “IPO” has the meaning specified in the Operating Agreement.

 

(xiv) “Material Contact” exists between Executive and each customer or potential customer: (i) with whom Executive dealt; (ii) whose dealings with the Company were coordinated or supervised by Executive; (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company; or (iv) who receives products or services authorized by the Company, the sale or provision of which resulted in compensation, commissions or earnings within two years prior to the date of Executive’s Termination Date.

 

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(xv) “Operating Agreement” means that certain Seventh Amended and Restated Operating Agreement of Rubicon Global Holdings, LLC, dated April 27, 2018, as amended on July 2, 2019, as it may be further amended from time to time and at any time.

 

(xvi) “Person” means an individual, a company, a corporation, an association, a partnership, a joint venture, a limited liability company or partnership, an unincorporated trade or business enterprise, a trust, an estate, or a government (national, regional or local) or an agency, instrumentality or official thereof.

 

(xvii) “Reasonable Out-of-Pocket Business Expenses” means in addition to those business and travel expenses allowed and pursuant to the Company’s Travel & Expense Reimbursement Policy, first class airline tickets for all air travel over four (4) hours of scheduled air travel; and travel expenses incurred by Executive to/from his residence in Kentucky eight (8) times per year.

 

(xviii) “Sale Event” means (i) the transfer of all or substantially all of the Company’s assets, (ii) a consolidation, merger, acquisition, or other transaction (or series of related transactions) in which the holders of the voting power of the outstanding units of the Company immediately prior to such transaction hold less than a majority in voting power of the outstanding equity securities of the Company or the surviving or resulting Person, as the case may be, immediately following such transaction, or (iii) a grant of an exclusive license to all or substantially all of the intellectual property that constitutes an effective disposition of such intellectual property. In addition, a Sale Event includes a transaction pursuant to which a special purpose acquisition company or other similar vehicle merges with or otherwise acquires an ownership interest in the Company or its operating subsidiaries, whether by merger, purchase or otherwise.

 

(xix) “Territory” means North America.

 

(xx) “Trade Secret” is defined in O.C.G.A. §10-1-761(4) and means any Confidential Information described above without regard to form which: (i) is not commonly known by or available to the public; (ii) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (iii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The Defend Trade Secrets Act of 2016 provides immunity from state and federal civil or criminal liability for Employee if Employee discloses a trade secret: (a) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, but in either case only if the disclosure is solely for the purpose of reporting or investigating a suspected violation of law; or (b) in a complaint or other document filed with a court in a lawsuit or other proceeding, if the filing of that document is made under seal, and any other disclosure of the trade secret Employee makes is only as allowed by the court.

 

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(xxi) “Transaction Value” means the total amount of the consideration paid by the buyer(s) or merger partner(s) (as applicable) in connection with a Sale Event, or the value of the Company at the time of an IPO, in each case prior to any fees or expenses, as applicable.

 

(b) 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 invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. The Parties agree that a court of competent jurisdiction making a determination of the invalidity or unenforceability of any term or provision of this Agreement shall have the power to reduce the scope, duration or area of any such term or provision, to delete specific words or phrases from any such term or provision, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

 

(c) Complete Agreement. This Agreement and those documents expressly referred to herein embody the complete agreement and understanding between the Parties and supersedes and preempts any prior understandings or agreements by or between the Parties, written or oral (including the Prior Agreement and those based on prior conduct), regarding the subject matter of this Agreement.

 

(d) Counterparts. This Agreement may be executed in separate counterparts (including by means of facsimile and electronic transmission in portable document format (pdf) or other electronic transmission), each of which is deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

(e) Affiliates, Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by the Company and its Affiliates, successors and assigns, including and may be assigned by the Company or its successors or assigns without the consent of Executive (without causing a termination of Executive’s employment). The Company’s Board of Managers are third-party beneficiaries of and have the right to enforce the terms and provisions of Section 8(c) of this Agreement. The Parties intend this Agreement to be enforceable and to survive a Sale Event or an IPO.

 

(f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia without giving effect to the choice of law provisions thereof The Trade Secrets and Confidential Information protected by this Agreement shall be subject to protection and seal to the full extent contemplated by the laws of the State of Georgia.

 

(g) Waiver of Jury Trial. As a specifically bargained for inducement for each of the Parties to enter into this Agreement (after having the opportunity to consult with counsel), each Party expressly waives, to the maximum extent allowed by applicable law, the right to trial by jury in any lawsuit or proceeding relating to or arising in any way from this Agreement or the matters contemplated hereby.

 

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(h) Arbitration. Except for claims seeking injunctive or other provisional relief to avoid irreparable damage (which claims the Parties agree shall only be brought in a court of competent jurisdiction in Fulton County, Georgia), any dispute, controversy or claim arising under or relating to this Agreement or any breach or threatened breach hereof (an “Arbitrable Dispute”) shall be resolved exclusively by final and binding arbitration in the State of Georgia pursuant to the American Arbitration Association’s Employment Arbitration Rules before a JAMS arbitrator. The Parties agree that they will keep confidential the substance and result of any arbitration between the Parties.

 

(i) Any Party may demand that any Arbitrable Dispute be submitted to binding arbitration. The demand for arbitration shall be in writing, shall be served on the other Party in the manner prescribed herein for the giving of notices, and shall set forth a short statement of the factual basis for the claim, specifying the matter or matters to be arbitrated.

 

(ii) Except as otherwise provided herein or under applicable law or rules, the Arbitrators shall award the prevailing Party in any Arbitrable Dispute (i) reimbursement of such prevailing Party’s reasonable pre-award expenses of the arbitration, including reasonable travel expenses, out-of-pocket expenses, witness fees, and reasonable attorney’s fees and expenses; and (ii) any fees and expenses of the Arbitrators incurred by the prevailing Party

 

INITIALS TO THIS ARBITRATION PROVISION:

 

Initials of Executive:     NRM    

 

Initials of Company’s Representative:     MH    

 

(i) Corporate Opportunity. During the Employment Period, Executive shall submit to the Company all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware which relate to the Business of the Company or its direct or indirect subsidiaries at any time during the Employment Period (“Corporate Opportunities”). During the Employment Period, unless approved by the Board, Executive shall not accept or pursue, directly or indirectly, any Corporate Opportunities. Corporate Opportunities do not include personal opportunities relating to Executive’s Insights. The Parties agree that the Company, its Affiliates, successors, assigns, Board, Board of Managers, or the Board of Advisors, do not have any rights, claims, or ownership interests whatsoever in Executive’s Insights or personal opportunities that are not Corporate Opportunities.

 

(j) Construction. The Parties agree that all Parties participated in the preparation and negotiation of this Agreement and that no provision in this Agreement shall be construed against any Party as the drafter thereof.

 

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(k) Executive’s Cooperation. During the Employment Period and thereafter, Executive shall reasonably cooperate with the Company, at the Company’s sole expense, in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company or any Affiliate (including, without limitation, Executive being available during normal business hours to the Company or its Affiliates upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, providing to the Company all pertinent information and all relevant documents which are or may come into Executive’s possession, all at times and on schedules that are reasonably consistent with Executive’s other permitted activities and commitments), provided that after the Employment Period, such activities shall be subject to the payment by the Company of reasonable compensation for the time and services of the Executive as well as reimbursement of reasonable travel and related expenses.

 

(l) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Parties, and no course of conduct or course of dealing or failure or delay by any Party hereto in enforcing or exercising any of the provisions of this Agreement, including, without limitation, the Company’s right to terminate the employment of Executive for Cause, shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

13. Compliance with Code Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“the Code”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible.

 

(a) Specified Employees. If Executive is a “specified employee,” as such term is defined within the meaning of Section 409A of the Code, any payments or benefits payable or provided as a result of the Executive’s termination of employment (to the extent such payments or benefits are subject to and not exempt from Section 409A of the Code) that would otherwise be paid or provided prior to the first day of the seventh (7th) month following such termination (other than due to death) shall instead be paid or provided on the earlier of (i) the date that is six (6) months and one (1) day following the Executive’s termination, (ii) the date of the Executive’s death, or (iii) any date that otherwise complies with Section 409A of the Code. In the event that Executive is entitled to receive payments during the suspension period provided under this Section, the Executive shall receive the accumulated benefits that would have been paid or provided under this Agreement within the suspension period on the earliest day that would be permitted under Section 409A of the Code. In the event of any delay in payment under this provision, the deferred amount shall bear interest at the prime rate (as stated in the Wall Street Journal) in effect on his termination date until paid.

 

(b) Reimbursement Payments. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

 

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(i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(ii) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

 

(iii) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

(c) Separation from Service. For purposes of this Agreement, any reference to “termination” of the Executive’s employment shall be interpreted consistent with the meaning of the term “separation from service” in Section 409A(a)(2)(A)(i) of the Code and no portion of the Severance Payments shall be paid to the Executive prior to the date he incurs a “separation from service.”

 

(d) Installment Payments. For purposes of Section 409A of the Code, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. All payments made under this Agreement (whether severance payments or otherwise) will be treated as a right to receive a series of separate payments and, accordingly, each installment payment under this Agreement will at all times be considered a separate and distinct payment. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

(e) General. Notwithstanding anything to the contrary in this Agreement, it is intended that the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code, and this Agreement will be construed to the greatest extent possible as consistent with those provisions. The commencement of payment or provision of any payment or benefit under this Agreement shall be deferred or not be deferred (as the case may be) to the minimum extent necessary to prevent the imposition of any excise taxes or penalties on the Company or Executive.

 

14. Tax Gross-ups. Any tax gross-up payments provided under this Agreement shall be paid to the Executive on or before December 31 of the calendar year immediately following the calendar year in which the Executive remits the related taxes.

 

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15. Code Section 280G.

 

(a) If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a change in control or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement, or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, and local excise, income, or other taxes at the highest applicable rates on such 280G Payments and on any payments under this section or otherwise) as if no Excise Tax had been imposed.

 

(b) All calculations and determinations under this section shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this section, the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this section. The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

 

16. Entire Agreement; Reasonable and Necessary; Severability; Enforceability; Non-Waiver. Except for those provisions in other agreements expressly referenced in this Agreement, this Agreement constitutes the entire agreement between Executive and the Company regarding the terms of Executive’s employment with the Company and the termination thereof and supersedes any other prior written or oral understandings. The terms and provisions of this Agreement are severable and if any term or provision is held to be unenforceable, it shall be enforced to the maximum extent allowable under the law and reformed or severed to the minimum extent necessary to render it or the Agreement enforceable. Any such alteration shall not affect the validity and enforceability of any other term or provision. Executive acknowledges that the obligations contained in this Agreement are not indivisible to any extent but are fully divisible and reformable or severable as legally necessary whether through alteration of a word, clause or sentence. The Company’s failure to act upon any breach of this Agreement or waiver of any such breach shall not constitute a waiver of any preceding or succeeding breach, or of any other right. Notwithstanding any other clauses to the contrary in this Agreement, both Parties agree as of the Effective Date, the Company does not have Cause, and the Executive does not have Good Reason, to terminate this Agreement, and both Parties agree to waive and release the other from any and all claims, damages, demands, causes of action, both in law and in equity, known or unknown, that could have been brought or could in the future be brought by one Party against the other in connection with Executive’s employment by Company for matters arising prior to the Effective Date, with the exception of violations of Company’s Code of Conduct for fraud which, for clarity, are not waived or released. Nothing in this clause is intended to waive Executive’s right to recover, or for Company to pay Executive, compensation due as of the Effective Date (i.e., annual compensation, annual bonus, equity awards, etc.) or reimbursement of reasonable business expenses incurred prior to the Effective Date.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement under seal on the date first written above.

 

  COMPANY:
     
  Rubicon Global Holdings LLC
     
  By: /s/ Michael Heller
    Michael Heller
  Title: Chief Administrative & People Officer
     
  EXECUTIVE:
     
  /s/ Nathaniel R. Morris
  Nathaniel R. Morris

 

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EXHIBIT A to Amended and Restated Employment Agreement

 

Form of Release

 

(See Attached)

 

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RELEASE AGREEMENT

 

This Release Agreement (hereinafter the “Agreement”) is made and entered into by and between Rubicon Global Holdings, LLC, a Delaware limited liability company (the “Company”), and Nathaniel R. Morris (“Employee”), on the date fully executed by the Company and Executive below. This Agreement is entered into pursuant that certain Amended and Restated Employment Agreement, dated _________, 2021, between Company and Executive (the “Employment Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, Employee’s employment with the Company has ended as of the Separation Date (as defined below in Paragraph 1); and

 

WHEREAS, Employee and the Company desire to resolve any and all matters arising from Employee’s employment and/or separation on mutually satisfactory terms as set forth herein;

 

NOW, THEREFORE, in consideration of the terms and mutual promises set forth herein, the parties agree as follows:

 

1. Separation Date. Executive’s employment will end effective _______________ (the “Separation Date”).

 

2. Separation Payment. In consideration of the covenants and agreements by Employee as described in this Agreement, including, without limitation, the covenants set forth in Paragraphs 4, 5, 6, and 7 and the releases as set forth in Paragraph 3, the Company agrees to make payment to the Employee as provided in the Employment Agreement. Employee acknowledges and agrees that Employee would not receive all such payment except for Employee’s execution of this Agreement and the fulfillment of the promises contained herein. Employee further acknowledges and agrees that, except for payments conditioned on his execution of this Agreement, Employee has received payment in full for all of the compensation, wages, benefits and/or payments of any kind otherwise due and payable from the Company as of the Effective Date, including, but not limited to compensation, bonuses, commissions, lost wages, expense reimbursements, payments to benefit plans, unused, accrued vacation, leave, and personal time, severance, sick pay or any other payment or benefit under a Company plan, program, policy, practice or promise. The payments described in this Paragraph are expressly contingent upon the Employee’s full compliance with the terms of this Agreement and the Employment Agreement. Should Employee fail to fully comply with the terms of this Agreement or the Employment Agreement, Employee shall forfeit rights to any of the payments described in this Paragraph, and Employee shall immediately return to the Company any payments already made pursuant to this Paragraph.

 

3. Release of Claims. In consideration of the promises and payments set forth herein, and as a material inducement for the parties to enter into this Agreement, the parties state as follows:

 

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(a) Employee hereby unconditionally releases, acquits, and forever discharges the Company and its subsidiaries, affiliates, estates, divisions, successors, insurers and assigns, attorneys and all of their owners, stockholders, general or limited partners, agents, directors, managers, officers, trustees, representatives, employees, the subrogees of all of the above, and all successors and assigns thereof (collectively, the “Releasees”), from any and all claims, charges, complaints, demands, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, entitlements, costs, losses, debts, and expenses (including attorneys’ fees and legal expenses) of any nature whatsoever, known or unknown, which Employee now has, had, or may hereafter claim to have had against the Releasees and/or any of them by reason of any matter, act, omission, transaction, occurrence, or event that has occurred or is alleged to have occurred up to and including the Effective Date of this Agreement; provided, however, that the foregoing Release is not intended to and shall not release (i) any claims Employee may have to indemnification pursuant to the Company’s Certificate of Formation, Operating Agreement or the Delaware Limited Liability Company Act (including any amendments), (ii) any rights Employee may have pursuant to any policies of insurance maintained by the Company, (iii) any rights Employee may continue to have pursuant to any Incentive Unit Grant Agreement to which Employee is a party, the Rubicon Global Holdings, LLC Profits Participation Plan or the Sixth Amended and Restated Operating Agreement of the Company, as amended, to the extent Employee continues to be a member of the Company following the Separation Date, (iv) any rights Employee has in respect of the Special Performance Bonus under Section 3(c) or Section 7 of the Employment Agreement, (v) any benefit plans maintained by the Company, (vi) any right to enforce the provisions of this Agreement or the Employment Agreement, or (vii) any claims or rights that are not releasable under applicable law.

 

(b) This Release includes a knowing and voluntary waiver and release of any and all claims including, but not limited to, claims for nonpayment of wages, overtime or bonuses or other claims pursuant to the Fair Labor Standards Act, breach of contract, fraud, loss of consortium, emotional distress, personal injury, injury to reputation, injury to property, intentional torts, negligence, wrongful termination, constructive discharge, retaliation, discrimination, harassment, non-payment of equity in the Company, and any and all claims for recovery of lost wages or back pay, fringe benefits, pension benefits, liquidated damages, front pay, compensatory and/or punitive damages, attorneys’ fees, injunctive or equitable relief, or any other form of relief under any federal, state, or local constitution, statute, law, rule, regulation, judicial doctrine, contract, or common law. Employee specifically agrees that, except for payments conditioned on his execution of this Agreement, Employee has been paid all overtime, bonuses, wages or other monies due and payable to Employee as of the Effective Date of this Agreement. Specifically included, without limitation, in this waiver and release is a knowing and voluntary waiver and release of all claims of employment discrimination, including but not limited to disability discrimination, harassment, retaliation or any other claims under the Americans With Disabilities Act; any claims under the Americans With Disabilities Act Amendments Act of 2008; any claims under Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1991; any claims under the Age Discrimination in Employment Act; any claims under the National Labor Relations Act; any claims under the Fair Labor Standards Act; any claims under the Family and Medical Leave Act; any claims under the Occupational Safety and Health Act; any claims under the Employee Retirement Income Security Act of 1974; any claims under The Lilly Ledbetter Fair Pay Act of 2009; any and all federal or state laws pertaining to employment or employment benefits, based on any federal, state, or local constitution, statute, law, rule, regulation, judicial doctrine, contract, or common law, or other theory arising out of any matter, act, omission, transaction, occurrence, or event that has occurred or is alleged to have occurred up to and including the Effective Date of this Agreement. Executive further agrees not to accept, recover, or receive any monetary damages or any other form of relief which may arise out of or in connection with any administrative remedies which may be filed or pursued independently by any governmental agency or agencies, whether federal, state or local or in connection with any legal action pursued by other individuals against the Company and any and all claims for attorney’s fees and costs. However, nothing in this Agreement shall be construed to prohibit Executive from filing a charge or complaint with the Equal Employment Opportunity Commission, or its state equivalent agency; or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, or its state equivalent agency.

 

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(c) Employee expressly acknowledges that this Agreement may be pled as a complete defense and may bar any and all claims, known or unknown, against any or all the Releasees based on any matter, act, omission, transaction, occurrence, or event that has occurred or is alleged to have occurred up to and including the Effective Date of this Agreement.

 

(d) Employee acknowledges that this general release extends also to claims that Employee does not know or suspect to exist in Employee’s favor at the time of executing this Agreement which, if known by Employee, might have materially affected Employee’s decision to execute this Agreement. Employee hereby knowingly and voluntarily waives and relinquishes all rights and benefits which Employee may have under applicable law with respect to such general release provisions.

 

4. Release of Claims under the Age Discrimination in Employment Act (“ADEA”) and Older Workers Benefit Protection Act (“OWBPA”). EMPLOYEE UNDERSTANDS THAT HE MAY TAKE UP TO TWENTY ONE (21) DAYS TO CONSIDER WHETHER OR NOT HE DESIRES TO ENTER INTO THIS AGREEMENT. Employee understands that the consideration he receives for this Agreement is in addition to that to which he was already entitled. Employee represents and warrants that he was not coerced, threatened or otherwise forced to sign this Agreement, and that his signature appearing hereinafter is genuine. Employee further represents and acknowledges that, in executing this Agreement, he does not rely and has not relied upon any representation or statement made by any of the Company’s agents, representatives, or attorneys with regard to the subject matter, basis, or effect of this Agreement, other than the written representations contained herein. Employee is advised to seek his own counsel regarding executing this Agreement. Employee understands that he may revoke this Agreement by notifying counsel for the Company, ____________________ (“Company Counsel”), at the address of ______________________, in writing of such revocation within seven (7) days of his execution and delivery of this Agreement to the Company by delivery to Company Counsel and that this Agreement is not enforceable until the expiration of such seven (7) day period. Employee understands that upon the expiration of such seven (7) day period, this Agreement will be binding upon him and his heirs, administrators, representatives, executors, successors and assigns and will be irrevocable. Employee understands that by signing this Agreement, he is giving up rights that he may have under the ADEA and the OWBPA as of the Effective Date of this Agreement as defined below and that he does not have to sign this Agreement.

 

5. Confidentiality of Agreement. In consideration of the payment, promises, and other consideration described in this Agreement, and as a significant material inducement for the Company to enter into this Agreement:

 

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(a) Employee hereby represents and warrants as of the date Employee executes this Agreement that Employee has not discussed or disclosed the terms or conditions of this Agreement with any person or entity, other than Employee’s attorneys.

 

(b) Employee warrants, covenants, and agrees that, from the Separation Date and after, Employee will keep confidential and will not disclose to any other persons or entities the terms or conditions of this Agreement, except as specifically provided herein. Employee will not provide any information as to the terms or conditions of this Agreement to anyone, including but not limited to Employee’s former co-workers at the Company or to anyone communicating with Employee’s former co-workers at the Company, except as set forth expressly herein.

 

(c) Employee may disclose the terms of this Agreement only to: (i) Employee’s attorneys and spouse; (ii) licensed, professional accountants to whom disclosure is reasonably necessary for the preparation of tax returns and/or the obtaining of tax advice; (iii) as ordered by a court of competent jurisdiction or as otherwise required by law; or (iv) within proceedings before a court of competent jurisdiction in an action brought in good faith to enforce the provisions of this Agreement; provided that Employee will exercise Employee’s commercially reasonable best efforts to cause persons to whom such permitted disclosure is made to keep confidential and not disclose the terms of this Agreement.

 

(d) Non-Disparagement and Non-Interference. For and in consideration of the payments, promises, and other consideration described in this Agreement, and as a significant material inducement for the Company and Employee to enter into this Agreement, Employee and Company each covenant and agree not to make any negative statements or to take any action which disparages or criticizes the other (and, with regard to the Company, its officers, management, employees, suppliers, products and services). Employee understands and agrees that this restriction prohibits Employee from making disparaging or defamatory remarks toward or complaints about the Company, its officers, board, board of advisors, management, employees, suppliers, or products in their capacities as such (1) to any member of the general public, including, but not limited to, any customer or vendor of the Company; or (2) to any current or former officer, manager or employee of any of the Company; or (3) to any member of the press or other media. If Employee receives a subpoena or other legal document concerning Employee’s employment with the Company, Employee agrees to notify ______________________, within ten (10) business days of receipt of the legal document requiring Employee to provide this information. Even if’ Employee is subject to a subpoena, Employee agrees to state that the terms of this Agreement are confidential and further agrees not to discuss the contents of this Agreement unless ordered to do so by a court of competent jurisdiction.

 

6. Return to Company. Employee warrants, represents, covenants, and agrees that as of the Effective Date, Employee has returned to the Company all Company documents, records, property, and information, in any form, including, but not limited to, Company tiles, electronic messages, notes, drawings, records, business plans and forecasts, financial information, specifications, business planning or strategy information, information about the Company’s employees, customer identity information, tangible property including, but not limited to, computers, intellectual property, credit cards, key fobs, mobile telephones, entry cards, identification badges and keys; and any materials of any kind which contain or embody trade secrets or other confidential information of the Company (and all embodiments, copies, or extracts thereof), which Employee has acquired or possessed during Employee’s employment. Employee also warrants, represents, covenants, and agrees that Employee has not made or retained and shall not make or retain any embodiment, copy, or extract thereof.

 

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7. Waiver of Employment. For and in consideration of the payments, promises, and other consideration described in this Agreement, and as a further material inducement for the parties to enter into this Agreement, Employee warrants, covenants, and agrees that Employee will not knowingly apply for, seek, or accept employment or any contractual relationship with the Company at any time in the future. Employee acknowledges that this Agreement will constitute a complete and final reason for any subsequent denial of employment or any contractual relationship, and that this Agreement may be offered as a complete defense to any lawsuit, charge, claim, or cause of action for such denial.

 

8. Tax Consequences. Employee shall be responsible for any tax consequences of any payment made pursuant to this Agreement. Employee shall indemnify the Company and hold it harmless for any tax liability (including any penalties and/or attorneys’ fees) incurred as a result of any payment described herein. Employee acknowledges and agrees that the Company is not undertaking to advise Employee with respect to any tax consequences of this Agreement, and that Employee is solely responsible for determining those consequences and satisfying all applicable tax obligations resulting from any payment described herein.

 

9. No Assignment. Employee represents and warrants that Employee has not assigned to any other person, and that no other person is entitled to assert on Employee’s behalf, any claim against any of the Releasees based on matters released in this Agreement. Employee shall indemnify and hold the Company harmless from and against any liability, costs, or expenses (including any penalties and/or attorneys’ fees) incurred in the defense or as a result of any breach of the representation and warranty made by Employee in this Paragraph.

 

10. Waiver of Breach. The failure of the Company at any time to require performance of any provision of this Agreement shall in no way affect its right thereafter to enforce the same, nor shall the waiver by the Company of any breach of any provision of this Agreement be taken or held to be a waiver of any succeeding breach of any provision, or as a waiver of the provision itself.

 

11. Binding Agreement. This Agreement is a contract between Employee and the Company and not merely a recital. Should either party breach any term of this Agreement, the party in breach will be liable to the other party for reasonable attorney’s fees and costs incurred in attempting to enforce the terms of the Agreement.

 

12. Modification. No change or modification to this Agreement shall be valid or binding unless the same is in writing and signed by the parties hereto.

 

13. Severability. The terms, conditions, covenants, restrictions, and other provisions contained in this Agreement are separate, severable, and divisible. If any term, provision, covenant, restriction, or condition of this Agreement or part thereof, or the application thereof to any person, place, or circumstance, shall be held to be invalid, unenforceable, or void, the remainder of this Agreement and such term, provision, covenant, or condition shall remain in full force and effect to the greatest extent permissible by law, and any such invalid, unenforceable, or void term, provision, covenant, or condition shall be deemed, without further action on the part of the parties hereto, modified, amended, limited, or deleted to the extent necessary to render the same and the remainder of this Agreement valid, enforceable, and lawful.

 

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14. Complete Agreement. This Agreement supersedes all previous or contemporaneous agreements, whether oral or written, between and among the parties hereto, if any, with respect to the subject matter referred to herein, except with regard to those provisions of the Employment Agreement that expressly survive termination of that Agreement or as otherwise set forth herein. Employee affirms that the only consideration for executing this Agreement is the payments, promises, and other consideration expressly contained or described herein and in the Employment Agreement, which is incorporated herein by reference. Employee further represents and acknowledges that, in executing this Agreement, Employee does not rely and has not relied upon any promise, inducement, representation, or statement by the Company or any of the Releasees or their respective agents, representatives, or attorneys about the subject matter, meaning, or effect of this Agreement that is not stated in this document or the Employment Agreement. For avoidance of doubt, all provisions in the Employment Agreement which by their terms survive the termination of employment shall survive as provided in the Employment Agreement.

 

15. Construction. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. The paragraph headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

16. Governing Law and Arbitration. This Agreement shall be governed, construed, and interpreted under and in accordance with the laws of the State of Georgia, without regard to any conflict of laws principles that would direct the application of another jurisdiction’s laws. Any issue, controversy or claim arising out of or relating to this Agreement or its alleged breach that cannot be resolved by mutual agreement of the parties shall be resolved exclusively by final and binding arbitration pursuant to the employment rules of the American Arbitration Association (“AAA”) before a JAMS arbitrator. Should either party employ an attorney or incur costs to enforce any of the terms and conditions of this Agreement against the other party, the prevailing party at arbitration shall recover all such costs, including reasonable attorney’s fees and the costs of arbitration. The parties agree that they will keep confidential the substance and result of any arbitration between the parties.

 

17. Acknowledgments. Employee acknowledges and represents that the waiver and release of claims in this Agreement are knowing and voluntary and are given only in exchange for new consideration that is in addition to anything of value to which Employee already is entitled absent this Agreement. Employee acknowledges that the language of this Agreement is understandable to Employee and is understood by Employee, and that Employee has been given a reasonable period within which to consider the Agreement before executing it. Employee further acknowledges that Employee has been and is hereby advised to consult, and has in fact consulted or had a reasonable opportunity to consult, an attorney of Employee’s choosing before executing the Agreement, and that Employee has obtained all advice and counsel Employee needs to understand all terms and conditions of this Agreement.

 

28

 

 

18. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and be deemed to have been duly given if delivered (email and electronic delivery is acceptable) or three days after mailing if mailed, first class, certified mail, postage prepaid:

 

To the Company: Rubicon Global Holdings, LLC
  [address]
  Attn: _______________, its _____________________
  Executive Chairman
   
With a mandatory copy sent to:
   
  [Name and address]
   
To the Employee: Nathaniel R. Morris
  [address]

 

Any party may change the address to which notices, requests, demands and other communications shall be delivered or mailed by giving notice thereof to the other party in the same manner provided herein.

 

19. Effective Date. This Agreement shall become effective and enforceable upon the earliest date (the “Effective Date”) on which Employee has executed this Agreement and delivered the fully executed Agreement to Company Counsel (electronic delivery via scan or PDF is expressly acceptable).

 

20. Execution. This Agreement may be executed in one or more counterparts as originals, all of which constitute one original.

 

[Signatures on the following page.]

 

29

 

 

THE UNDERSIGNED HAVE CAREFULLY READ THIS “RELEASE AGREEMENT”; THEY KNOW AND UNDERSTAND ITS CONTENTS; THEY FREELY AND VOLUNTARILY AGREE TO ABIDE BY ITS TERMS; AND THEY HAVE NOT BEEN COERCED INTO SIGNING THIS AGREEMENT.

 

     
Date   NATHANIEL R MORRIS
     
  Rubicon Global Holdings, LLC
     
Date   By:  
    Its:  

 

30

 

 

SUBJECT TO APPROVAL

HIGHLY CONFIDENTIAL

 

Amendment to Amended and Restated Employment Agreement

 

This Amendment (this “Amendment”) to the Amended and Restated Employment Agreement, dated as of February 9, 2021 (the “Existing Agreement”), by and between Rubicon Technologies, LLC (f/k/a Rubicon Global Holdings, LLC), a Delaware limited liability company (the “Company”), and Nathaniel R. Morris (the “Executive”) (the Company and the Executive collectively referred to herein as the “Parties”), shall be effective as of April 26, 2022. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Existing Agreement.

 

WHEREAS, the Company, Founder SPAC (the “SPAC”) and the other parties thereto, entered into the Agreement and Plan of Merger, dated as of December 15, 2021 (the “Merger Agreement”), pursuant to which the Company will become a wholly-owned subsidiary of a publicly-traded company to be known as Rubicon Technologies, Inc., the successor to the SPAC (“Rubicon”), following the transactions contemplated by the Merger Agreement (the “Transaction”); and

 

WHEREAS, in connection with the Transaction, the Parties desire to amend the Existing Agreement for the benefit of the Company, in order to promote the Executive’s retention and service following the closing date of the Transaction (the “Closing Date”), to incentivize the Executive to grow the Company and its market position and to better reflect the Executive’s value to the Company.

 

NOW THEREFORE, in consideration of the premises and the mutual benefits to be derived herefrom and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. The following is added to the end of Section 1 of the Existing Agreement:

 

“Notwithstanding the foregoing, (i) the Company authorizes and permits the Executive to continue to take higher-education courses in furtherance of the Executive’s continuing education, and that any reasonable time that the Executive takes in connection with such education (which will be generally consistent with the time spent on such educational activities prior to the Amendment) will be expressly permitted and (ii) the Executive may serve on up to two for profit boards; provided that, in each case, the Executive continues to devote substantially all of his business time and attention to the business and affairs of the Company and the performance of the Executive’s duties hereunder, to render such services to the best of his ability and to use his best efforts to promote the interests of the Company and such activities do not, individually or in the aggregate, interfere with his duties to the Company or any of its Affiliates or violate any Restrictive Covenants under Section 8.”

 

31

 

 

2. Section 3(a) of the Existing Agreement shall be revised by deleting “$614,692.52” in the first sentence and replacing it with “$810,000”. For purposes of clarity, such change shall be effective as of the Closing Date.

 

3. Section 3(b) of the Existing Agreement shall be revised by deleting the second sentence and replacing it with “Executive’s Annual Performance Bonus target shall be equal to one hundred percent (100%) of Executives’s Annual Base Salary, less required witholdings, based on achievement of performance standards”. For purposes of clarity, (i) such change shall be effective as of the Closing Date and, following the Closing Date, the revised annual bonus target shall be effective for the full 2022 fiscal year and (ii) performance criteria for periods following the Closing Date shall be established by the Compensation Committee of Rubicon.

 

4. The following sentence shall be added at the end of Section 3(c) of the Existing Agreement:

 

“Notwithstanding the foregoing, the Special Performance Bonus shall be satisfied as follows: (i) the Executive shall receive his allocated portion of the Cash Transaction Bonus Amount as set forth on the Transaction Consideration Schedule pursuant to Section 3.3(d) and Section 2.4(c)(ii) of the Merger Agreement (which amount is expected to be $25 million, but in any case shall be the amount set forth on the Transaction Consideration Schedule), and (ii) the Executive shall receive his allocated portion of the Management Rollover Consideration as set forth on the Transaction Consideration Schedule pursuant to Section 3.3(d) of the Merger Agreement (which is expected to be 3,561,469 shares of restricted Surviving Pubco Class A stock, but in any case shall be such number as set forth on the Transaction Consideration Schedule) granted as soon as permitted following the Closing Date and Rubicon filing an effective registration statement on Form S-8 for the 2022 Plan (as defined in Section 5(e)) and shall become fully vested and non-forfeitable on the six (6) month anniversary of the Closing Date, subject to the Executive’s continued employment with the Company (including for this purpose, Rubicon and its subsidiaries) or earlier upon a Qualifying Termination, Qualifying CIC Event or upon the Executive’s death or Disability.”

 

32

 

 

5. The following is added to the end of Section 3 of the Existing Agreement:

 

“(e) Founder Time-Based Restricted Stock Unit Award. As soon as practicable following the Closing Date and in no event later than sixty (60) days following the Closing Date (but with the effectiveness, vesting and settlement of such grant being subject to Rubicon filing an effective registration statement on Form S-8 for the 2022 Plan), Rubicon shall grant the Executive an award of time-based restricted stock units (“Time-Based RSUs”), pursuant to Rubicon’s shareholder approved 2022 Stock Incentive Plan to be established in connection with the Transaction (the “2022 Plan”) and an award agreement to be entered into by and between Rubicon and the Executive, with a number of underlying shares equal to three percent (3%) of the shares of Rubicon immediately following the Transaction. The Time-Based RSUs will vest ratably on each of the first three (3) anniversaries of the Closing Date, subject to the Executive’s continued employment with the Company on each such anniversary date. If, following the Closing Date and prior to the expiration of the 3-year vesting period, either (i) the Company terminates the Executive’s employment without Cause or if the Executive resigns for Good Reason (a “Qualifying Termination”), (ii) Rubicon experiences a Change in Control (as defined in the 2022 Plan), following which, if the transaction is in the form of a merger, the Executive ceases to be the Chief Executive Officer of the combined entity formed by the Change in Control transaction or, if the transaction is in the form of an acquisition, the Executive is not the Chief Executive Officer of the ultimate parent company (a “Qualifying CIC Event”), or (iii) the Executive incurs a termination of employment due to death or Disability, then all outstanding Time-Based RSUs will automatically vest (and will become non-forfeitable) as of such date. If the Executive incurs a Qualifying Termination, a Qualifying CIC Event or a termination of employment due to death or Disability following the Closing Date and prior to the grant of the Time-Based RSUs, Rubicon shall issue fully-vested shares to the Executive in an amount equal to the Time-Based RSUs as soon as practicable following any such event.”

 

“(f) Founder Exceptional Performance-Based Restricted Stock Unit Award. As soon as practicable following the Closing Date and in no event later than sixty (60) days following the Closing Date (but with the effectiveness, vesting and settlement of such grant being subject to Rubicon filing an effective registration statement on Form S-8 for the 2022 Plan), Rubicon shall grant the Executive an award of performance-based restricted stock units (“the “Performance-Based RSUs”), pursuant to 2022 Plan and an award agreement to be entered into by and between Rubicon and the Executive, with a number of underlying shares equal to one and one-half percent (1.5%) of the shares of Rubicon (immediately following the Transaction. The Performance-Based RSUs will vest based upon performance criteria to be determined by the Compensation Committee of Rubicon following the Closing Date and on or prior to the grant date. The Executive will remain eligible to vest in the Performance-Based RSUs provided he remains employed during the performance period or, following the Closing Date and prior to the expiration of the applicable performance period, in the event the Executive incurs a Qualifying Termination, a Qualifying CIC Event or a termination of employment due to death or Disability, subject in each case to achievement of the performance goals. If the Executive incurs a Qualifying Termination, a Qualifying CIC Event or a termination of employment due to death or Disability following the Closing Date and prior to the grant of the Performance-Based RSUs, Rubicon shall issue fully-vested shares to the Executive in an amount equal to the Performance-Based RSUs as soon as practicable following any such event.”

 

33

 

 

6. The definition of “Business” under Section 12(a)(iv) of the Existing Agreement shall be revised by deleting such definition in its entirety and replacing it with the following:

 

“(iv) “Business of the Company” means activities, products or services of the type conducted, offered or provided by the Company or its Affiliates (including Rubicon and any other successors to the Company) in the waste industry.”

 

Notwithstanding anything in this Amendment to the contrary, this Amendment will be null and void ab initio and of no further force or effect if the Merger Agreement is terminated and the Closing Date does not occur (but, for purposes of clarity and the avoidance of doubt, this Amendment will have force and effect from and after the date of this Amendment upon the occurrence of the Closing Date).

 

Except as set forth in this Amendment, all terms and conditions of the Existing Agreement shall remain unchanged and in full force and effect in accordance with their terms. All references to the “Agreement” in the Existing Agreement shall refer to the Existing Agreement as previously amended and as amended by this Amendment.

 

This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

 

[Signatures Page Follows]

 

34

 

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment as of the effective date first written above.

 

  Rubicon TECHNOLOGIES, LLC
   
  By /s/ Michael Heller
    Name: Michael Heller
    Title: Chief Administrative Officer

 

  EXECUTIVE
   
  By /s/ Nate Morris
    Name: Nathaniel R. Morris
    Title: Executive

 

35

 

 

August 10, 2022

 

Nathaniel R. Morris

c/o last address on file

 

Dear Nate:

 

Reference is made to the Amended and Restated Employment Agreement, dated as of February 9, 2021 (the “Original Agreement”), by and between Rubicon Technologies, LLC, a Delaware limited liability company (the “Company”), and Nathaniel R. Morris (“Executive”), and the Amendment to the Original Agreement, dated April 21, 2022 (the “Amended Agreement”). Capitalized used but not defined in this letter agreement (this “Letter Agreement”) shall have the meanings ascribed to them in the Original Agreement and Amendment Agreement, as applicable.

 

This Letter Agreement serves to memorialize our understanding regarding the payment of the Special Incentive Bonus referred to in the Original Agreement and the Amended Agreement. As a reflection of Executive’s belief in the future and growth potential of Rubicon Technologies, Inc., Executive has agreed to reduce the proportion of the Special Incentive Bonus payable to him in cash in exchange for a supplemental grant of shares of Company equity issuable to him (the “Supplemental Equity Grant”) (for clarity, such that the aggregate amount of the Special Incentive Bonus and the Supplemental Equity Grant payable to him remains at approximately $60 million), such that the last sentence of Section 3(c) of the Original Agreement shall be amended and restated with the foregoing:

 

“Notwithstanding the foregoing, the Special Performance Bonus shall be satisfied as follows: (i) the Executive shall receive his allocated portion of the Cash Transaction Bonus Amount pursuant to Section 3.3(d) and Section 2.4(c)(ii) of the Merger Agreement (which shall be reduced from $25 million to $20 million), (ii) the Executive shall receive his allocated portion of the Management Rollover Consideration as set forth on the Transaction Consideration Schedule pursuant to Section 3.3(d) of the Merger Agreement (which shall be 3,561,469 shares of restricted Surviving Pubco Class A stock) granted as soon as permitted following the Closing Date and Rubicon filing an effective registration statement on Form S-8 for the 2022 Plan (as defined in Section 5(e)) and such shares shall become fully vested and non-forfeitable on the six (6) month anniversary of the Closing Date, subject to the Executive’s continued employment with the Company (including for this purpose, Rubicon and its subsidiaries) or earlier upon a Qualifying Termination, Qualifying CIC Event or upon the Executive’s death or Disability and (iii) the Executive shall receive an additional award of shares of restricted Surviving Pubco Class A stock granted as soon as permitted following the Closing Date and Rubicon filing an effective registration statement on Form S-8 for the 2022 Plan with a value equal to $5 million (based on the Fair Market Value (as determined under the 2022 Plan) of the shares on the grant date) and such shares shall become fully vested and non-forfeitable on the six (6) month anniversary of the Closing Date, subject to the Executive’s continued employment with the Company (including for this purpose, Rubicon and its subsidiaries) or earlier upon a Qualifying Termination, Qualifying CIC Event or upon the Executive’s death or Disability.”

 

36

 

 

Notwithstanding anything in this Amendment to the contrary, this Letter Agreement will be null and void ab initio and of no further force or effect if the Merger Agreement is terminated and the Closing Date does not occur (but, for purposes of clarity and the avoidance of doubt, this Amendment will have force and effect from and after the date of this Letter Agreement upon the occurrence of the Closing Date).

 

Except as set forth in this Amendment, all terms and conditions of the Original Agreement and the Amended Agreement shall remain unchanged and in full force and effect in accordance with their terms. All references to the “Agreement” in the Original Agreement shall refer to the Original Agreement as previously amended and as amended by this Letter Agreement.

 

This Letter Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. Delivery of an executed counterpart of a signature page of this Letter Agreement by electronic transmission shall be effective as delivery of a manually executed counterpart of this Letter Agreement.

 

[Signatures Page Follows]

 

37

 

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Letter Agreement as of the effective date first written above.

 

  Rubicon TECHNOLOGIES, LLC,
 
  By /s/ Michael Heller
    Name: Michael Heller
    Title: Chief Administrative Officer

 

  EXECUTIVE
 
  By /s/ Nathaniel R. Morris
    Name: Nathaniel R. Morris
    Title: Executive

 

38

 

Exhibit 10.15

 

PROMISSORY NOTE [AND SECURITY AGREEMENT]

 

$[●] Effective Date: July 20, 2022

 

FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, RUBICON TECHNOLOGIES, LLC, a Delaware limited liability company (“Borrower”), hereby promises to pay to the order of ______________________ (“Lender”, and together with the Borrower, the “Parties”), the principal amount of _________________________ U.S. Dollars ($________________) (the “Loan”), together with all accrued interest thereon, as provided in this Promissory Note (this “Note”).

 

1. Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in this Section 1.

 

Applicable Rate” means the rate equal to ten percent (10.0%) per annum.

 

Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Wilmington, Delaware are authorized or required by law to close.

 

Default Rate” means the Applicable Rate plus five percent (5%) per annum.

 

Loan Fee” means a fee equal to fifteen percent (15%) of the principal amount of the Loan less all accrued interest, whether paid or unpaid. The Loan Fee shall be due and payable on the Maturity Date pursuant to Section 2.1 and shall not accrue interest.

 

Maturity Date” means the earliest of: (a) the date on which the Merger Closing occurs; or (b) August 15, 2022.

 

Merger Closing” means consummation of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of December 15, 2021, by and among Founder SPAC, a Cayman Islands exempted company (“Acquiror”), Ravenclaw Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Acquiror, Ravenclaw Merger Sub Corporation 2, a Delaware corporation and wholly-owned subsidiary of the Acquiror, Ravenclaw Merger Sub Corporation 3, a Delaware corporation and wholly-owned subsidiary of the Acquiror, Boom Clover Business Limited, a British Virgin Islands corporation, NZSF Frontier Investments Inc., a Delaware corporation, PLC Blocker A LLC, a Delaware limited liability company, and the Borrower.

 

2. Final Payment; Prepayment.

 

2.1 Final Payment. The entire unpaid principal amount of the Loan, all accrued and unpaid interest, the Loan Fee and all other amounts payable under this Note shall be due and payable on the Maturity Date.

 

2.2 Prepayment. The Borrower may prepay the Loan in whole at any time without penalty or premium by paying the entire principal amount of the Loan together with all accrued interest thereon to the date of prepayment and the Loan Fee.

 

 

 

 

3. Interest.

 

3.1 Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Loan shall bear interest at the Applicable Rate from the Effective Date set forth above until the Loan is paid in full, whether at maturity, upon acceleration, by prepayment or otherwise.

 

3.2 Interest and Loan Fee Payment. All accrued interest and the Loan Fee shall be due and payable to the Lender on the Maturity Date.

 

3.3 Default Interest. If any amount payable hereunder is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall bear interest at the Default Rate from the date of such non-payment until such amount is paid in full.

 

4. Payment Mechanics. All payments of interest and principal shall be made in lawful money of the United States of America no later than the close of business on the date on which such payment is due by wire transfer of immediately available funds to the Lender’s account at a bank specified by the Lender in writing to the Borrower. All payments made hereunder shall be applied first to the payment of accrued interest, second to the Loan Fee, and third to the payment of the principal amount of the Loan outstanding. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest payable under this Note.

 

5. Remedies. Upon the occurrence and during the continuance of any event of default by Borrower, the Lender may at its option by written notice to the Borrower declare the entire principal amount of this Note, together with all accrued interest thereon, the Loan Fee and all other amounts payable hereunder, immediately due and payable.

 

6. Security Interest. As security for the prompt and full satisfaction of the outstanding Loan of this Note, and all other sums due under this Note including the Loan Fee, Borrower agrees that Lender shall have, and Borrower hereby grants to and creates in favor of Lender, a first priority lien and security interest in all proceeds from the Merger Closing (together with all accessions, additions, products and proceeds, the “Collateral”). Borrower agrees that it shall not, without the prior written consent of Lender, grant or create or permit to attach or exist any mortgage, security interest, lien, judgment, or other encumbrance of or in the Collateral or any portion thereof, other than the security interest provided for in this Note. Borrower agrees that it shall preserve and protect Lender’s security interest in the Collateral. In addition to all rights and remedies given to Lender by this Note, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Delaware (the “UCC”). Borrower and Lender agree that this Note constitutes a security agreement under the UCC. Borrower agrees to provide from time to time at the request of Lender such additional documents or instruments for Lender to perfect and maintain its security interest in the Collateral. Borrower consents to Lender filing or causing to be filed or recorded, such instruments, documents or notices, including assignments, financing statements and continuation statements as Lender may deem necessary or advisable from time to time in order to perfect, to continue perfected and to preserve the priority of the lien and security interest in the Collateral granted pursuant to this Note.

 

7. Non-Contravention. Neither the execution and the delivery by the Subscriber of this Agreement, nor the consummation by the Subscriber of the transactions contemplated hereby, will (a) violate any law, rule, injunction, or judgment of any governmental agency or court to which the Borrower is subject or any provision of its charter, bylaws, trust agreement, or other governing documents or (b) conflict with, result in a breach of, or constitute a default under, any agreement, contract, lease, license, instrument, or other arrangement to which the Borrower is a party or by which the Borrower is bound or to which any of its assets is subject; or (c) require any consent or other action by any person under any agreement or other instrument to which any Borrower is a party or that is binding upon any Borrower or any license, franchise, permit or other similar authorization held by any Borrower.

 

2

 

 

8. Miscellaneous.

 

8.1 Notices. All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing, in each case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance with this Section 8.1. Notices (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received and (ii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).

 

If to Borrower:

Rubicon Technologies, LLC
100 West Main Street, Suite 610

Lexington, Kentucky 40507

Attention: William Meyer, General Counsel
Email: bill.meyer@rubicon.com

   

If to Lender:

_________________________

 

_________________________

 

_________________________

 

Email: _________________________

 

8.2 Governing Law. This Note and any claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the State of Delaware.

 

8.3 Counterparts; Integration. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Note. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with U.S. federal ESIGN Act of 2000, e.g. www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. This Note constitutes the entire contract between the Parties with respect to the subject matter hereof and supersedes all previous agreements and understandings, oral or written, with respect thereto.

 

8.4 Successors and Assigns. This Note may be assigned or transferred by the Lender or the Borrower only with the prior written consent of the other party to this Note.

 

8.5 Headings. The headings of the various sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.

 

[Signatures on the Following Page(s).]

 

3

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Note effective as of the Effective Date.

 

  BORROWER:
     
  RUBICON TECHNOLOGIES, LLC,
a Delaware limited liability company
     
  By:  
  Name:  
  Title:  

 

  LENDER:
     
  By:  
  Name:  
  Title:  

 

[Signature Page to Promissory Note – Rubicon Technologies, LLC]

 

4

 

Exhibit 10.16

 

SPONSOR FORFEITURE AGREEMENT

 

This SPONSOR FORFEITURE AGREEMENT (this “Agreement”) is made and entered into as of August 15, 2022, by and among Founder SPAC, a Cayman Islands exempted company (“Founder”), Founder SPAC Sponsor LLC, a Delaware limited liability company (“Sponsor”), and Rubicon Technologies, LLC, a Delaware limited liability company (“Rubicon,” and together with Founder and Sponsor, each a “Party” and collectively, the “Parties”).

 

RECITALS

 

WHEREAS, on December 15, 2021, Founder, Ravenclaw Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Founder, Ravenclaw Merger Sub Corporation 1, a Delaware corporation and wholly owned subsidiary of Founder, Ravenclaw Merger Sub Corporation 2, a Delaware corporation and wholly owned subsidiary of Founder, Ravenclaw Merger Sub Corporation 3, a Delaware corporation and wholly owned subsidiary of Founder, Boom Clover Business Limited, a British Virgin Islands corporation, NZSF Frontier Investments Inc., a Delaware corporation, and PLC Blocker A LLC, a Delaware limited liability company, entered into an agreement and plan of merger (the “Merger Agreement”) with Rubicon with respect to a business combination between Founder and Rubicon (the “Business Combination”);

 

WHEREAS, Sponsor holds Class B ordinary shares, par value $0.0001 per share, of Founder (“Founder Class B Shares”); and

 

WHEREAS, in consideration for the various transactions and undertakings by the Parties contemplated by the Business Combination and the ancillary agreements related thereto, Sponsor has agreed to forfeit 1,000,000 Founder Class B Shares (the “Forfeited Shares”) immediately prior to the consummation of the Business Combination (the “Closing”).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

1.Forfeiture and Cancellation: Sponsor hereby agrees that, immediately prior to the Closing, Sponsor shall automatically and irrevocably surrender and forfeit to Founder, for no consideration and as a contribution of capital of Founder, the Forfeited Shares. Founder hereby agrees that it shall immediately cancel the Forfeited Shares for no consideration.

 

2.Entire Agreement: This Agreement constitutes the entire agreement and understanding of the Parties in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Agreement may not be amended, modified or waived except by an instrument in writing, signed by each of the Parties.

 

3.Assignment: No Party shall assign this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of the other Parties. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on and inure to the benefit of the Parties and their respective permitted successors and assigns.

 

 

 

 

4.No Third-Party Beneficiaries: Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation other than the Parties any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the Parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees.

 

5.Counterparts: This Agreement may be executed in any number of original, electronic or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

6.Severability: This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the Parties intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

7.Specific Performance: The Parties agree that irreparable damage could 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. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific enforcement of the terms and provisions of this Agreement, in addition to any other remedy to which any Party is entitled at law or in equity. In the event that any legal proceeding shall be brought in equity to enforce the provisions of this Agreement, no Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at law, and each Party agrees to waive any requirement for the securing or posting of any bond in connection therewith.

 

8.Governing Law; Jurisdiction: This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, 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 provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Any action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in federal and state courts located in the Chancery Court of the State of Delaware, and each of the Parties irrevocably and unconditionally submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction, any state or federal court sitting in the Borough of Manhattan, State of New York, New York County), for the purposes of any proceeding, claim, demand, action or cause of action arising under this Agreement, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such proceeding has been brought in an inconvenient forum, agrees that all claims in respect of the proceeding shall be heard and determined only in any such court, and agrees not to bring any proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any proceeding brought pursuant to this paragraph. The prevailing Party in any such proceeding (as determined by a court of competent jurisdiction) shall be entitled to be reimbursed by the non-prevailing Party for its reasonable expenses, including reasonable attorneys’ fees, incurred with respect to such action.

 

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9.Waiver of Jury Trial: THE PARTIES EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREE AND CONSENT THAT ANY SUCH PROCEEDING, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS AGREEMENT.

 

10.Notices: All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service, or (iv) when delivered by email (in each case in this clause (iv), solely if receipt is confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:

 

  (a) If to Founder or Sponsor, to:
       
    Founder SPAC
    11752 Lake Potomac Drive
    Potomac, Maryland 20854
    Attention:  Osman Ahmed
    Email: osman@founderspac.com
       
  with copies (which shall not constitute notice) to:
       
    Winston & Strawn LLP
    800 Capitol St Suite 2400
    Houston, TX 77002
    Attention: Michael Blankenship
      James R. Brown
      Louis B. Savage
    Email: mblankenship@winston.com
      jrbrown@winston.com
      lsavage@winston.com

 

3

 

 

  (b) If to Rubicon, to:
       
    Rubicon Technologies, LLC
    950 E. Paces Ferry Road
    Suite 1900
    Atlanta, GA 30326
    Attention: William Meyer, General Counsel
    Email: bill.meyer@rubicon.com
       
  with copies (which shall not constitute notice) to:
       
    Gibson, Dunn & Crutcher LLP
    200 Park Ave.
    New York, NY 10166 
    Attention: Saee Muzumdar
      Evan D’Amico
    Email: SMuzumdar@gibsondunn.com
      EDAmico@gibsondunn.com

 

11.Further Assurances: Each of the Parties agrees to execute and deliver hereafter any further document, agreement or instrument of assignment, transfer or conveyance as may be necessary or desirable to effectuate the purposes hereof and as may be reasonably requested in writing by another party hereto.

 

[Signature Page Follows]

 

4

 

 

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be duly executed as of the date first written above.

 

  FOUNDER SPAC
     
  By: /s/ Osman Ahmed
  Name: Osman Ahmed
  Title: CEO
     
  FOUNDER SPAC SPONSOR LLC
     
  By: /s/ Manpreet Singh
  Name: Manpreet Singh
  Title: Managing Member
     
  RUBICON TECHNOLOGIES, LLC
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel Morris
  Title: Chairman & CEO

 

[Signature Page to Sponsor Forfeiture Agreement]

 

5

 

Exhibit 10.19

 

FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

This FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated as of April 26, 2022 (this “Fourth Amendment”), is entered into among (a) RUBICON GLOBAL, LLC, a Delaware limited liability company (“Rubicon”) and RIVERROAD WASTE SOLUTIONS, INC., a New Jersey corporation (“RiverRoad”; together with Rubicon, each a “Borrower” and collectively the “Borrowers”), (b) RUBICON TECHNOLOGIES, LLC, a Delaware limited liability company (“Holdings”), (c) CLEANCO LLC, a New Jersey limited liability company (“Cleanco”), (d) CHARTER WASTE MANAGEMENT, INC., a Delaware corporation (“Charter”), (e) the Lenders party hereto and (f) PATHLIGHT CAPITAL LP, as agent for the Lenders (in such capacity, “Agent”).

 

PRELIMINARY STATEMENTS

 

A. Reference is hereby made to that certain Loan and Security Agreement, dated as of March 29, 2019 (as amended by that certain First Amendment to Loan and Security Agreement, dated as of February 27, 2020, as amended by that certain Second Amendment to Loan and Security Agreement, dated as of March 24, 2021, as amended by that certain Third Amendment to Loan and Security Agreement, dated as of October 15, 2021 and as may be further amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time and in effect immediately prior to the effectiveness of this Fourth Amendment, the “Existing Loan Agreement”, and the Existing Loan Agreement, as amended by this Fourth Amendment, the “Amended Loan Agreement”), among the Borrowers, the other Loan Party Obligors party thereto, the Lenders from time to time party thereto, and the Agent.

 

B. Reference is made to that certain Agreement and Plan of Merger entered into as of December 15, 2021 by and among others (i) Founder SPAC, a Cayman Island except company, the “Acquirer”), (ii) Ravenclaw Merger Sub LLC, a Delaware limited liability company (“Merger Sub LLC”), (iii) Holdings (the “Merger Agreement”). Pursuant to the Merger Agreement, the Acquirer, Merger Sub LLC, Holdings and other parties thereto intend to effect a business combination transaction pursuant to which Merger Sub LLC will merge with and into the Holdings (the “SPAC Merger”) with Holdings continuing as the surviving entity;

 

C. The Borrowers have requested that the Agent and the Lenders agree to amend certain of the terms and provisions of the Existing Loan Agreement as specifically set forth in this Fourth Amendment.

 

D. The Borrowers have requested that the Agent and the Lenders consent to the SPAC Merger in accordance with the terms and conditions of the Fourth Amendment.

 

E. The Agent and the undersigned Lenders are prepared to amend the Existing Loan Agreement and consent to the SPAC Merger, subject to the conditions and in reliance on the representations set forth in this Fourth Amendment.

 

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

 

 

 

 

SECTION 1. Defined Terms. Unless otherwise defined herein, all capitalized terms used herein, including in preamble and the preliminary statements hereto, shall have the meanings assigned to such terms in the Amended Loan Agreement.

 

SECTION 2. Amendments to Existing Loan Agreement. The Existing Loan Agreement is hereby amended as set forth in Exhibit A attached hereto such that all of the newly inserted double underlined text (indicated textually in the same manner as the following example: double-underlined text) and any formatting changes attached hereto shall be deemed to be inserted and all stricken text (indicated textually in the same manner as the following example: stricken text) shall be deemed to be deleted therefrom.

 

SECTION 3. Conditions Precedent to Effectiveness of Fourth Amendment. This Fourth Amendment shall become effective as of the date first written above (the “Fourth Amendment Effective Date”) upon satisfaction of each of the following conditions precedent:

 

(a) Fourth Amendment. This Fourth Amendment shall have been duly executed and delivered to the Agent by each of the Loan Party Obligors, the Lenders and the Agent.

 

(b) Fourth Amendment Fee Letter. The Agent shall have received a Fourth Amendment Fee Letter, in form and substance satisfactory to the Agent, duly executed and delivered by each of the Borrowers and the Agent.

 

(c) Amendment to ABL Loan Agreement. The Agent shall have received an amendment to the ABL Loan Agreement, in form and substance satisfactory to the Agent, duly executed by the ABL Agent and the Loan Party Obligors.

 

(d) Representations and Warranties; No Default. The following statements shall be true on the Fourth Amendment Effective Date, both immediately before and immediately after giving effect to this Fourth Amendment and the consummation of the transactions contemplated by this Fourth Amendment taking place on or about the Fourth Amendment Effective Date:

 

(i) the representations and warranties contained in the Amended Loan Agreement and the other Loan Documents shall be true and correct in all respects as of the Fourth Amendment Effective Date as though made on and as of the Fourth Amendment Effective Date (or, to the extent such representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), and

 

(ii) no Default or Event of Default shall have occurred and be continuing.

 

(e) No Material Adverse Effect. Since December 31, 2020, no event has occurred which has had, or could reasonably be expected to have, a Material Adverse Effect.

 

(f) Additional Documents, Etc. The Agent shall have received such additional documents, instruments and information as are customary for transactions of this type as the Agent may reasonably request to effect the transactions contemplated hereby.

 

2

 

 

(g) Fees and Expenses. The Agent shall have received all fees (including fees payable pursuant to the Fourth Amendment Fee Letter) and other amounts due and payable on or prior to the Fourth Amendment Effective Date and reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers under the Existing Loan Agreement.

 

For purposes of determining compliance with the conditions specified in this Section 3, each Lender that has signed this Fourth Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice from such Lender prior to the proposed Fourth Amendment Effective Date specifying its objection thereto.

 

SECTION 4. Acknowledgment of Permitted Equity Transfer. Each Lender and the Agent hereby acknowledge and agree that the SPAC Merger, if consummated pursuant to and in accordance with the terms and conditions of the Merger Agreement as in effect as of the Fourth Amendment Effective Date, shall (i) constitute a Permitted Equity Transfer and (ii) satisfy clause (ii) of the definition of “Permitted SPAC Merger” in all respects.

 

SECTION 5. Representations and Warranties. Each Borrower and each other Loan Party represents and warrants to the Lenders and the Agent that:

 

(a) Authorization; No Contravention. The execution, delivery and performance by each Loan Party Obligor of this Fourth Amendment and all other instruments and agreements required to be executed and delivered by such Loan Party Obligor in connection with the transactions contemplated hereby or referred to herein (collectively, the “Amendment Documents”) (i) have been duly and validly authorized by all corporate, stockholder, partnership or limited liability company action required to be taken by the Loan Party Obligors, (ii) do not violate or contravene such Loan Party Obligor’s Governing Documents or any applicable law or any material agreement or instrument or any court order which is binding upon any Loan Party Obligor or its property, (iii) do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon any Loan Party Obligor or its property, and (iv) do not require the consent of any Person.

 

(b) Government Approvals. No Loan Party Obligor is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of this Fourth Amendment or any other Amendment Document.

 

(c) Enforceability. Each of this Fourth Amendment, the other Amendment Documents, and the Amended Loan Agreement is a legal, valid and binding obligation of each Loan Party Obligor party thereto, enforceable against each Loan Party Obligor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

 

3

 

 

SECTION 6. Survival of Representations and Warranties. All representations and warranties made in this Fourth Amendment or in any other Amendment Document shall survive the execution and delivery of this Fourth Amendment. Such representations and warranties have been or will be relied upon by the Agent and each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf and notwithstanding that the Agent or any Lender may have had notice or knowledge of any Default at the time of any extension of credit by the Agent or such lender, and shall continue in full force and effect as long as any Loan or any other Obligation under the Amended Loan Agreement or any other Loan Document shall remain unpaid or unsatisfied.

 

SECTION 7. Effect of Fourth Amendment, Etc.

 

(a) Effect of Fourth Amendment. After giving effect to this Fourth Amendment on the Fourth Amendment Effective Date, the Amended Loan Agreement and the other Loan Documents shall be and remain in full force and effect in accordance with their terms and are hereby ratified and confirmed by the Borrowers and each other Loan Party Obligor in all respects. The execution, delivery, and performance of this Fourth Amendment shall not operate as a waiver of any right, power, or remedy of the Agent or the Lenders under the Existing Loan Agreement or the other Loan Documents. The Borrowers and each other Loan Party Obligor hereby acknowledges and agrees that, after giving effect to this Fourth Amendment, all of its obligations and liabilities under the Existing Loan Agreement and the other Loan Documents to which it is a party, as such obligations and liabilities have been amended by this Fourth Amendment, are reaffirmed and remain in full force and effect. All references to the Existing Loan Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to the Amended Loan Agreement. Nothing contained herein shall be construed as a novation of the Obligations outstanding under and as defined in the Existing Loan Agreement, which shall remain in full force and effect, except as modified hereby.

 

(b) Reaffirmation of Grant of Security Interests. Each Borrower and each other Loan Party Obligor hereby reaffirms its grant to the Agent, for the benefit of the Lenders, of a continuing security interest in and Lien upon the Collateral of such Person, whether now owned or hereafter acquired or arising, and wherever located, all as provided in the Loan Documents, and each Borrower and other Loan Party Obligor hereby reaffirms that the Obligations are and shall continue to be secured by the continuing security interest and Lien granted by such Person to the Agent, for the benefit of the Lenders, pursuant to the Loan Documents.

 

(c) Limited Effect. This Fourth Amendment relates only to the specific matters expressly covered herein, shall not be considered to be an amendment or waiver of any rights or remedies that the Agent or any Lender may have under the Existing Loan Agreement or any other Loan Document (except as expressly set forth herein) or under applicable law, and shall not be considered to create a course of dealing or to otherwise obligate in any respect the Agent or any Lender to execute similar or other amendments or waivers or grant any amendments or waivers under the same or similar or other circumstances in the future.

 

SECTION 8. Miscellaneous.

 

(a) Fourth Amendment as Loan Document. This Fourth Amendment and Fourth Amendment Fee Letter constitute a Loan Document under the Amended Loan Agreement.

 

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(b) Headings. Section headings in this Fourth Amendment are included herein for convenience and do not affect the meanings of the provisions that they precede.

 

(c) Severability. If any provision of this Fourth Amendment or any other Amendment Document is held invalid or unenforceable, either in its entirety or by virtue of its scope or application to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or not applicable to given circumstances, or excised from this Fourth Amendment or such other Amendment Document, as the situation may require, and this Fourth Amendment and the other Amendment Documents shall be construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included herein or therein, as the case may be.

 

(d) GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS FOURTH AMENDMENT OR THE OTHER AMENDMENT DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

 

(e) Costs and Expenses. Each Borrower and Loan Party Obligor hereby affirms its obligation under the Amended Loan Agreement to reimburse the Agent for all fees and expenses paid or incurred by the Agent in connection with the preparation, negotiation, execution and delivery of this Fourth Amendment, including but not limited to the internal and external attorneys’ fees and expenses of attorneys for the Agent with respect thereto.

 

(f) Execution in Counterparts. This Fourth Amendment may be executed in counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. This Fourth Amendment may be executed by signatures delivered by facsimile or electronic mail, each of which shall be fully binding on the signing party.

 

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

5

 

 

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

 

  PATHLIGHT CAPITAL LP,
  as Agent
     
  By: Pathlight GP LLC, its General Partner
     
  By: /s/ Shawn Pennels
  Name: Shawn Pennels
  Its: Director
     
  PATHLIGHT CAPITAL FUND I LP,
  as a Lender
     
  By: Pathlight GP LLC, its General Partner
     
  By: /s/ Shawn Pennels
  Name: Shawn Pennels
  Its: Director
     
  PATHLIGHT CAPITAL OFFSHORE FUND I LP,
  as a Lender
     
  By: Pathlight GP LLC, its General Partner
     
  By: /s/ Shawn Pennels
  Name: Shawn Pennels
  Its: Director

 

[Signature Page to Fourth Amendment to Loan and Security Agreement]

 

6

 

 

  RUBICON GLOBAL, LLC,
  as a Borrower and a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chairman and CEO
     
  RIVERROAD WASTE SOLUTIONS, INC.,
  as a Borrower and a Loan Party Obligor
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Its: President
     
  RUBICON TECHNOLOGIES, LLC
  as a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chairman & CEO
     
  CLEANCO LLC,
  as a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chairman & CEO
     
  CHARTER WASTE MANAGEMENT, INC.,
  as a Loan Party Obligor
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Its: President

 

[Signature Page to Fourth Amendment to Loan and Security Agreement]

 

7

 

 

Exhibit A

 

[Please see attached]

 

A-1

 

 

EXHIBIT A

TO THIRDFOURTH AMENDMENT

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

Dated as of March 29, 2019

as amended February 27, 2020

as amended March 24, 2021

as amended October 15, 2021

as amended April 26, 2022

 

by and among

 

RUBICON GLOBAL, LLC

 

and

 

RIVERROAD WASTE SOLUTIONS, INC.,

as Borrowers and Loan Party Obligors,

 

RUBICON TECHNOLOGIES, LLC, CLEANCO LLC

and CHARTER WASTE MANAGEMENT, INC.,

as Loan Party Obligors

 

the Lenders from time to time party hereto,

 

and

 

PATHLIGHT CAPITAL LP,

as Agent

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

      Page
1. DEFINITIONS   1
  1.1. Certain Defined Terms   1
  1.2. Accounting Terms and Determinations   2325
  1.3. Other Definitional Provisions and References   2426
         
2. LOANS   2427
  2.1. Term Loans; Reserves   2427
  2.2. Protective Advances   2527
  2.3. [Reserved]   2528
  2.4. [Reserved]   2528
  2.5. Repayments   2628
  2.6. Prepayments; Application of Prepayments   2628
  2.7. Obligations Unconditional   2730
  2.8. Reversal of Payments   2831
  2.9. Notes   2831
  2.10. Defaulting Lenders   2831
  2.11. Appointment of Borrower Representative   2931
  2.12. Joint and Several Liability   3032
         
3. INTEREST AND FEES   3234
  3.1. Interest   3234
  3.2. Fees   3234
  3.3. Computation of Interest and Fees   3235
  3.4. Loan Account; Monthly Accountings   3235
  3.5. Further Obligations; Maximum Lawful Rate   3235
  3.6. Certain Provisions Regarding LIBOR Loans; Replacement of Lenders   3336
         
4. CONDITIONS PRECEDENT   3436
  4.1. Conditions to Funding Term Loans   3436
         
5. COLLATERAL   3538
  5.1. Grant of Security Interest   3538
  5.2. Possessory Collateral   3538
  5.3. Further Assurances   3538
  5.4. UCC Financing Statements   3639
  5.5. ABL Intercreditor Agreement   3639
         
6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS   3639
  6.1. Lock Boxes and Blocked Accounts   3639
  6.2. Application of Payments   3739
  6.3. Notification; Verification   3740
  6.4. Power of Attorney   3840
  6.5. Disputes   3941
  6.6. Invoices   3942

 

-i-

 

 

7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS   3942
  7.1. Existence and Authority   3942
  7.2. Names; Trade Names and Styles   4042
  7.3. Title to Collateral; Third Party Locations; Permitted Liens   4043
  7.4. Accounts and Chattel Paper   4043
  7.5. Electronic Chattel Paper   4043
  7.6. Capitalization; Investment Property   4144
  7.7. Commercial Tort Claims   4245
  7.8. Jurisdiction of Organization; Location of Collateral   4245
  7.9. Financial Statements and Reports; Solvency   4346
  7.10. Tax Returns and Payments; Pension Contributions   4346
  7.11. Compliance with Laws; Intellectual Property; Licenses   4447
  7.12. Litigation   4548
  7.13. Use of Proceeds   4548
  7.14. Insurance   4548
  7.15. Financial, Collateral and Other Reporting / Notices   4649
  7.16. Litigation Cooperation   4851
  7.17. Maintenance of Collateral, Etc   4851
  7.18. Material Contracts   4852
  7.19. No Default   4952
  7.20. No Material Adverse Change   4952
  7.21. Full Disclosure   4952
  7.22. Sensitive Payments   4952
  7.23. Holdings   4953
  7.24. Subordinated Debt   5053
  7.25. Access to Collateral, Books and Records   5053
  7.26. Appraisals   5053
  7.27. Lender Meetings   5053
  7.28. Interrelated Businesses   5054
  7.29. Post-Closing Matters   5154
  7.30. Term Loan Push-Down Reserve   5154
  7.31. ABL Obligations   5154
  7.32. Third Lien Obligations   5154
         
8. NEGATIVE COVENANTS   5155
         
9. FINANCIAL COVENANTS   5457
  9.1. Capital Expenditure Limitation   5457
  9.2. Minimum Excess Availability   5457
         
10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY   5457
  10.1. Release   5457
  10.2. Limitation of Liability   5458
  10.3. Indemnity   5458
         
11. EVENTS OF DEFAULT AND REMEDIES   5558
  11.1. Events of Default   5558
  11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc   5861
  11.3. Remedies with Respect to Collateral   5862
         

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12. LOAN GUARANTY   6468
  12.1. Guaranty   6468
  12.2. Guaranty of Payment   6468
  12.3. No Discharge or Diminishment of Loan Guaranty   6468
  12.4. Defenses Waived   6569
  12.5. Rights of Subrogation   6569
  12.6. Reinstatement; Stay of Acceleration   6569
  12.7. Information   6669
  12.8. Termination   6670
  12.9. Maximum Liability   6670
  12.10. Contribution   6670
  12.11. Liability Cumulative   6771
         
13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES   6771
         
14. AGENT   6973
  14.1. Appointment   6973
  14.2. Rights as a Lender   7073
  14.3. Duties and Obligations   7074
  14.4. Reliance   7074
  14.5. Actions through Sub-Agents   7174
  14.6. Resignation   7175
  14.7. Non-Reliance   7176
  14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties   7376
  14.9. Credit Bidding   7377
  14.10. Certain Collateral Matters   7478
  14.11. Restriction on Actions by Lenders   7478
  14.12. Expenses   7578
  14.13. Notice of Default or Event of Default   7579
  14.14. Liability of Agent   7579
         
15. GENERAL PROVISIONS   7580
  15.1. Notices   7580
  15.2. Severability   7781
  15.3. Integration   7781
  15.4. Waivers   7781
  15.5. Amendments   7882
  15.6. Time of Essence   7982
  15.7. Expenses, Fee and Costs Reimbursement   7983
  15.8. Benefit of Agreement; Assignability   7983
  15.9. Assignments   7984
  15.10. Participations   8085
  15.11. Headings; Construction   8185
  15.12. USA PATRIOT Act Notification   8185
  15.13. Counterparts; Fax/Email Signatures   8185
  15.14. GOVERNING LAW   8185
  15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS   8286
  15.16. Publication   8286
  15.17. Confidentiality   8286

 

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Attachments:

 

Perfection Certificate

Annex I Reporting
Annex II Term Loan Commitment Schedule
Annex III Post-Closing Obligations
Exhibit A Closing Checklist
Exhibit B Form of Account Debtor Notification
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Assumption Agreement

 

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LOAN AND SECURITY AGREEMENT

 

This LOAN AND SECURITY AGREEMENT (as it may be amended, restated or otherwise modified from time to time pursuant to the terms hereof, this “Agreement”) is entered into on March 29, 2019, by and among RUBICON GLOBAL, LLC, a Delaware limited liability company (“Rubicon”), and RIVERROAD WASTE SOLUTIONS, INC., a New Jersey corporation (“RiverRoad”; together with Rubicon, each a “Borrower” and collectively the “Borrowers”), RUBICON TECHNOLOGIES, LLC, a Delaware limited liability company (“Holdings”), CLEANCO LLC, a New Jersey limited liability company (“Cleanco”), and CHARTER WASTE MANAGEMENT, INC., a Delaware corporation (“Charter”), the Lenders party hereto from time to time, and PATHLIGHT CAPITAL LP, as agent for the Lenders (in such capacity, “Agent”). The Annexes and Exhibits to this Agreement, as well as the Perfection Certificate attached to this Agreement, are an integral part of this Agreement and are incorporated herein by reference.

 

1. DEFINITIONS.

 

1.1. Certain Defined Terms.

 

Unless otherwise defined herein, the following terms are used herein as defined in the UCC: Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financing Statement, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper.

 

As used in this Agreement, the following terms have the following meanings:

 

ABL Agentmeans Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC), in its capacity as “Agent” under (and as defined in) the ABL Loan Agreement, and any of its successors in such capacity.

 

ABL Borrowing Basemeans the “Borrowing Base” under (and as defined in) the ABL Loan Agreement as in effect on the date hereof or as amended from time to time in accordance with the ABL Intercreditor Agreement.

 

ABL Intercreditor Agreementmeans that certain Amended and Restated Intercreditor Agreement, dated as of the First Amendment Effective Date, by and between Agent and ABL Agent and acknowledged by the Loan Party Obligors, and shall also include any replacement intercreditor agreement entered into in accordance with the terms thereof.

 

ABL Lender means each “Lender” under (and as defined in) the ABL Loan Agreement.

 

ABL Loan Agreement means that certain Loan and Security Agreement dated as of December 14, 2018, by and among the Loan Party Obligors, the ABL Lenders and ABL Agent.

 

ABL Loan Documentsmeans the “Loan Documents” as defined in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time in accordance with the ABL Intercreditor Agreement.

 

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ABL Obligations means the “Obligations” as defined in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time in accordance with the ABL Intercreditor Agreement.

 

ABL Reserves means, at any time of determination, all “Reserves” being maintained under (and as defined in) the ABL Loan Agreement (including any Term Loan Push-Down Reserve).

 

Advance Ratesmeans, collectively, the Billed Accounts Advance Rate, the Billed Aged Accounts Advance Rate, the Billed Cross-Aged Accounts Advance Rate, the Unbilled Accounts Advance Rate, the Uninvoiced Accounts Advance Rate, and the Service Contracts Advance Rate.

 

Affiliatemeans, with respect to any Person, any other Person in control of, controlled by, or under common control with the first Person, and any other Person who has a substantial interest, direct or indirect, in the first Person or any of its Affiliates, including, any officer or director of the first Person or any of its Affiliates (and if that Person is an individual, any member of the immediate family (including parents, siblings, spouse, children, stepchildren, nephews, nieces and grandchildren) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust); provided, that neither Agent, any Lender nor any of their respective Affiliates shall be deemed an Affiliateof Borrower for any purposes of this Agreement. For the purpose of this definition, a substantial interestshall mean the direct or indirect legal or beneficial ownership of more than ten (10%) percent of any class of equity or similar interest.

 

Agent” has the meaning set forth in the preamble to this Agreement, and includes any successor agent appointed in accordance with Section 14.6 herein.

 

Agent Fee Letter” means that certain amended and restated fee letter agreement, dated as of the FirstThird Amendment Effective Date, between Agent and Borrowers.

 

Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, members, managers, attorneys, and agents.

 

Agent Professionals” means attorneys, accountants, appraisers, auditors, business valuation experts, liquidation agents, collection agencies, auctioneers, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Agreementand this Agreement has the meaning set forth in the preamble to this Agreement.

 

Allocable Amounts” has the meaning set forth in Section 2.12(f)(ii) of this Agreement.

 

Applicable Margin” means (a) with respect to LIBOR Loans, 9.50%, and (b) with respect to Base Rate Loans, 8.50%.

 

Applicable Payment Percentage” has the meaning set forth in Section 12.10 of this Agreement.

 

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Approved Electronic Communication means each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, facsimile or any other equivalent electronic service, whether owned, operated or hosted by Agent, any of its Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent pursuant to this Agreement or any other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information or material; provided, that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that Agent specifically instructs a Person to deliver in physical form.

 

Approved Fundmeans any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business, in each case that is administered, managed, advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

April Equity Contribution” means Qualified Equity Contributions in Holdings in an aggregate amount equal to at least $30,000,000 made no later than April 30, 2021.

 

Assigneehas the meaning set forth in Section 15.9(a).

 

Assignment and Assumptionmeans an assignment and assumption agreement substantially in the form of Exhibit D.

 

Assignment of Claims Act”, means the Assignment of Claims Act of 1940, as amended, currently codified at 31 U.S.C. 3727 and 41 U.S.C. 6305, and includes the prior historically referenced Federal Anti-Claims Act (31 U.S.C. 3727) and the Federal Anti-Assignment Act (41 U.S.C. 6305).

 

Bankruptcy Code means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

 

Base Rate means, for any day, the greatest of (a) the Federal Funds Rate plus ½%, (b) the LIBOR Rate (which rate shall be calculated based upon a one (1) month period and shall be determined on a daily basis), (c) one percent (1.0%), and (d) the rate of interest announced, from time to time, within Wells Fargo Bank, N.A. at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo Bank, N.A.’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo Bank, N.A. may designate (or, if such rate ceases to be so published, as quoted from such other generally available and recognizable source as Agent may select).

 

Base Rate Loan means any Loan which bears interest at or by reference to the Base Rate.

 

Billed Accounts Advance Rate” means (a) one hundred five percent (105%) at all times prior to the date that is six (6) months after the Closing Date, (b) one hundred two and one-half percent (102.5%) at all times on and after the date that is six (6) months after the Closing Date and prior to the first anniversary of the Closing Date, and (c) one hundred percent (100%) at all times on and after the first anniversary of the Closing Date, in each case, subject to any Repayment Advance Reductions; provided, in each case, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such Advance Rate by the number of full or partial percentage points comprising such excess or (B) establish a Reserve on account of such excess (the “Dilution Reserve”).

 

-3-

 

 

Billed Aged Accounts Advance Rate” means one hundred percent (100%), subject to any Repayment Advance Reductions; provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve on account of such excess.

 

Billed Cross-Aged Accounts Advance Rate” means one hundred percent (100%), subject to any Repayment Advance Reductions; provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve on account of such excess.

 

Blocked Account has the meaning set forth in Section 6.1.

 

Borrowerand Borrowers has the meaning set forth in the preamble to this Agreement.

 

Borrower Representative means Rubicon, in such capacity pursuant to the provisions of Section 2.9, or any permitted successor Borrower Representative selected by Borrowers and approved by Agent.

 

Borrowing Base means, as of any date of determination, the Dollar Equivalent Amount as of such date of determination of:

 

(a) the aggregate amount of Eligible Billed Accounts multiplied by the Billed Accounts Advance Rate, plus

 

(b) the aggregate amount of Eligible Billed Aged Accounts multiplied by the Billed Aged Accounts Advance Rate, plus

 

(c) the aggregate amount of Eligible Billed Cross-Aged Accounts multiplied by the Billed Cross-Aged Accounts Advance Rate, plus

 

(d) the aggregate amount of Eligible Unbilled Accounts multiplied by the Unbilled Accounts Advance Rate, plus

 

(e) the lesser of (i) the aggregate amount of Eligible Uninvoiced Accounts multiplied by the Uninvoiced Accounts Advance Rate and (ii) the Uninvoiced Accounts Sublimit, plus

 

(f) the lesser of (i) the Eligible Service Contracts Component multiplied by the Service Contracts Advance Rate, and (ii) the Service Contracts Sublimit, minus

 

(g) the amount of the ABL Borrowing Base (without giving effect to any Term Loan Push-Down Reserve or any other ABL Reserves), minus

 

(h) all Reserves which Agent has established pursuant to Section 2.1(b).

 

Borrowing Base Certificate means a certificate in the form provided by Agent to Borrower Representative for use in reporting the Borrowing Base.

 

Business Day means a day other than a Saturday or Sunday or any other day on which Agent or banks in New York are authorized to close and, in the case of a Business Day which relates to a LIBOR Loan, any day on which dealings are carried on in the London Interbank Eurodollar market.

 

-4-

 

 

Capital Expendituresmeans all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of Borrowers, but excluding expenditures made in connection with the acquisition, replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with cash awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

Capitalized Leasemeans any lease which is or should be capitalized on the balance sheet of the lessee thereunder in accordance with GAAP.

 

Closing Date means March 29, 2019.

 

Codemeans the Internal Revenue Code of 1986, as amended.

 

Collateralmeans all property and interests in property in or upon which a security interest, mortgage, pledge or other Lien is granted pursuant to this Agreement or the other Loan Documents, including all of the property of each Loan Party Obligor described in Section 5.1.

 

Collectionshas the meaning set forth in Section 6.1.

 

Compliance Certificatemeans a compliance certificate substantially in the form of Exhibit C hereto to be signed by the Chief Financial Officer or President of Borrower Representative.

 

Confidential Informationmeans confidential information that any Loan Party furnishes to the Agent pursuant to any Loan Document concerning any Loan Party’s business, but does not include any such information once such information has become, or if such information is, generally available to the public or available to the Agent (or other applicable Person) from a source other than the Loan Parties which is not, to the Agent’s knowledge, bound by any confidentiality obligation in respect thereof.

 

Control Agreement” means an agreement with respect to any deposit, securities or commodities account, in form and substance reasonably satisfactory to Agent, establishing control (as defined in the UCC to the extent applicable) of such account by Agent and is executed and delivered by the bank (with respect to a deposit account), securities intermediary (with respect to a securities account), or commodities intermediary (with respect to a commodities account) maintaining such account, the applicable Loan Party Obligor, Agent and ABL Agent.

 

Credit Bid” has the meaning set forth in Section 14.9 of this Agreement.

 

Defaultmeans any event or circumstance which with notice or passage of time, or both, would constitute an Event of Default.

 

Default Rate has the meaning set forth in Section 3.1.

 

-5-

 

 

Defaulting Lender means any Lender that (a) has failed, within one (1) Business Day of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to Agent or any other Lender any other amount required to be paid by it hereunder, (b) has notified Borrower Representative or Agent in writing, or it or its parent has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement or generally under other agreements in which it or its parent commits to extend credit, (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such certification in form and substance satisfactory to Agent, (d) had an involuntary proceeding commenced or an involuntary petition filed seeking (i) liquidation, reorganization or other relief in respect of such Lender or its parent or its or its parent’s debts, or of a substantial part of its or its parent’s assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Lender or its parent or for a substantial part of its or its parent’s assets, or (e) shall have or whose parent shall have (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consented to the institution of, or failed to contest in a timely and appropriate manner, any proceeding or petition described in clause (d) of this definition, (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or a substantial part of its assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) made a general assignment for the benefit of creditors or (vi) taken any action for the purpose of effecting any of the foregoing.

 

Dilutionmeans, as of any date of determination, a percentage, based upon the experience of the immediately prior twelve (12) months, that is the result of dividing the Dollar Equivalent Amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to a Borrower’s Accounts during such period by (b) such Borrower’s billings with respect to Accounts during such period.

 

Dilution Reserve has the meaning set forth in the definition of Billed Accounts Advance Rate.

 

Division” in reference to any Person which is an entity, means the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity. The word “Divide” when capitalized, shall have a correlative meaning.

 

Dollar Equivalent Amount means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent.

 

Dollarsor $ means United States Dollars.

 

E-Signaturemeans the process of attaching to or logically associating with an Approved Electronic Communication an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Approved Electronic Communication) with the intent to sign, authenticate or accept such Approved Electronic Communication.

 

-6-

 

 

Electronic Signatures in Global and National Commerce Act” means 15 U.S.C. § 7001 et seq.

 

Eligible Accounts means, collectively, Eligible Billed Accounts, Eligible Billed Aged Accounts, Eligible Billed Cross-Aged Accounts, Eligible Unbilled Accounts, and Eligible Uninvoiced Accounts.

 

Eligible Billed Accountmeans, at any time of determination and subject to the criteria below, an Account of a Borrower, which was generated and billed by a Borrower in the Ordinary Course of Business, and which Agent, in its Permitted Discretion, deems to be an Eligible Billed Account. The net amount of an Eligible Billed Account at any time shall be the face amount of such Eligible Billed Account as originally billed minus all customer deposits, unapplied cash collections and other Proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Without limiting the generality of the foregoing, the following Accounts shall not be Eligible Billed Accounts:

 

(i) the Account Debtor or any of its Affiliates is an Affiliate of any Loan Party;

 

(ii) it remains unpaid longer than the earlier to occur of (A) ninety (90) days after the original invoice date or (B) sixty (60) days after the original invoice due date;

 

(iii) the Account Debtor or its Affiliates are past any of the applicable dates referenced in clause (ii) above on other Accounts owing to a Borrower comprising more than twenty-five percent (25%) of all of the Accounts owing to a Borrower by such Account Debtor or its Affiliates;

 

(iv) all Accounts owing by the Account Debtor or its Affiliates (excluding the Account Debtors Walmart, Inc.(“Walmart”), Five Below (“Five Below”) and TJ Maxx (“TJ Maxx”)) represent more than tenfifteen percent (1015%) of all otherwise Eligible Billed Accounts (for Walmart, such percentage shall be twenty-five percent (25%)) (for Five Below, such percentage shall be twenty percent (20%) solely for RiverRoad) (for TJ Maxx, such percentage shall be twenty percent (20%) solely for Rubicon); provided, that Accounts which are deemed to be ineligible solely by reason of this clause (iv) shall be considered Eligible Billed Accounts to the extent of the amount thereof which does not exceed the applicable percentages set forth above of all otherwise Eligible Billed Accounts;

 

(v) a covenant, representation or warranty contained in this Agreement or any other Loan Document with respect to such Account (including any of the representations set forth in Section 7.4) has been breached;

 

(vi) the Account is subject to any contra relationship, counterclaim, dispute or set-off; provided, that Accounts which are deemed to be ineligible by reason of this clause (vi) shall be considered ineligible only to the extent of such applicable contra relationship, counterclaim, dispute or set-off;

 

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(vii) the Account Debtor’s chief executive office or principal place of business is located outside of the United States;

 

(viii) it is payable in a currency other than Dollars;

 

(ix) it is not absolutely owing to a Borrower or arises from a sale on a bill-and-hold, guarantied sale, sale-or-return, sale-on-approval, consignment, retainage or any other repurchase or return basis or consist of progress billings or other advance billings that are due prior to the completion of performance by a Borrower of the subject contract for goods or services;

 

(x) the Account Debtor is the United States of America or any state or political subdivision (or any department, agency or instrumentality thereof), unless such Borrower has complied with the Assignment of Claims Act or other applicable similar state or local law in a manner reasonably satisfactory to Agent;

 

(xi) it is not at all times subject to Agent’s duly perfected, Requisite Priority security interest or is subject to any other Lien that is not a Permitted Lien, or the goods giving rise to such Account were, at the time of sale, subject to any Lien that is not a Permitted Liens;

 

(xii) it is evidenced by Chattel Paper or an Instrument of any kind (unless such Chattel Paper or Instrument is delivered to Agent in accordance with Section 5.2) or has been reduced to judgment;

 

(xiii) the Account Debtor’s total indebtedness to Borrowers exceeds the amount of any credit limit established by Borrowers or Agent or the Account Debtor is otherwise deemed not to be creditworthy by Agent; provided, that Accounts which are deemed to be ineligible solely by reason of this clause (xiii) shall be considered Eligible Billed Accounts to the extent the amount of such Accounts does not exceed the lower of such credit limits;

 

(xiv) there are facts or circumstances existing, or which could reasonably be anticipated to occur, which might result in an adverse change in the Account Debtor’s financial condition or impair or delay the collectability of all or any portion of such Account;

 

(xv) Agent has not been furnished with all documents and other information pertaining to such Account which Agent has requested, or which any Borrower is obligated to deliver to Agent, pursuant to this Agreement;

 

(xvi) Any Borrower has made an agreement with the Account Debtor to extend the time of payment thereof beyond the time periods set forth in clause (ii) above;

 

(xvii) Any Borrower has posted a surety or other bond in respect of the contract or transaction under which such Account arose;

 

-8-

 

 

(xviii) the Account Debtor is subject to any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law;

 

(xix) the sale giving rise to such Account is on cash in advance or cash on delivery terms;

 

(xx) the goods giving rise to such Account have been sold by a Borrower to the Account Debtor outside such Borrower’s Ordinary Course of Business or the services giving rise to such Account have been performed by Borrower outside such Borrower’s Ordinary Course of Business;

 

(xxi) Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor;

 

(xxii) the Account Debtor on such Accounts is located in any jurisdiction which adopts a statute or other requirement that any Person that obtains business from within such jurisdiction or is otherwise subject to such jurisdiction’s tax law must file a “Business Activity Report” (or other applicable report) or make any required filings in a timely manner in order to enforce its claims in such jurisdiction’s courts or arising under such jurisdiction’s laws; provided, however, that such Accounts shall nonetheless be Eligible Billed Accounts if such Borrower has filed a “Business Activity Report” (or other applicable report or required filing);

 

(xxiii) any Eligible Unbilled Accounts;

 

(xxiv) any Accounts obtained in a Permitted Acquisition unless Agent has caused a field examination to be performed on such Accounts and the results of such examination are satisfactory to Agent and Agent has consented to such Accounts being Eligible Billed Accounts in writing; or

 

(xxv) Accounts with respect to which the services giving rise to such Account are or have been performed by a subcontractor, and for which services the Borrowers have not received an invoice from such subcontractor.

 

Eligible Billed Aged Accounts means at any time of determination and subject to the criteria set forth in the definition of Eligible Billed Account (other than the disqualification in subsection (ii) thereof as to the Account remaining unpaid longer than the earlier to occur of (A) ninety (90) days after the original invoice date or (B) sixty (60) days after the original invoice due date), an Account of a Borrower (excluding all Eligible Billed Accounts), which has not remained unpaid longer than the earlier to occur of (x) one hundred thirty-five (135) days after the original invoice date or (y) one hundred five (105) days after the original invoice due date, and which Agent, in its Permitted Discretion, deems to be an Eligible Billed Aged Account.

 

Eligible Billed Cross-Aged Accounts means at any time of determination and subject to the criteria set forth in the definition of Eligible Billed Account (other than the disqualification in subsection (iii) thereof as to the Account Debtor or its Affiliates being past any of the applicable dates referenced in clause (ii) of such definition on other Accounts owing to a Borrower comprising more than twenty-five percent (25%) of all of the Accounts owing to a Borrower by such Account Debtor or its Affiliates), an Account of a Borrower (excluding all Eligible Billed Accounts), with respect to which the Account Debtor and its Affiliates are not past any of the applicable dates referenced in clause (ii) of the definition of Eligible Billed Account on other Accounts owing to a Borrower comprising more than fifty percent (50%) of all of the Accounts owing to a Borrower by such Account Debtor or its Affiliates, and which Agent, in its Permitted Discretion, deems to be an Eligible Billed Cross-Aged Account.

 

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Eligible Service Contractsmeans, at any time of determination and subject to the criteria below, a Service Contract of a Borrower, which was entered into by such Borrower in the Ordinary Course of Business, and which Agent, in its Permitted Discretion, deems to be an Eligible Service Contract. Without limiting the generality of the foregoing, the a Service Contracts shall not be an Eligible Service Contracts if:

 

(i) such Service Contract is not in full force and effect;

 

(ii) such Service Contract has a stated expiration date (after giving effect to any automatic extension provisions set forth in such Service Contract) that occurs within six (6) months of the date of determination;

 

(iii) any Loan Party has received notice from the applicable Service Contract Counterparty of any breach by the applicable Borrower of its obligations under such Service Contract or the applicable Service Contract Counterparty has delivered to the applicable Borrower any notice of termination with respect to such Service Contract;

 

(iv) the Service Contract Counterparty with respect to such Service Contract is an Affiliate of any Loan Party;

 

(v) a covenant, representation or warranty contained in this Agreement or any other Loan Document with respect to such Service Contract (including any of the representations set forth in Section 7.18) has been breached;

 

(vi) such Service Contract is not at all times subject to Agent’s duly perfected, Requisite Priority security interest or is subject to any other Lien that is not a Permitted Lien;

 

(vii) the Service Contract Counterparty with respect to such Service Contract is subject to any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law;

 

(viii) Agent has not been furnished with all documents, notices and other information pertaining to such Service Contract which Agent has requested, or which any Borrower is obligated to deliver to Agent, pursuant to this Agreement;

 

(ix) more than twenty-five percent (25.0%) of the Accounts arising under such Service Contract do not constitute Eligible Accounts; or

 

(x) such Service Contract is not included in the most recent appraisal of Service Contracts based on Orderly Liquidation Value conducted and received by Agent from time to time in accordance with this Agreement.

 

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Eligible Service Contracts Componentmeans an amount equal to the sum of the Orderly Liquidation Value of each Eligible Service Contract.

 

Eligible Unbilled Accountsmeans at any time of determination and subject to the criteria set forth in the definition of Eligible Billed Account (other than the disqualification in subsection (xxi) thereof as to the Account not having been “billed”), an Account of a Borrower (excluding all Eligible Billed Accounts), which was generated by a Borrower in the Ordinary Course of Business but not yet billed, and which Agent, in its Permitted Discretion, deems to be an Eligible Unbilled Account, provided, no Account that arises from services provided more than 60 days prior to the date of determination shall qualify as an Eligible Unbilled Account unless (i) Agent has been provided with supporting documentation relating to such Account, (ii) such account will be billed in the next billing cycle for such Account Debtor and (iii) such Account does not arise from services provided more than 60 days prior to the end of the month during which such services were rendered.

 

Eligible Uninvoiced Accounts means at any time of determination and subject to the criteria set forth in the definition of Eligible Billed Account (other than (x) the disqualification in subsection (xxi) thereof as to the Account not having been “billed” and (y) the disqualification in subsection (xxv) thereof as to the Borrowers having not received an invoice from the applicable subcontractor), an Account of a Borrower (excluding all Eligible Billed Accounts and all Eligible Unbilled Accounts), which was generated by a Borrower in the Ordinary Course of Business (which may be billed or not yet billed) and for which the Borrowers have not yet received an invoice from the applicable subcontractor, and which Agent, in its Permitted Discretion, deems to be an Eligible Uninvoiced Account, provided, no Account that arises from services provided more than 30 days prior to the date of determination shall qualify as an Eligible Uninvoiced Account unless (i) Agent has been provided with supporting documentation relating to such Account, (ii) such account has been billed or will be billed in the next billing cycle for such Account Debtor and (iii) such Account does not arise from services provided more than 60 days prior to the end of the month during which such services were rendered.

 

Enforcement Action” means any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral, whether by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu of foreclosure, action in any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or otherwise.

 

ERISAmeans the Employee Retirement Income Security Act of 1974 and all rules, regulations and orders promulgated thereunder.

 

ERISA Affiliatemeans any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code and Section 302 of ERISA).

 

ERISA Eventmeans: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employeras defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

 

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Event of Default has the meaning set forth in Section 11.1.

 

Excess Availabilityhas the meaning set forth in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time in accordance with the ABL Intercreditor Agreement.

 

Exchange Act” means the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.

 

Excluded Taxesmeans any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of Agent or any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof); (b) in the case of a Non-U.S. Recipient (as defined in Section 13(e)), U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Non-U.S. Recipient with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which such Non-U.S. Recipient becomes a party to this Agreement, acquires a participation or changes its Lending Office, except in each case to the extent that, pursuant to Section 13, amounts with respect to such Taxes were payable either to such Non-U.S. Recipient’s assignor (or Lender granting such participation) immediately before such assignment or grant of participation or to such Non-U.S. Recipient immediately before it changed its Lending Office; (c) United States federal withholding Taxes that would not have been imposed but for such Recipient’s failure to comply with Section 13(e) (except where the failure to comply with Section 13(e) was the result of a change in law, ruling, regulation, treaty, directive, or interpretation thereof by a Governmental Authority after the date the Recipient became a party to this Agreement or a Participant) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

Existing Term Loans has the meaning set forth in Section 2.1(a).

 

Extraordinary Receipt means any cash or cash equivalents received by or paid to or for the account of any Person not in the Ordinary Course of Business, (i) including tax refunds, pension plan reversions in respect of a funding surplus, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments, but (ii) excluding any purchase price adjustments.

 

FATCAmeans Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

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February Equity Contribution” means Qualified Equity Contributions in Holdings in an amount equal to at least $50,000,000 made after the Third Amendment Effective Date and on or before February 28, 2022.

 

FIRREAmeans the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

First Amendmentmeans that certain First Amendment to Loan and Security Agreement, dated as of the First Amendment Effective Date, by and among the Borrowers, the other Loan Party Obligors, the Lenders party thereto and the Agent.

 

First Amendment Effective Date means February 27, 2020.

 

First Amendment Term Loans has the meaning set forth in Section 2.1(a).

 

Fiscal Year means the fiscal year of Borrowers which ends on December 31 of each year.

 

Fourth Amendment Effective Date” means April 26, 2022.

 

FRBmeans the Board of Governors of the Federal Reserve System or any successor thereto.

 

GAAPmeans generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession) which are applicable to the circumstances as of the date of determination, in each case consistently applied.

 

Governing Documentsmeans, with respect to any Person, the certificate of incorporation, articles of incorporation, certificate of formation, certificate of limited partnership, by-laws, operating agreement, limited liability company agreement, limited partnership agreement or other similar governance document of such Person.

 

Governmental Authoritymeans the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantor Payment” has the meaning set forth in Section 2.12(f)(i).

 

Guaranty” or “Guarantied”, as applied to any Indebtedness, liability or other obligation, means (a) a guaranty, directly or indirectly, in any manner, including by way of endorsement (other than endorsements of negotiable instruments for collection in the Ordinary Course of Business), of any part or all of such Indebtedness, liability or obligation and (b) an agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or intended to assure, the payment or performance (or payment of damages in the event of non-performance) of any part or all of such Indebtedness, liability or obligation by any means (including the purchase of securities or obligations, the purchase or sale of property or services or the supplying of funds).

 

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Indebtednessmeans (without duplication), with respect to any Person, (a) all obligations or liabilities of such Person, contingent or otherwise, for borrowed money, (b) all obligations of such Person represented by promissory notes, bonds, debentures or the like, or on which interest charges are customarily paid, (c) all liabilities secured by any Lien on such Person’s property owned or acquired, whether or not such liability shall have been assumed by such Person, (d) all obligations of such Person under conditional sale or other title-retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade payables which are less than ninety (90) days past the invoice date incurred in the Ordinary Course of Business, but including the maximum potential amount payable under any earn-out or similar obligations), (f) all Capitalized Leases of such Person, (g) all obligations (contingent or otherwise) of such Person as an account party or applicant in respect of letters of credit and bankers’ acceptances or in respect of financial or other hedging obligations, (h) all equity interests issued by such Person subject to repurchase or redemption at any time on or prior to the Scheduled Maturity Date (valued at, in the case of redeemable preferred equity interests, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such equity interests plus accrued and unpaid dividends), other than voluntary repurchases or redemptions that are at the sole option of such Person, (i) all principal outstanding under any synthetic lease, off-balance sheet loan or similar financing product of such Person and (j) all Guaranties, endorsements (other than for collection in the Ordinary Course of Business) and other contingent obligations of such Person in respect of the obligations of others.

 

Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Intellectual Propertymeans the collective reference to all rights, priorities 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 and trademark licenses 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.

 

Investment Property means the collective reference to (a) all investment property as such term is defined in Section 9-102 of the UCC, (b) all financial assets as such term is defined in Section 8-102(a)(9) of the UCC and (c) whether or not constituting investment propertyas so defined, all Pledged Equity.

 

Issuersmeans the collective reference to each issuer of Investment Property.

 

June Equity Contribution” means Qualified Equity Contributions in Holdings in an amount equal to at least $50,000,000 made after the Fourth Amendment Effective Date and on or before June 30, 2022.

 

Lendermeans each Person listed on the Term Loan Commitment Schedule and any other Person that shall have become a Lender hereunder pursuant to an Assignment and Assumption, other than any such Person that ceases to be a Lender hereunder pursuant to an Assignment and Assumption.

 

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LIBOR Loan means any Loan which bears interest at a rate determined by reference to the LIBOR Rate.

 

LIBOR Rate means, for any calendar month, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/100 of 1%) for deposits in Dollars, for a one-month period, that appears on Bloomberg Screen US0001M (or the successor thereto) as the London interbank offered rate for deposits in Dollars as of 11:00 a.m., London time, as of two (2) Business Days prior to the first day of such calendar month (and, in no event shall the LIBOR Rate be less than 2.00%), which determination shall be made by Agent and shall be conclusive in the absence of manifest error. For the sake of clarity, the LIBOR Rate shall be adjusted monthly on the first day of each month.

 

Lienmeans any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest or other security arrangement and any other preference, priority, or preferential arrangement in the nature of a security interest of any kind or nature whatsoever, including any conditional sale contract or other title-retention agreement, the interest of a lessor under a Capitalized Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

 

Loan Account has the meaning set forth in Section 3.4.

 

Loan Documentsmeans, collectively, this Agreement, the Agent Fee Letter, the ABL Intercreditor Agreement, the Third Lien Subordination Agreement and all notes, guaranties, security agreements, mortgages, certificates, landlord’s agreements, Lock Box and Blocked Account agreements, Borrowing Base Certificates, Compliance Certificates, each Subordinated Debt Subordination Agreement and all other agreements, documents and instruments now or hereafter executed or delivered by any Borrower, any Loan Party, or any Other Obligor in connection with, or to evidence the transactions contemplated by, this Agreement.

 

Loan Guaranty means the guaranty encompassed in Section 12.

 

Loan Party means, individually, Holdings, each Borrower, or any Subsidiary; and Loan Parties means, collectively, Holdings, each Borrower and all Subsidiaries.

 

Loan Party Obligormeans, individually, each Borrower or any Obligor that is a Loan Party; and Loan Party Obligorsmeans, collectively, each Borrower and each Obligor that is a Loan Party.

 

Loansmeans, collectively, the Term Loans and any Protective Advances.

 

Lock Box has the meaning set forth in Section 6.1.

 

Material Adverse Effectmeans any event, act, omission, condition or circumstance which, which individually or in the aggregate, has or could reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets or condition, financial or otherwise, of any Loan Party or any Other Obligor, as applicable, (b) the ability of any Loan Party or any Other Obligor, as applicable, to perform any of its obligations under any of the Loan Documents, (c) the validity or enforceability of, or Agent’s and Lenders’ rights and remedies under, any of the Loan Documents, (d) the ability of Agent and Lenders to realize upon Collateral in which Agent has previously perfected a Lien or (e) the existence, perfection or priority of any security interest granted in any Loan Document and covering Collateral in which Agent has previously perfected a Lien.

 

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Material Contract” means has the meaning set forth in Section 7.18.

 

Maturity Datemeans the Scheduled Maturity Date (or, if earlier, the Termination Date), or such earlier date as (i) the Obligations may be accelerated in accordance with the terms of this Agreement (including pursuant to Section 11.2) or (ii) the Maturity Date under (and as defined in) the ABL Loan Agreement shall occur.

 

Maximum Lawful Rate has the meaning set forth in Section 3.5.

 

Maximum Liability has the meaning set forth in Section 12.9.

 

Merger Agreement” has the meaning set forth in the Fourth Amendment.

 

Merger Sub LLC” has the meaning set forth in the Fourth Amendment.

 

Multiemployer Planmeans any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Net Proceeds means:

 

(a) with respect to any sale or other disposition, any Extraordinary Receipt, or any casualty or taking, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (v) the principal amount of any Indebtedness that is secured by the applicable asset by a Permitted Lien which is senior to the Agent’s Lien on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction, (w) the reasonable and customary out-of-pocket expenses incurred by the Loan Parties in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party to third parties (other than Affiliates)), (x) taxes reasonably estimated to be actually payable by any Loan Party in connection therewith, (y) reasonable reserves as determined in good faith by a responsible officer of a Loan Party, in accordance with GAAP, for any liabilities or indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchasers and other retained liabilities in respect of such disposition undertaken by any Loan Party in connection with such disposition, provided, that to the extent that any such amount ceases to be so reserved, the amount thereof shall be deemed to be Net Proceeds of such disposition at such time, and (z) in the case of Extraordinary Receipts consisting of indemnity payments, any amount applied to compensate or reimburse the applicable Loan Party for replacing, repairing or restoring any assets or otherwise remedying the condition giving rise to the claim for indemnification or paying claims and settlements to third Persons giving rise to the claim for indemnification, provided, that to the extent that any such amount is not so applied within 180 days, the amount thereof shall be deemed to be Net Proceeds of such Extraordinary Receipt at such time; and

 

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(b) with respect to the incurrence or issuance of any Indebtedness, the excess of (i) the sum of the cash and cash equivalents received in connection with such transaction over (ii) the sum of (x) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Loan Parties in connection therewith and (y) the amount of all taxes paid or reasonably estimated to be actually payable by the Loan Parties in connection therewith.

 

Non-Consenting Lenderhas the meaning set forth in Section 15.5(b).

 

Non-Paying Guarantorhas the meaning set forth in Section 12.10.

 

Non-U.S. Recipient has the meaning set forth in Section 13(e)(ii).

 

Obligationsmeans all present and future Loans, advances, debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by any Borrower or any other Loan Party Obligor to Agent and Lenders, whether evidenced by this Agreement or any other Loan Document, whether arising from an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect, whether absolute or contingent, whether due or to become due and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.

 

Obligormeans any guarantor, endorser, acceptor, surety or other Person liable on, or with respect to, any of the Obligations or who is the owner of any property which is security for any of the Obligations, other than a Borrower.

 

Orderly Liquidation Valuemeans, at any time of determination with respect to any Service Contract, the amount that could be realized at a privately negotiated sale of such Service Contract, properly advertised and professionally managed, by a seller obligated to sell over a reasonable period of time, net of occupancy and liquidation costs, as determined from time to time by Agent based on the most recent appraisal of Service Contracts conducted pursuant to this Agreement by an appraiser engaged by Agent (it being recognized and agreed by Borrowers that individual Service Contracts may have different Orderly Liquidation Values).

 

Ordinary Course of Businessmeans, in respect of any transaction involving any Person, the ordinary course of business of such Person, as conducted by such Person as of the Closing Date and, without obligation on the part of such Person to undertake such practices, any practices that are utilized to improve past practices or to conform with customary operating procedures for a similar business, as reasonably determined by such Person.

 

Other Obligor means any Obligor other than a Loan Party Obligor.

 

Other Taxesmeans all present or future stamp, court or documentary, property, excise, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

Participanthas the meaning set forth in Section 15.10(b).

 

Paying Guarantorhas the meaning set forth in Section 12.10.

 

PBGCmeans the Pension Benefit Guaranty Corporation.

 

Pension Actmeans the Pension Protection Act of 2006.

 

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Pension Funding Rules means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA, and any sections of the Code or ERISA related thereto that are enacted after the date of this Agreement.

 

Pension Planmeans any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by a Loan Party and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

Perfection Certificate means the Perfection Certificate attached to this Agreement as of the Closing Date, together with any updates thereto as contemplated by this Agreement or otherwise permitted by Agent from time to time, including the update delivered on the First Amendment Effective Date and the update delivered on the Second Amendment Effective Date.

 

Permitted Acquisition” means any consensual acquisition by any Loan Party Obligor (other than asset acquisitions by Holdings), whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the equity interests of, or a business line or unit or a division of, any Person; in each case, provided:

 

(i) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such acquisition;

 

(ii) at or prior to the closing of such acquisition, Agent will be granted a Requisite Priority Lien (subject only to Permitted Liens) in substantially all the assets (wherever located) acquired pursuant thereto constituting Collateral (including, if applicable, any equity interests of any Person being acquired), and the Loan Party Obligors and such Person shall have executed such documents and taken such actions as may be reasonably required by Agent in connection therewith (including, without limitation, the delivery of (A) certified copies of the resolutions of the governing board of any applicable Loan Party Obligor and such Person authorizing such Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and substance reasonably acceptable to Agent, with respect to the transactions described herein (if required), (C) evidence of insurance of the business to be acquired consistent with the requirements of this Agreement and (D) any joinders or other agreements required pursuant to Section 5.3);

 

(iii) the Borrower Representative shall have furnished Agent with ten (10) Business Days’ (or such shorter period as may be agreed by Agent) prior written notice of such intended acquisition and shall have furnished Agent with a current draft of the applicable material acquisition documents (and final copies thereof as and when executed);

 

the Borrower Representative shall have furnished to Agent at least ten (10) Business Days (or such shorter period as may be agreed by Agent) prior to the date on which any such acquisition is to be consummated or such shorter time as Agent may allow, a certificate of a responsible officer of Borrower, in form and substance reasonably satisfactory to Agent, certifying that all of the other requirements for a Permitted Acquisition will be satisfied on or prior to the closing date of such acquisition; provided, further that no hostile takeover or non-consensual transaction shall qualify as a Permitted Acquisition.

 

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Permitted Discretion means a determination made by Agent in good faith and in the exercise of reasonable (from the perspective of an asset-based secured lender) business judgment.

 

Permitted Equity Transfers means transfers of beneficial ownership interests in Holdings in compliance with Holdings’ Governing Documents, provided that following such transfers, current equity owners as of the Closing Date continue (i) to, directly or indirectly, own and control at least fifty-one percent (51%) of the aggregate Voting Power represented by the issued and outstanding equity interests of Holdings on a fully diluted basis and (ii) to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Rubicon Technologies, Inc. or Holdings and in either case to direct the management policies and decisions of Holdings.

 

Permitted Indebtedness means (a) the Obligations; (b) the Indebtedness existing on the date hereof described in Section 7 of the Perfection Certificate; in each case along with extensions, refinancings, modifications, amendments and restatements thereof; provided, that (i) the principal amount thereof is not increased, (ii) if secured by a Permitted Lien, no additional collateral beyond that existing as of the Closing Date is granted to secure such Indebtedness; (iii) if such Indebtedness is subordinated to any or all of the Obligations, the applicable subordination terms shall not be modified without the prior written consent of Agent and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party; (c) Capitalized Leases and purchase-money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $15,000,000 at any time outstanding; (d) Indebtedness incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (e) Subordinated Debt owing by Borrower solely to the extent such Subordinated Debt is subject to, and permitted by, a Subordinated Debt Subordination Agreement; (f) Indebtedness incurred under the ABL Loan Agreement in an aggregate principal amount not to exceed the Maximum First Lien Facility Amount (as defined in the ABL Intercreditor Agreement) at any time outstanding; and (g) Indebtedness incurred under the Third Lien Loan Agreement in an aggregate principal amount at any time outstanding not to exceed $20,000,000 (plus amounts capitalized to principal in accordance with the terms of the Third Lien Loan Agreement as in effect on the Third Lien Debt Incurrence Date) so long as such Indebtedness is subject to the Third Lien Subordination Agreement.

 

Permitted Liensmeans (a) purchase-money security interests in specific items of Equipment securing Permitted Indebtedness described under clause (c) of the definition of Permitted Indebtedness; (b) Liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained provided the same have no priority over any of Agent’s security interests; (c) Liens of materialmen, mechanics, carriers, or other similar Liens arising in the Ordinary Course of Business and securing obligations which are not delinquent or are being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained; (d) Liens which constitute banker’s Liens, rights of set-off, or similar rights as to Deposit Accounts or other funds maintained with a bank or other financial institution (but only to the extent such banker’s Liens, rights of set-off or other rights are in respect of customary service charges relative to such Deposit Accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to any Loan Party); (e) cash deposits or pledges of an aggregate amount not to exceed $100,000 to secure the payment of worker’s compensation, unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the Ordinary Course of Business; (f) judgment Liens in respect of judgments that do not constitute an Event of Default; (g) Liens securing the ABL Obligations, subject to the terms of the ABL Intercreditor Agreement, including the relative Lien priorities set forth therein; and (h) Liens securing the Third Lien Obligations, subject to the terms of the Third Lien Subordination Agreement, including the relative Lien priorities set forth therein.

 

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“Permitted SPAC Merger” means the merger of Merger Sub LLC with and into Holdings, provided:

 

(i) the SPAC Merger shall be consummated pursuant to and in accordance with the terms and conditions of the Merger Agreement as in effect as of the Fourth Amendment Effective Date;

 

(ii) the SPAC Merger shall constitute a Permitted Equity Transfer; and

 

(iii) Agent shall maintain a Requisite Priority Lien (subject only to Permitted Liens) in the Collateral, and in connection therewith: (A) Loan Party Obligors and Merger Sub LLC shall deliver to the Agent certified copies of the resolutions of the governing board of any applicable Loan Party Obligor and such Person authorizing such Permitted SPAC Merger; (B) Holdings shall execute and deliver a Ratification Agreement, in form and substance reasonably acceptable to the Agent, ratifying and confirming the Loan Documents in its capacity as Borrower and Loan Party Obligor; and (C) Holdings and the Agent shall have agreed to the form of a UCC 3 amendment giving effect to Holdings name change to Rubicon Technologies Holdings, LLC or such other name as agreed upon among the Loan Parties.

 

The Borrower Representative shall have furnished to Agent at least five (5) Business Days (or such shorter period as may be agreed by Agent) prior to the date on which the SPAC Merger is to be consummated or such shorter time as Agent may allow, a certificate of a responsible officer of Borrower, in form and substance reasonably satisfactory to Agent, certifying that all of the other requirements for a Permitted SPAC Merger will be satisfied on or prior to the closing date of the SPAC Merger.

 

Permitted Tax Distributions” means, with respect to any Person, for any taxable period after the Closing Date during which time such Person is a pass-through entity for income tax purposes, any dividend or distribution to any holder of such Person’s stock or other equity interests to permit such holders to pay federal income taxes and all relevant state and local income taxes at a rate equal to the highest marginal applicable tax rate for the applicable tax year, however denominated imposed as a result of taxable income allocated to such holder as a partner of such Person under federal, state, and local income tax laws, taking into account applicable deductions, losses, and credits of such Person (including, without limitation, deductions pursuant to Section 199A of the Internal Revenue Code) and allocated to such holder in proportion and to the extent of such holder’s stock or other equity interests of such Person.

 

Personmeans any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government or any agency or political division thereof, or any other entity.

 

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Planmeans any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of any Loan Party or any such plan to which any Loan Party (or with respect to any plan subject to Section 412 of the Code or Section 302 or Title IV of ERISA, any ERISA Affiliate) is required to contribute on behalf of any of its employees.

 

Pledged Equitymeans the equity interests listed on Sections 1(f) and 1(g) of the Perfection Certificate, together with any other equity interests, certificates, options, or rights or instruments of any nature whatsoever in respect of the equity interests of any Person that may be issued or granted to, or held by, any Loan Party Obligor while this Agreement is in effect, and including, to the extent attributable to, or otherwise related to, such pledged equity interests, all of such Loan Party Obligor’s (a) interests in the profits and losses of each Issuer, (b) rights and interests to receive distributions of each Issuer’s assets and properties and (c) rights and interests, if any, to participate in the management of each Issuer related to such pledged equity interests.

 

Prepayment Event” means, without duplication:

 

(a) any sale or other disposition (including pursuant to a sale and leaseback transaction) of any Collateral, except for (i) sales and other dispositions permitted under clauses (i) and (ii) of Sections 8(e) and (ii) other sales and other dispositions permitted under Section 8(e) of Collateral with an aggregate value not to exceed $250,000 in any Fiscal Year;

 

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of (and payments in lieu thereof), any Collateral in an amount in excess of $250,000;

 

(c) the incurrence by a Loan Party of any Indebtedness (other than Permitted Indebtedness); or

 

(d) the receipt by any Loan Party of any Extraordinary Receipts.

 

Prepayment Premium” has the meaning set forth in the Agent Fee Letter.

 

Pro Rata Share” means with respect to all matters relating to any Lender the percentage obtained by dividing (i) the outstanding principal amount of such Lender’s Term Loans by (ii) the aggregate outstanding principal amount of all Term Loans, in each case as any such percentages may be adjusted by assignments pursuant to an Assignment and Assumption.

 

Protective Advances has the meaning set forth in Section 2.2(a).

 

Qualified Equity Contribution” means a cash equity contribution which is (a) in the form of common equity, preferred equity, other equity made to Holdings or redemption of warrants for common equity, preferred equity, or other equity of Holdings, in each case, which, by its terms (or by the terms of any security or other equity interests into which it is convertible or for which it is exchangeable), (i) does not mature or become mandatorily redeemable pursuant to a sinking fund obligation, (ii) is not redeemable at the option of the holder thereof, in whole or in part, (iii) does not provide for the scheduled payments of dividends in cash, or (iv) is not or will not become convertible into or exchangeable for debt securities or other equity interests that would constitute Indebtedness; and (b) not obtained for or used for the purpose of a distribution or dividend.

 

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Recipientmeans any Agent, any Lender, any Participant, or any other recipient of any payment to be made by or on account of any Obligation of any Loan Party under this Agreement or any other Loan Document, as applicable.

 

Registerhas the meaning set forth in Section 15.9(c).

 

Released Parties has the meaning set forth in Section 10.1.

 

Repayment Advance Reductions means, for Eligible Service Contracts and/or one or more categories of Eligible Accounts, a reduction in the Advance Rates applicable to such Eligible Accounts or Eligible Service Contracts, as applicable, in connection with any repayment or prepayment of the principal of the Term Loans (whether voluntary or mandatory), which reductions may be implemented from time to time by Agent in its Permitted Discretion. Any such reduction in any Advance Rate shall be implemented by the Agent and shall become effective on the date of any applicable repayment or prepayment (regardless of amount).

 

Replacement Lender has the meaning set forth in Section 3.6(c).

 

Reportable Eventmeans any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

 

Required Lendersmeans at any time Lenders (other than Defaulting Lenders) then holding Term Loans representing at least fifty-one percent (51%) of the aggregate principal amount of all Term Loans of such Lenders outstanding at such time; provided, that if there are two or more Lenders, then Required Lenders shall include at least two (2) Lenders (Lenders that are Affiliates or Approved Funds of one (1) another being considered as one Lender for purposes of this proviso).

 

Requisite Prioritymeans, with respect to any particular type of Collateral, the priority of Agent’s Lien therein (a) being either first-priority or second-priority as set forth in the ABL Intercreditor Agreement and (b) being senior in priority to the Lien of the Third Lien Agent pursuant to the Third Lien Subordination Agreement.

 

Reserveshas the meaning set forth in Section 2.1(b).

 

Restricted Accountsmeans Deposit Accounts (a) established and used (and at all times will be used) solely for the purpose of paying current payroll obligations of Loan Parties (and which do not (and will not at any time) contain any deposits other than those necessary to fund current payroll), in each case in the Ordinary Course of Business, or (b) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, but solely to the extent that all funds on deposit therein are solely held for the benefit of, and owned by, employees (and will continue to be so held and owned) pursuant to such plan.

 

Scheduled Maturity Date means March 29, 2024.

 

Second Amendment” means that certain Second Amendment to Loan and Security Agreement, dated as of the Second Amendment Effective Date, by and among the Borrowers, the other Loan Party Obligors, the Lenders party thereto and the Agent.

 

Second Amendment Effective Date” means March 24, 2021.

 

Second Amendment Term Loans” has the meaning set forth in Section 2.1(a).

 

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Securities Act means the Securities of Act of 1933, as amended.

 

Service Contract means any written contract governing the rendition of services by a Borrower to a Service Contract Counterparty.

 

Service Contract Counterpartymeans, with respect to any Service Contract, the Person that is the counterparty of the applicable Borrower under such Service Contract, together with such Person’s Affiliates or subsidiaries.

 

Service Contracts Advance Ratemeans sixty percent (60%), subject to any Repayment Advance Reductions; provided, however, (i) if the April Equity Contribution has not been received in accordance with the terms thereof, the Service Contracts Advance Rate means fifty percent (50%) and (ii) if the FebruaryJune Equity Contribution has not been received in accordance with the terms thereof, the Service Contracts Advance Rate means forty percent (40%), in each case, subject to any Repayment Advance Reductions.

 

Service Contracts Sublimit means (i) $40,000,000,36,000,000 or (ii) $30,000,000 if the April Equity Contribution has not been received in accordance with the terms thereof, or (iii) $20,000,000 if the FebruaryJune Equity Contribution has not been received in accordance with the terms thereof, in each case, which amount shall be reduced by an amount equal to $1,500,000 on July 1, 20212022 and on the first day of each October, January, April and July occurring thereafter.

 

SPAC Merger” shall have the meaning set forth in the Fourth Amendment.

 

Stated Rate has the meaning set forth in Section 3.5.

 

Subordinated Debt means unsecured debt of a Loan Party that is in an amount and on terms satisfactory to Agent and is subject to a Subordinated Debt Subordination Agreement.

 

Subordinated Debt Documentsmeans the documents approved by Agent in writing to govern the Subordinated Debt.

 

Subordinated Debt Subordination Agreementmeans a subordination agreement with terms and conditions satisfactory to Agent that governs the respective priority and rights of the applicable Subordinated Debt and the Obligations and is entered into by the holders of such Subordinated Debt (or their agent), the Agent and Borrower Representative (and any other relevant Loan Parties).

 

Subsidiarymeans any corporation or other entity of which a Person owns, directly or indirectly, through one or more intermediaries, more than 50% of the capital stock or other equity interest at the time of determination. Unless the context indicates otherwise, references to a Subsidiary shall be deemed to refer to a Subsidiary of a Borrower.

 

Taxesmeans 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 Loan Commitmentmeans (a) as to any Lender, the commitment of such Lender to make Second Amendment Term Loans as set forth in the Term Loan Commitment Schedule and (b) as to all Lenders, the aggregate commitment of all Lenders to make Second Amendment Term Loans, which aggregate commitment equals $20,000,000.

 

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Term Loan Commitment Schedule” means the Term Loan Commitment Schedule attached hereto as Annex II.

 

Term Loan Push-Down Reserve” means, as of any date of determination, an ABL Reserve against the ABL Borrowing Base and the Maximum Revolving Facility Amount (as defined in the ABL Loan Agreement) in respect of, and in an amount equal to, the excess (if any) of the aggregate outstanding principal amount of the Loans over the amount of the Borrowing Base.

 

Term Loans has the meaning set forth in Section 2.1(a).

 

Termination Date means the date on which all of the Obligations have been paid in full in cash and all of Agent and Lenders’ lending commitments under this Agreement and under each of the other Loan Documents have been terminated.

 

Third Amendment” means that certain Third Amendment to Loan and Security Agreement, dated as of the Third Amendment Effective Date, by and among the Borrowers, the other Loan Party Obligors, the Lenders party thereto and the Agent.

 

Third Amendment Effective Date” means October 15, 2021.

 

Third Lien Agent means Mizzen Capital, LP, in its capacity as “Agent” under (and as defined in) the Third Loan Agreement, and any of its successors in such capacity.

 

Third Lien Debt Incurrence Date” means the date on which all of the following conditions are satisfied: (a) the Third Lien Subordination Agreement shall have been executed by the parties thereto, (b) the Agent and the ABL Agent shall have confirmed in writing that each such Person is satisfied with the form and substance (including all terms and conditions) of the Third Lien Loan Agreement and other Third Lien Loan Documents, and the Third Lien Loan Agreement and other Third Lien Loan Documents shall have been executed by the parties thereto, and (c) the Third Lien Lenders shall have funded the loans pursuant to the Third Lien Loan Agreement.

 

Third Lien Lender” means each “Lender” under (and as defined in) the Third Lien Loan Agreement.

 

Third Lien Loan Agreement” means the subordinated term loan agreement, dated as of the Third Lien Debt Incurrence Date, by and among the Loan Party Obligors, the Third Lien Lenders and the Third Lien Agent, in form and substance (including all terms and conditions) satisfactory to the Agent.

 

Third Lien Loan Documents” means the “Loan Documents”, or other similar definition of the same effect, as defined in the Third Lien Loan Agreement, as in effect on the Third Lien Debt Incurrence Date or as amended from time to time in accordance with the Third Lien Subordination Agreement.

 

Third Lien Obligations” means the “Obligations”, or other similar definition of the same effect, as defined in the Third Lien Loan Agreement, as in effect on the Third Lien Debt Incurrence Date or as amended from time to time in accordance with the Third Lien Subordination Agreement.

 

Third Lien Subordination Agreement” means that certain Subordination and Intercreditor Agreement, dated as of the Third Lien Debt Incurrence Date, by and between, Agent, ABL Agent and the Third Lien Agent and acknowledged by the Loan Party Obligors, and shall also include any replacement subordination agreement entered into in accordance with the terms thereof, in each case in form and substance (including all terms and conditions) satisfactory to the Agent.

 

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UCCmeans, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of New York or other applicable jurisdiction.

 

Unbilled Accounts Advance Rate” means one hundred percent (100%), subject to any Repayment Advance Reductions; provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve on account of such excess.

 

Uniform Electronic Transactions Act” means that certain Uniform Electronic Transactions Act published by the Uniform Law Commission in 1999 giving electronic signatures the same effect as traditional handwritten signatures under the statute of frauds.

 

Uninvoiced Accounts Advance Rate” means eighty percent (80%), subject to any Repayment Advance Reductions; provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve on account of such excess.

 

Uninvoiced Accounts Sublimit” means (a) $3,000,000 at all times prior to the date that is nine (9) months after the Closing Date and (b) $2,000,000 at all times on and after the date that is nine (9) months after the Closing Date.

 

Voting Power” means, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person. The holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or similar governing body of such Person.

 

1.2. Accounting Terms and Determinations.

 

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and either Borrower Representative or Agent shall so request, Required Lenders and Borrower Representative shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower Representative shall provide to Agent and Lenders financial statements and other documents required under this Agreement and the other Loan Documents which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (Codification of Accounting Standards 825-10) to value any Indebtedness or other liabilities of any Loan Party at fair value, as defined therein.

 

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Notwithstanding anything to the contrary contained in the paragraph above or the definitions of Capital Expenditures or Capitalized Leases, in the event of a change in GAAP after the Closing Date requiring all leases to be capitalized, only those leases (assuming for purposes of this paragraph that they were in existence on the Closing Date) that would constitute Capitalized Leases on the Closing Date shall be considered Capitalized Leases (and all other such leases shall constitute operating leases) and all calculations and deliverables under this Agreement or the other Loan Documents shall be made in accordance therewith (other than the financial statements delivered pursuant to this Agreement; provided that all such financial statements delivered to Agent and Lenders in accordance with the terms of this Agreement after the date of such change in GAAP shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such change).

 

1.3. Other Definitional Provisions and References.

 

References in this Agreement to Articles, Sections, Annexes, Exhibits or Schedules shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. Include, includesand includingshall be deemed to be followed by without limitation. Orshall be construed to mean and/or. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References fromor through any date mean, unless otherwise specified, from and includingor through and including, respectively. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds. Time is of the essence for each performance obligation of the Loan Parties under this Agreement and each Loan Document. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any agreement, instrument or document (a) shall include all schedules, exhibits, annexes and other attachments thereto and (b) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document). The words assetand propertyshall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise specified herein Dollar ($) baskets set forth in the representations and warranty, covenants and event of default provisions of this Agreement (and other similar baskets) are calculated as of each date of measurement by the Dollar Equivalent Amount thereof as of such date of measurement. Reference to a Loan Party’s “knowledge” or similar concept means actual knowledge of a senior officer, or knowledge that a senior officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.

 

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2. LOANS.

 

2.1. Term Loans; Reserves.

 

(a) Term Loans. Subject to the terms and conditions of this Agreement, on the Closing Date, each Lender then party to this Agreement severally (and not jointly) made a term loan to Borrowers (collectively, the “Existing Term Loans”) in an amount equal to $20,000,000. Subject to the terms and conditions of this Agreement and the First Amendment, on the First Amendment Effective Date, each Lender severally (and not jointly) agrees to make an additional term loan to Borrowers (collectively, the “First Amendment Term Loans”) in an amount equal to such Lender’s Term Loan Commitment, such that after giving effect to the First Amendment on the First Amendment Effective Date, the aggregate principal amount of the Term Loans hereunder shall be $40,000,000. Subject to the terms and conditions of this Agreement and the Second Amendment, on the Second Amendment Effective Date, each Lender severally (and not jointly) agrees to make an additional term loan to Borrowers (collectively, the “Second Amendment Term Loans,” and together with the Existing Term Loan and the First Amendment Term Loans, collectively, the “Term Loans”), in an amount equal to such Lender’s Term Loan Commitment, such that after giving effect to the Second Amendment on the Second Amendment Effective Date, the aggregate principal amount of the Term Loans hereunder shall be $60,000,000. All Term Loans shall be made in and repayable in Dollars. Amounts repaid in respect of Term Loans may not be reborrowed, and upon each Lender’s making of the Second Amendment Term Loans on the Second Amendment Effective Date, any then outstanding Term Loan Commitment of such Lender shall be terminated (it being understood and agreed that the initial Term Loan Commitments of $20,000,000, under and as defined in this Agreement as in effect on the Closing Date, were reduced to $0 upon the funding of the Existing Term Loans on the Closing Date and the Term Loan Commitments of $20,000,000, under and as defined in this Agreement as in effect on the First Amendment Effective Date, were reduced to $0 upon the funding of the First Amendment Term Loans on the First Amendment Effective Date).

 

(b) Reserves. Agent may, with or without notice to Borrower Representative, from time to time establish and revise reserves against the Borrowing Base in such amounts and of such types as Agent deems appropriate in its Permitted Discretion (“Reserves”) to reflect (i) events, conditions, contingencies or risks which affect or may affect (A) the Collateral or its value, or the enforceability, perfection or priority of the security interests and other rights of Agent in the Collateral or (B) the assets, business or prospects of any Borrower or any Loan Party Obligor (including the Dilution Reserve), (ii) Agent’s good faith concern that any Collateral report or financial information furnished by or on behalf of any Borrower or any Loan Party Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect, (iii) any fact or circumstance which Agent determines in good faith constitutes, or could constitute, a Default or Event of Default, or (iv) any other events or circumstances which Agent determines in good faith make the establishment or revision of a Reserve prudent. In no event shall the establishment of a Reserve in respect of a particular actual or contingent liability obligate Agent to make advances to pay such liability or otherwise obligate Agent with respect thereto.

 

(c) [Reserved].

 

2.2. Protective Advances.

 

(a) Notwithstanding any contrary provision of this Agreement or any other Loan Document, at any time after the occurrence and during the continuance of a Default or Event of Default, Agent is authorized by each Borrower and each Lender, from time to time, in Agent’s sole discretion, to make such advances to, or for the benefit of, any Borrower, as Agent in its sole discretion deems necessary or desirable (1) to maintain, preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (“Protective Advances”). Notwithstanding any contrary provision of this Agreement or any other Loan Document, Agent may disburse the proceeds of any Protective Advance to any Borrower or to such other Person(s) as Agent determines in its sole discretion. All Protective Advances shall be payable immediately upon demand.

 

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(b) Upon the making of any Protective Advance (whether before or after the occurrence of a Default or Event of Default), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from Agent, without recourse or warranty, an undivided interest and participation in such Protective Advance in an amount equal to its Pro Rata Share thereof. Agent may, at any time, require the applicable Lenders to fund their participations. From and after the date, if any, on which any Lender is required to fund its participation in any Protective Advance purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by such Agent in respect of such Loan. Each Lender acknowledges and agrees that (i) Agent may elect to fund a Protective Advance through one or more of its Affiliates on behalf of Agent for administrative convenience and (ii) any such funding shall constitute a Protective Advance as if made by Agent subject to the terms and conditions of this Agreement.

 

2.3. [Reserved].

 

2.4. [Reserved].

 

2.5. Repayments.

 

(a) [Reserved].

 

(b) Term Loan Amortization Payments. Commencing on July 1, 2021, and on the first day of each July, October, January and April occurring thereafter, the Borrowers shall make quarterly principal payments on the Term Loans, each in an amount equal to $1,500,000.

 

(c) Maturity Date Payments. All remaining outstanding Term Loans and other monetary Obligations (including all accrued and unpaid fees described in Section 3.2) shall be payable in full on the Maturity Date.

 

2.6. Prepayments; Application of Prepayments.

 

(a) Voluntary Prepayments. The Borrowers may, upon irrevocable notice from the Borrower Representative to the Agent, from time to time voluntarily prepay Term Loans in whole or in part, subject to payment of any applicable Prepayment Premium in the amount specified in the Agent Fee Letter; provided that (i) such notice must be received by the Agent not later than 11:00 a.m. ET three (3) Business Days prior to the date of such prepayment and (ii) such prepayment shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining outstanding principal amount of the Term Loans). The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower Representative, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Each such prepayment shall be applied to the Term Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

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(b) Mandatory Prepayments.

 

(i) If any Prepayment Event occurs, then, to the extent of any remaining Net Proceeds received by the Loan Parties on account thereof after application of such proceeds to outstanding ABL Obligations in accordance with the ABL Loan Agreement, the Borrowers shall, within five (5) Business Days (or immediately in the case of any incurrence of any Indebtedness that is not Permitted Indebtedness) after receipt of such Net Proceeds, prepay the Term Loans in an amount equal to such remaining Net Proceeds, together with any applicable Prepayment Premium in the amount specified in the Agent Fee Letter; provided, however, that the Borrowers shall be permitted to replace, repair, restore or rebuild Collateral that is subject to any casualty or other insured damage or any taking under power of eminent domain or by condemnation or similar proceeding of (and payments in lieu thereof), so long as (i) no Default or Event of Default has occurred and is continuing and (ii) any such Net Proceeds on account of such Prepayment Event not used to replace, repair, restore or rebuild such Collateral within 180 days after the receipt of such Net Proceeds shall be applied to the prepayment of the Term Loans in accordance with this Section 2.6(b)(i) and Section 2.6(c).

 

(ii) If all Commitments under (and as defined in) the ABL Loan Agreement are terminated prior to the Scheduled Maturity Date under (and as defined in) the ABL Loan Agreement, the Borrowers shall immediately prepay all of the Loans.

 

(c) Application of Prepayments. Prepayments made pursuant to Section 2.6(a) or 2.6(b) shall be applied to the outstanding Term Loans of the Lenders, ratably in accordance with their respective Pro Rata Shares (subject to Section 2.6(d)), and in the inverse order of principal payments due pursuant to Section 2.5(b).

 

(d) Option to Decline Proceeds. Upon the occurrence of any Prepayment Event, the Borrower Representative shall promptly provide the Agent with a written notice of such Prepayment Event and any associated prepayment required under Section 2.6(b), including the date and amount of such prepayment. The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. Each Lender may reject all or part of its Pro Rata Share of such prepayment (other than a prepayment in respect of Indebtedness that is not Permitted Indebtedness) (such declined amounts, the “Initial Declined Proceeds”) by providing written notice (each, a “Rejection Notice”) to the Agent no later than 3:00 p.m. ET, two (2) Business Days prior to the date of such prepayment as set forth in the applicable notice of prepayment (any such Lender, a “Declining Lender”); provided, that, if a Lender fails to deliver a Rejection Notice to the Agent within the time frame specified above, such failure will be deemed an acceptance by such Lender of its Pro Rata Share of such mandatory prepayment. If there are any Initial Declined Proceeds, the Agent shall then provide written notice (the “Second Offer”) to Lenders other than the Declining Lenders (such Lenders, the “Accepting Lenders”) of the additional amount available (due to such Declining Lenders’ declining such prepayment) to prepay Term Loans owing to such Accepting Lenders, with such available amount to be allocated on a pro rata basis among the Accepting Lenders that accept the Second Offer. Any Lenders declining prepayment pursuant to such Second Offer shall give written notice thereof to the Agent by 4:00 p.m. ET time no later than one (1) Business Day prior to the date of such prepayment as set forth in the applicable notice of prepayment; provided, that, if a Lender fails to deliver a Rejection Notice to the Agent within the time frame specified above, such failure will be deemed an acceptance of such Lender’s pro rata share of the Second Offer. Amounts remaining after the allocation to Accepting Lenders as set forth above may be retained by the applicable Loan Parties.

 

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2.7. Obligations Unconditional.

 

(a) The payment and performance of all Obligations shall constitute the absolute and unconditional obligations of each Loan Party Obligor, and shall be independent of any defense or right of set-off, recoupment or counterclaim that any Loan Party Obligor or any other Person might otherwise have against Agent, any Lender or any other Person. All payments required by this Agreement or the other Loan Documents shall be made in Dollars (unless payment in a different currency is expressly provided otherwise in the applicable Loan Document) and paid free of any deductions or withholdings for any taxes or other amounts and without abatement, diminution or set-off. If any Loan Party Obligor is required by applicable law to make such a deduction or withholding from a payment under this Agreement or under any other Loan Document, such Loan Party Obligor shall pay to Agent such additional amount as shall be necessary to ensure that, after the making of such deduction or withholding, Agent receives (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made. Each Loan Party Obligor shall (a) pay the full amount of any deduction or withholding that it is required to make by law, to the relevant authority within the payment period set by applicable law and (b) promptly after any such payment, deliver to Agent an original (or certified copy) official receipt issued by the relevant authority in respect of the amount withheld or deducted or, if the relevant authority does not issue such official receipts, such other evidence of payment of the amount withheld or deducted as is reasonably acceptable to Agent.

 

(b) If, at any time and from time to time after the Closing Date (or at any time before or after the Closing Date with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith), (a) any change in any existing law, regulation, treaty or directive or in the interpretation or application thereof, (b) any new law, regulation, treaty or directive enacted or application thereof or (c) compliance by Agent with any request or directive (whether or not having the force of law) from any Governmental Authority, central bank or comparable agency (i) subjects Agent or any Lender to any tax, levy, impost, deduction, assessment, charge or withholding of any kind whatsoever with respect to any Loan Document, or changes the basis of taxation of payments to Agent or any Lender of any amount payable thereunder (except for net income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by federal, state, local or other taxing authorities with respect to interest or fees payable hereunder or under any other Loan Document or changes in the rate of tax on the overall net income of Agent, any Lender or their respective members) or (ii) imposes, modifies or deems applicable any reserve (including any reserve imposed by the FRB, but excluding any reserve included in the determination of the LIBOR Rate), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Agent or any Lender or imposes on Agent or any Lender any other condition affecting its LIBOR Loans or its obligation to make LIBOR Loans, the result of which is to increase the cost to (or to impose a cost on) Agent or any Lender of making or maintaining any LIBOR Loan or (iii) imposes on Agent or any Lender any other condition or increased cost in connection with the transactions contemplated thereby or participations therein, and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or continuing any Loan or to reduce any amount receivable hereunder or under any other Loan Documents, then, in each such case, Borrowers shall promptly pay to Agent or such Lender, when notified to do so by Agent or such Lender, any additional amounts necessary to compensate Agent or such Lender, on an after-tax basis, for such additional cost or reduced amount as determined by Agent or such Lender, but only to the extent such amounts relate to this Agreement or the Loan Documents. Each such notice of additional amounts payable pursuant to this Section 2.7(b) submitted by Agent or any Lender, as applicable, to Borrower Representative shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(c) This Section 2.7 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

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2.8. Reversal of Payments. To the extent that any payment or payments made to or received by Agent or any Lender pursuant to this Agreement or any other Loan Document are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to any trustee, receiver or other Person under any state, federal or other bankruptcy or other such applicable law, then, to the extent thereof, such amounts (and all Liens, rights and remedies relating thereto) shall be revived as Obligations (secured by all such Liens) and continue in full force and effect under this Agreement and under the other Loan Documents as if such payment or payments had not been received by Agent or such Lender. This Section 2.8 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

2.9. Notes. The Loans shall, at the request of any Lender, be evidenced by one or more promissory notes in form and substance reasonably satisfactory to such Lender. However, if such Loans are not so evidenced, such Loans may be evidenced solely by entries upon the books and records maintained by Agent.

 

2.10. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a) [Reserved].

 

(b) Any amount payable to a Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) may, in Agent’s sole discretion, in lieu of being distributed to such Defaulting Lender, be retained by Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to Agent hereunder, (ii) second, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent, (iii) third, if so determined by Agent and Borrowers, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment of any amounts owing to Borrowers or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by Borrowers or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (v) fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.

 

(c) No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver, consent or any other action the Lenders or the Required Lenders have taken or may take hereunder, provided that any waiver, amendment or modification requiring the consent of all Lenders or each directly affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

2.11. Appointment of Borrower Representative.

 

(a) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent and attorney-in-fact to request and receive Loans in the name or on behalf of such Borrower and any other Borrowers, deliver Notices of Borrowing, and Borrowing Base Certificates, give instructions with respect to the disbursement of the proceeds of the Loans, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) in the name or on behalf of any Borrower or Borrowers pursuant to this Agreement and the other Loan Documents. Agent may disburse the Loans to such bank account of Borrower Representative or a Borrower or otherwise make such Loans to a Borrower, in each case as Borrower Representative may designate or direct, without notice to any other Borrower. Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

 

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(b) Borrower Representative hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 2.11. Borrower Representative shall ensure that the disbursement of any Loans that are at any time requested by or to be remitted to or for the account of a Borrower requested on behalf of a Borrower hereunder, shall be remitted or issued to or for the account of such Borrower.

 

(c) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

 

(d) Any notice, election, representation, warranty, agreement or undertaking made or delivered by or on behalf of any Borrower by Borrower Representative shall be deemed for all purposes to have been made or delivered by such Borrower, as the case may be, and shall be binding upon and enforceable against such Borrower to the same extent as if made or delivered directly by such Borrower.

 

(e) No resignation by or termination of the appointment of Borrower Representative as agent and attorney-in-fact as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to Agent. If the Borrower Representative resigns under this Agreement, Borrowers shall be entitled to appoint a successor Borrower Representative (which shall be a Borrower and shall be reasonably acceptable to Agent as such successor). Upon the acceptance of its appointment as successor Borrower Representative hereunder, such successor Borrower Representative shall succeed to all the rights, powers and duties of the retiring Borrower Representative and the term “Borrower Representative” shall mean such successor Borrower Representative for all purposes of this Agreement and the other Loan Documents, and the resigning or terminated Borrower Representative’s appointment, powers and duties as Borrower Representative shall be thereupon terminated.

 

2.12. Joint and Several Liability.

 

(a) Joint and Several. Each Borrower hereby agrees that such Borrower is jointly and severally liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each other Borrower. Each Borrower agrees that its obligation hereunder shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.12 shall be absolute and unconditional, irrespective of, and unaffected by,

 

(i) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

 

(ii) the absence of any action to enforce this Agreement (including this Section 2.12) or any other Loan Document or the waiver or consent by Agent or any Lender with respect to any of the provisions thereof;

 

(iii) the existence, value or condition of, or failure to perfect Agent’s Lien against, any security for the Obligations or any action, or the absence of any action, by Agent in respect thereof (including the release of any such security);

 

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(iv) the insolvency of any Loan Party or Other Obligor; or

 

(v) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

 

(b) Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent to marshal assets or to proceed in respect of the Obligations against any other Loan Party or Other Obligor, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 2.12 and such waivers, Agent and Lenders would decline to enter into this Agreement.

 

(c) Benefit of Joint and Several Obligations. Each Borrower agrees that the provisions of this Section 2.12 are for the benefit of Agent and Lenders and their successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower, Agent and any Lender, the obligations of such other Borrower under the Loan Documents.

 

(d) Subordination of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor with respect to any other Loan Party or any Other Obligor until the Obligations are indefeasibly paid in full in cash. Each Borrower acknowledges and agrees that this subordination is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 2.12, and that Agent and Lenders and their successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 2.12(d).

 

(e) Election of Remedies. If Agent may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2.12. If, in the exercise of any of its rights and remedies, Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Agent and waives any claim based upon such action, even if such action by Agent shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent.

 

(f) Contribution with Respect to Guaranty Obligations.

 

(i) To the extent that any Borrower shall make a payment under this Section 2.12 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

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(ii) As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Section 2.12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

(iii) This Section 2.12(f) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 2.12(f) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.12(a). Nothing contained in this Section 2.12(f) shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

 

(iv) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of each Borrower to which such contribution and indemnification is owing.

 

(v) The rights of the indemnifying Borrowers against other Loan Parties under this Section 2.12(f) shall be exercisable upon the full and indefeasible payment of the Obligations.

 

(g) Liability Cumulative. The liability of Borrowers under this Section 2.12 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

3. INTEREST AND FEES.

 

3.1. Interest. All Loans and other monetary Obligations shall bear interest at a rate per annum equal to the LIBOR Rate plus the Applicable Margin (or, to the extent required under Section 3.6, at a rate per annum equal to the Base Rate plus the Applicable Margin), and accrued interest shall be payable (a) on the first day of each month in arrears, (b) upon a prepayment of Loan in accordance with Section 2.6 and (c) on the Maturity Date; provided, that after the occurrence and during the continuation of an Event of Default, all Loans and other monetary Obligations shall bear interest at a rate per annum equal to four (4) percentage points (4.00%) in excess of the rate otherwise applicable thereto (the Default Rate), and all such interest shall be payable on demand. Changes in the interest rate shall be effective as of the date of any change in the Base Rate or LIBOR Rate, as applicable. Subject to Section 3.6, all Loans shall constitute LIBOR Loans.

 

3.2. Fees. Borrowers shall pay Agent the fees described in the Agent Fee Letter, for the account of the Persons identified therein and on the dates set forth therein, which fees are in addition to all fees and other sums payable by Borrowers or any other Person to Agent under this Agreement or under any other Loan Document and, in each case, are not refundable once paid.

 

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3.3. Computation of Interest and Fees. All interest and fees shall be calculated daily on the outstanding monetary Obligations based on the actual number of days elapsed in a year of 360 days.

 

3.4. Loan Account; Monthly Accountings. Agent shall maintain a loan account for Borrowers reflecting all outstanding Loans, along with interest accrued thereon and such other items reflected therein (the “Loan Account”), and shall provide Borrower Representative with a monthly accounting reflecting the activity in the Loan Account. Each accounting shall be deemed correct, accurate and binding on Borrowers and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Agent), unless Borrower Representative notifies Agent in writing to the contrary within thirty (30) days after such account is rendered, describing the nature of any alleged errors or omissions. However, Agent’s failure to maintain the Loan Account or to provide any such accounting shall not affect the legality or binding nature of any of the Obligations. Interest, fees and other monetary Obligations due and owing under this Agreement may, in Agent’s discretion, be charged to the Loan Account and capitalized by adding such Obligations to the principal balance of the Loans, and will thereafter be deemed to be Loans and will bear interest at the same rate as other Loans.

 

3.5. Further Obligations; Maximum Lawful Rate. With respect to all monetary Obligations for which the interest rate is not otherwise specified herein (whether such Obligations arise hereunder or under any other Loan Document, or otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time with respect to the Loans and shall be payable upon demand by Agent. In no event shall the interest charged with respect to any Loan or any other Obligation exceed the maximum amount permitted under applicable law. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable or other amounts hereunder or under any other Loan Document (the Stated Rate) would exceed the highest rate of interest or other amount permitted under any applicable law to be charged (the Maximum Lawful Rate), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest and other amounts payable shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the extent permitted by applicable law, continue to pay interest and such other amounts at the Maximum Lawful Rate until such time as the total interest and other such amounts received is equal to the total interest and other such amounts which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable or such other amounts payable. Thereafter, the interest rate and such other amounts payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest or other such amounts received by Agent exceed the amount which it could lawfully have received had the interest and other such amounts been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Agent has received interest or other such amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other Obligations (other than interest) payable hereunder, and if no such principal or other Obligations are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

 

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3.6. Certain Provisions Regarding LIBOR Loans; Replacement of Lenders.

 

(a) Inadequate or Unfair Basis. If Agent or any Lender reasonably determines (which determination shall be binding and conclusive on Borrowers) that, by reason of circumstances affecting the interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate, then Agent or such Lender shall promptly notify Borrower Representative (and Agent, if applicable) thereof and, so long as such circumstances shall continue, (i) Agent and/or such Lender shall be under no obligation to make any LIBOR Loans and (ii) on the last day of the current calendar month, each LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

(b) Change in Law. If any change in, or the adoption of any new, law, treaty or regulation, or any change in the interpretation of any applicable law or regulation by any Governmental Authority charged with the administration thereof, would make it (or in the good faith judgment of Agent or the applicable Lender cause a substantial question as to whether it is) unlawful for Agent or such Lender to make, maintain or fund LIBOR Loans, then Agent or such Lender shall promptly notify Borrower Representative and, so long as such circumstances shall continue, (i) Agent or such Lender shall have no obligation to make any LIBOR Loan and (ii) on the last day of the current calendar month for each LIBOR Loan (or, in any event, on such earlier date as may be required by the relevant law, regulation or interpretation), such LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

(c) If any Borrower becomes obligated to pay additional amounts to any Lender pursuant to Section 2.7(b), or any Lender gives notice of the occurrence of any circumstances described in Section 2.7(b), or if any Lender becomes a Defaulting Lender, Borrowers may designate another Person engaged in the making of commercial loans in the ordinary course of business which is acceptable to Agent in its sole discretion (such other Person being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Assumption), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrowers hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

 

(d) LIBOR Discontinuation. Notwithstanding anything contained herein to the contrary, if Agent reasonably determines after the Closing Date that the LIBOR Rate has been discontinued or is no longer available as a benchmark interest rate, Agent shall select a comparable successor rate in its reasonable discretion (in consultation with the Borrowers), which successor rate shall be applied in a manner consistent with market practice taking into account the benchmark interest rates applicable to funding sources for the Lenders, and will promptly so notify each Lender.

 

4. CONDITIONS PRECEDENT.

 

4.1. Conditions to Funding Term Loans.

 

Each Lender’s obligation to fund the Term Loans under this Agreement on the Closing Date is subject to the following conditions precedent (as well as any other conditions set forth in this Agreement or any other Loan Document), all of which must be satisfied in a manner acceptable to Agent (and as applicable, pursuant to documentation which in each case is in form and substance acceptable to Agent):

 

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(a) each Loan Party Obligor shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable Persons to have duly executed and or delivered, to Agent such agreements, instruments, documents, proxies and certificates as Agent may require, including such other agreements, instruments, documents and certificates listed on the closing checklist attached hereto as Exhibit A;

 

(b) Agent shall have completed its business and legal due diligence pertaining to the Loan Parties and their respective businesses and assets, including reviews of existing field examinations, with results thereof satisfactory to Agent in its sole discretion;

 

(c) each Lender’s obligations and commitments under this Agreement shall have been approved by such Lender’s investment committee;

 

(d) after giving effect to such Loans, as well as to the payment of all trade payables older than sixty days past due and the consummation of all transactions contemplated hereby to occur on the Closing Date, closing costs and any book overdraft, Excess Availability shall be no less than $35,000,000;

 

(e) since December 31, 2017, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party;

 

(f) Borrowers shall have paid to Agent all fees due on the date hereof, and shall have paid or reimbursed Agent for all of Agent’s costs, charges and expenses incurred through the Closing Date;

 

(g) each of the representations and warranties set forth in this Agreement and in the other Loan Documents shall be true and correct in all respects as of the Closing Date (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), both before and after giving effect to the borrowing of the Term Loans and any application of the proceeds thereof on or about the Closing Date; and

 

(h) as of the Closing Date, both before and after giving effect to the borrowing of the Term Loans and any application of the proceeds thereof on or about the Closing Date, no Default or Event of Default shall have occurred and be continuing.

 

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5. COLLATERAL.

 

5.1. Grant of Security Interest. To secure the full payment and performance of all of the Obligations, each Loan Party Obligor hereby assigns to Agent and grants to Agent, for itself and on behalf of the Lenders, a continuing security interest in all property of each Loan Party Obligor, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including: (a) all Accounts and all Goods whose sale, lease or other disposition by any Loan Party Obligor has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, any Loan Party Obligor; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists,tax refund claims, claims against carriers and shippers, guaranty claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory (whether or not Eligible Inventory); (d) all Goods (other than Inventory), including Equipment, vehicles, and Fixtures; (e) all Investment Property, including all rights, privileges, authority, and powers of each Loan Party Obligor as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member, equity holder or shareholder, as applicable, of each Issuer and any rights related to any Loan Party Obligors’ capital account within the Issuer in respect of Investment Property; (f) all Deposit Accounts, bank accounts, deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims, including those listed in Section 2 of the Perfection Certificate (if any); (i) all Supporting Obligations; (j) all life insurance policies; (k) all leases; (l) any other property of any Loan Party Obligor now or hereafter in the possession, custody or control of Agent or any agent or any parent, Affiliate or Subsidiary of Agent, any Lender or any Participant with Lender in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (m) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property (including hazard, flood and credit insurance), and all of each Loan Party Obligor’s books and records relating to any of the foregoing and to any Loan Party’s business.

 

5.2. Possessory Collateral. Promptly, but in any event no later than five (5) Business Days after any Loan Party Obligor’s receipt of any portion of the Collateral evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper and any Investment Property consisting of certificated securities, such Loan Party Obligor shall deliver the original thereof to Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Agent (in form and substance acceptable to Agent). If an endorsement or assignment of any such items shall not be made for any reason, Agent is hereby irrevocably authorized, as attorney and agent-in-fact (coupled with an interest) for each Loan Party Obligor, to endorse or assign the same on such Loan Party Obligor’s behalf. The requirements of this Section 5.2 are subject to Section 5.5.

 

5.3. Further Assurances. Each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as may from time to time be necessary or desirable or as Agent may from time to time require in order to (a) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (b) establish, create, preserve, protect and perfect a Requisite Priority Lien (subject only to Permitted Liens) in favor of Agent in all the Collateral (wherever located) from time to time owned by the Loan Party Obligors and in all capital stock and other equity from time to time issued by the Loan Parties (other than Holdings) (including appraisals of real property in compliance with FIRREA), (c) cause Holdings and each Subsidiary to guaranty all of the Obligations, all pursuant to documentation that is in form and substance reasonably satisfactory to Agent and (d) facilitate the collection of the Collateral. Without limiting the foregoing, each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) to Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Agent, as Agent may request from time to time to perfect, protect and maintain Agent’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.

 

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5.4. UCC Financing Statements. Each Loan Party Obligor authorizes Agent to file, transmit or communicate, as applicable, from time to time, UCC Financing Statements, along with amendments and modifications thereto, in all filing offices selected by Agent, listing such Loan Party Obligor as the Debtor and Agent as the Secured Party, and describing the collateral covered thereby in such manner as Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor,” or words of similar effect, in each case without such Loan Party Obligor’s signature. Each Loan Party Obligor also hereby ratifies its authorization for Agent to have filed, in any filing office, any Financing Statements filed prior to the date hereof.

 

5.5. ABL Intercreditor Agreement. In accordance with the terms of the ABL Intercreditor Agreement, all Collateral delivered to ABL Agent shall be held by the ABL Agent as gratuitous bailee for Agent and the Lenders solely for the purpose of perfecting the security interest granted under this Agreement. Notwithstanding anything herein to the contrary, to the extent any Loan Party Obligor is required hereunder to deliver Collateral to Agent and is unable to do so as a result of having concurrently or previously delivered such Collateral to ABL Agent in accordance with the terms of the ABL Loan Documents, such Loan Party Obligor’s obligations hereunder with respect to such delivery shall be deemed satisfied by such delivery to ABL Agent, acting as gratuitous bailee of Agent and the Lenders.

 

6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS.

 

6.1. Lock Boxes and Blocked Accounts. Each Loan Party Obligor hereby represents and warrants that all Deposit Accounts and all other depositary and other accounts maintained by each Loan Party Obligor as of the Closing Date are described in Section 3 of the Perfection Certificate, which description includes for each such account the name of the Loan Party Obligor maintaining the account, the name of the financial institution at which the account is maintained, the account number and the purpose of the account. After the Closing Date, no Loan Party Obligor shall open any new Deposit Account or any other depositary or other account without the prior written consent of Agent and without updating Section 3 of the Perfection Certificate to reflect such Deposit Account or other account. No Deposit Account or other account of any Loan Party Obligor shall at any time constitute a Restricted Account other than accounts expressly indicated on Section 3 of the Perfection Certificate as being Restricted Accounts (and each Loan Party Obligor hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of Restricted Account to qualify as a Restricted Account). Each Loan Party Obligor will, at its expense, establish (and revise from time to time as Agent may require) procedures acceptable to Agent, in Agent’s sole discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party Obligor’s Accounts and other Collateral (Collections), which shall include (a) directing all Account Debtors to send all Account proceeds directly to a post office box either in the name of such Loan Party Obligor (and subject to a Control Agreement) or, at Agent’s option, in the name of Agent (a Lock Box) and (b) depositing all Collections received by such Loan Party Obligor into one or more bank accounts maintained in the name of such Loan Party Obligor (and subject to a Control Agreement) or, at Agent’s option, in the name of Agent (each, a Blocked Account), and/or (c) a combination of the foregoing. Each Loan Party Obligor agrees to execute, and to cause its depository banks and other account holders to execute, Control Agreements with respect to such Lock Boxes and Blocked Accounts (and all other accounts that do not constitute Restricted Accounts) and other documentation as Agent shall require from time to time in connection with the foregoing, all in form and substance acceptable to Agent, and in any event such arrangements and documents must be in place prior to any such account being opened with respect to such account, in each case excluding Restricted Accounts.

 

6.2. Application of Payments. All amounts paid to or received by Agent in respect of monetary Obligations, from whatever source (whether from any Borrower or any other Loan Party Obligor pursuant to such other Loan Party Obligor’s guaranty of the Obligations, any realization upon any Collateral or otherwise) shall be applied by Agent to the Obligations as follows:

 

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(i) FIRST, to reimburse Agent for all out-of-pocket costs and expenses, and all indemnified losses, incurred by Agent which are reimbursable to Agent in accordance with this Agreement or any of the other Loan Documents;

 

(ii) SECOND, to any accrued but unpaid interest on any Protective Advances;

 

(iii) THIRD, to the outstanding principal of any Protective Advances;

 

(iv) FOURTH, to any accrued but unpaid fees owing to Agent and Lenders under this Agreement and/or any other Loan Documents;

 

(v) FIFTH, to any unpaid accrued interest on the Obligations;

 

(vi) SIXTH, to the outstanding principal of the Term Loans; and

 

(vii) SEVENTH, to the payment of any other outstanding Obligations; and after payment in full in cash of all of the outstanding monetary Obligations, any further amounts paid to or received by Agent in respect of the Obligations (so long as no monetary Obligations are outstanding) shall be paid over to Borrowers or such other Person(s) as may be legally entitled thereto.

 

6.3. Notification; Verification. Agent or its designee may, from time to time: (a) whether or not a Default or Event of Default has occurred, verify directly with the Account Debtors of the Loan Party Obligors (or by any manner and through any medium Agent considers advisable) the validity, amount and other matters relating to the Accounts and Chattel Paper of the Loan Party Obligors, by means of mail, telephone or otherwise, either in the name of the applicable Loan Party Obligor or Agent or such other name as Agent may choose; (b) whether or not a Default or Event of Default has occurred, notify Account Debtors of the Loan Party Obligors that Agent has a security interest in the Accounts of the Loan Party Obligors and direct such Account Debtors to make payment thereof directly to Agent; each such notification to be sent on the letterhead of such Loan Party Obligor and substantially in the form of Exhibit B annexed hereto; and (c) following the occurrence and during the continuance of a Default or Event of Default, demand, collect or enforce payment of any Accounts and Chattel Paper (but without any duty to do so) and, in furtherance of the foregoing, each Loan Party Obligor hereby authorizes Account Debtors to make payments directly to Agent and to rely on notice from Agent without further inquiry. Agent may on behalf of each Loan Party Obligor endorse all items of payment received by Agent that are payable to such Loan Party Obligor for the purposes described above.

 

6.4. Power of Attorney.

 

Without limiting any of Agent’s and the other Lenders’ other rights under this Agreement or any other Loan Document, each Loan Party Obligor hereby grants to Agent an irrevocable power of attorney, coupled with an interest, authorizing and permitting Agent (acting through any of its officers, employees, attorneys or agents), at Agent’s option but without obligation, with or without notice to such Loan Party Obligor, and at each Loan Party Obligor’s expense, to do any or all of the following, in such Loan Party Obligor’s name or otherwise:

 

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(a) at any time, whether or not an Event of Default has occurred or is continuing, (i) execute on behalf of such Loan Party Obligor any documents that Agent may, in its sole discretion, deem advisable in order to perfect, protect and maintain Agent’s security interests, and priority thereof, in the Collateral and to fully consummate all the transactions contemplated by this Agreement and the other Loan Documents (including such Financing Statements and continuation Financing Statements, and amendments or other modifications thereto, as Agent shall deem necessary or appropriate) and to notify Account Debtors of the Loan Party Obligors in the manner contemplated by Section 6.3, (ii) endorse such Loan Party Obligor’s name on all checks and other forms of remittances received by Agent, (iii) pay any sums required on account of such Loan Party Obligor’s taxes or to secure the release of any Liens therefor, (iv) pay any amounts necessary to obtain, or maintain in effect, any of the insurance described in Section 7.14, (v) receive and otherwise take control in any manner of any cash or non-cash items of payment or Proceeds of Collateral, (vi) receive, open and dispose of all mail addressed to such Loan Party Obligor at any post office box or lockbox maintained by Agent for such Loan Party Obligor or at any other business premises of Agent and (vii) endorse or assign to Agent on such Loan Party Obligor’s behalf any portion of Collateral evidenced by an agreement, Instrument or Document if an endorsement or assignment of any such items is not made by such Loan Party Obligor pursuant to Section 5.2; and

 

(b) at any time, after the occurrence and during the continuance of an Event of Default, (i) execute on behalf of such Loan Party Obligor any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real or personal property which is part of the Collateral or in which Agent has an interest, (ii) execute on behalf of such Loan Party Obligor any invoices relating to any Accounts, any draft against any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of mechanic’s, materialman’s or other Lien, (iii) execute on behalf of such Loan Party Obligor any notice to any Account Debtor, (iv) pay, contest or settle any Lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same, (v) grant extensions of time to pay, compromise claims relating to, and settle Accounts, Chattel Paper and General Intangibles for less than face value and execute all releases and other documents in connection therewith, (vi) settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor, (vii) instruct any third party having custody or control of any Collateral or books or records belonging to, or relating to, such Loan Party Obligor to give Agent the same rights of access and other rights with respect thereto as Agent has under this Agreement or any other Loan Document, (viii) change the address for delivery of such Loan Party Obligor’s mail, (ix) vote any right or interest with respect to any Investment Property, and (x) instruct any Account Debtor to make all payments due to any Loan Party Obligor directly to Agent.

 

Any and all sums paid, and any and all costs, expenses, liabilities, obligations and reasonable attorneys’ fees (internal and external counsel) of Agent with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Each Loan Party Obligor agrees that Agent’s rights under the foregoing power of attorney and any of Agent’s other rights under this Agreement or the other Loan Documents shall not be construed to indicate that Agent or any Lender is in control of the business, management or properties of any Loan Party Obligor.

 

6.5. Disputes. Each Loan Party Obligor shall promptly notify Agent of all disputes or claims relating to its Accounts and Chattel Paper. Each Loan Party Obligor agrees that it will not, without Agent’s prior written consent, compromise or settle any of its Accounts or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts or Chattel Paper; except (unless otherwise directed by Agent during the existence of a Default or an Event of Default) such Loan Party Obligor may take any of such actions in the Ordinary Course of Business consistent with past practices, provided that Borrower Representative promptly reports the same to Agent.

 

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6.6. Invoices. At Agent’s request, each Loan Party Obligor will cause all invoices and statements that it sends to Account Debtors or other third parties to be marked and authenticated, in a manner reasonably satisfactory to Agent, to reflect Agent’s security interest therein and payment instructions (including, but not limited to, in a manner to meet the requirements of Section 9-404(a)(2) of the UCC).

 

7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS.

 

To induce Agent and the Lenders to enter into this Agreement, each Loan Party Obligor represents, warrants and covenants as follows (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof and be deemed remade as of each date on which any Loan is made (except to the extent any such representation or warranty expressly relates only to any earlier or specified date, in which case such representation or warranty will be made as of such earlier or specified date) and (ii) shall not be affected by any knowledge of, or any investigation by, Agent or any Lender and (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date):

 

7.1. Existence and Authority. Each Loan Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdiction is identified in Section 1(a) of the Perfection Certificate) and is qualified to do business in each jurisdiction in which the operation of its business requires that it be qualified (which each such jurisdiction is identified in Section 1(a) of the Perfection Certificate) or, if such Loan Party is not so qualified, such Loan Party may cure any such failure without losing any of its rights, incurring any liens or material penalties, or otherwise affecting Agent’s rights. Each Loan Party has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby. The execution, delivery and performance by each Loan Party Obligor of this Agreement and all of the other Loan Documents to which such Loan Party Obligor is a party have been duly and validly authorized, do not violate such Loan Party Obligor’s Governing Documents or any applicable law or any material agreement or instrument or any court order which is binding upon any Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon any Loan Party or its property, and do not require the consent of any Person. No Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of any of the Loan Documents. This Agreement and each of the other Loan Documents have been duly executed and delivered by, and are enforceable against, each of the Loan Party Obligors who have signed them, in accordance with their respective terms. Section 1(f) of the Perfection Certificate sets forth the ownership of each Borrower and its Subsidiaries and, as of the Second Amendment Effective Date, Holdings.

 

7.2. Names; Trade Names and Styles. The name of each Loan Party Obligor set forth on Section 1(b) of the Perfection Certificate is its correct and complete legal name as of the date hereof, and except as stated in Section 1(b) of the Perfection Certificate, and no Loan Party Obligor has used any other name at any time in the past five (5) years, or at any time will use any other name, in any tax filing made in any jurisdiction. Listed in Section 1(b) of the Perfection Certificate are all prior names used by each Loan Party Obligor at any time in the past five (5) years and all of the present and prior trade names used by any Loan Party Obligor at any time in the past five (5) years. Borrower Representative shall give Agent at least thirty (30) days’ prior written notice (and will deliver an updated Section 1(b) of the Perfection Certificate to reflect the same) before it or any other Loan Party Obligor changes its legal name or does business under any other name.

 

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7.3. Title to Collateral; Third Party Locations; Permitted Liens. Each Loan Party Obligor has, and at all times will continue to have, good and marketable title to all of the Collateral. The Collateral now is, and at all times will remain, free and clear of any and all Liens, except for Permitted Liens. Agent now has, and will at all times continue to have, a Requisite Priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and each Loan Party Obligor will at all times defend Agent and the Collateral against all claims of others. None of the Collateral which is Equipment is, or will at any time, be affixed to any real property in such a manner, or with such intent, as to become a fixture. Except for leases or subleases as to which Borrowers have delivered to Agent a landlord’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion; provided, that such waiver may be conditioned upon Agent establishing a rent or other similar Reserve satisfactory to Agent in its sole discretion), no Loan Party Obligor is or will be a lessee or sublessee under any real property lease or sublease. Except for warehouses as to which Borrowers have delivered to Agent a warehouseman’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion; provided, that such waiver may be conditioned upon Agent establishing a rent or other similar Reserve satisfactory to Agent in its sole discretion), no Loan Party Obligor is or will at any time be a bailor of any Goods at any warehouse or otherwise. Prior to causing or permitting any Collateral to at any time be located upon premises in which any third party (including any landlord, warehouseman, or otherwise) has an interest, Borrower Representative shall notify Agent and the applicable Loan Party Obligor shall cause each such third party to execute and deliver to Agent, in form and substance reasonably acceptable to Agent, such waivers, collateral access agreements, and subordinations as Agent shall specify, so as to, among other things, ensure that Agent’s rights in the Collateral are, and will at all times continue to be, superior to the rights of any such third party and that Agent has access to such Collateral. Each applicable Loan Party Obligor will keep at all times in full force and effect, and will comply at all times with all the terms of, any lease of real property where any of the Collateral now or in the future may be located.

 

7.4. Accounts and Chattel Paper. As of each date reported by Borrowers, all Accounts which any Borrower has then reported to Agent as then being Eligible Accounts comply in all respects with the criteria for eligibility set forth in the respective definitions of Eligible Billed Accounts, Eligible Billed Aged Accounts, Eligible Billed Cross-Aged Accounts, Eligible Unbilled Accounts, and Eligible Uninvoiced Accounts, as applicable. All such Accounts, and all Chattel Paper owned by any Loan Party Obligor, are genuine and in all respects what they purport to be, arise out of a completed, bona fide and unconditional and non-contingent sale and delivery of goods or rendition of services by a Borrower in the Ordinary Course of Business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto, each Account Debtor thereunder had the capacity to contract at the time any contract or other document giving rise to such Accounts and Chattel Paper were executed, and the transactions giving rise to such Accounts and Chattel Paper comply with all applicable laws and governmental rules and regulations.

 

7.5. Electronic Chattel Paper. To the extent that any Loan Party Obligor obtains or maintains any Electronic Chattel Paper, such Loan Party Obligor shall at all times create, store and assign the record or records comprising the Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies Agent as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Agent or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Agent, (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

 

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7.6. Capitalization; Investment Property.

 

(a) No Loan Party, directly or indirectly, owns, or shall at any time own, any capital stock or other equity interests of any other Person except as set forth in Sections 1(f) and 1(g) of the Perfection Certificate, which Sections list all Investment Property owned by each Loan Party Obligor.

 

(b) None of the Pledged Equity has been issued or otherwise transferred in violation of the Securities Act, or other applicable laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity pledged by each Loan Party Obligor hereunder constitutes all of the issued and outstanding equity interests of each Issuer owned by such Loan Party Obligor.

 

(c) All of the Pledged Equity has been duly and validly issued and is fully paid and non-assessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. There are no outstanding options, warrants or similar agreements, documents, or instruments with respect to any of the Pledged Equity.

 

(d) Each Loan Party Obligor has caused each Issuer to amend or otherwise modify its Governing Documents, books, records, and related agreements, documents and instruments, as applicable, to reflect the rights and interests of Agent hereunder, and to the extent required to enable and empower Agent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Equity and other Investment Property.

 

(e) Each Loan Party Obligor will take any and all actions required or requested by Agent, from time to time, to (i) cause Agent to obtain control of any Investment Property in a manner reasonably acceptable to Agent and (ii) obtain from any Issuers and such other Persons as Agent shall specify, for the benefit of Agent, written confirmation of Agent’s control over such Investment Property and take such other actions as Agent may request to perfect Agent’s security interest in any Investment Property. For purposes of this Section 7.6, Agent shall have control of Investment Property if (A) pursuant to Section 5.2, such Investment Property consists of certificated securities and the applicable Loan Party Obligor delivers such certificated securities to Agent (with all appropriate endorsements), (B) such Investment Property consists of uncertificated securities and either (x) the applicable Loan Party Obligor delivers such uncertificated securities to Agent or (y) the Issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with instructions originated by Agent without further consent by the applicable Loan Party Obligor and (C) such Investment Property consists of security entitlements and either (x) Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with entitlement orders originated by Agent without further consent by the applicable Loan Party Obligor. Each Loan Party Obligor that is a limited liability company or a partnership hereby represents and warrants that it has not, and at no time will, elect pursuant to the provisions of Section 8-103 of the UCC to provide that its equity interests are securities governed by Article 8 of the UCC. The requirements of this Section 7.6(e) are subject to Section 5.5.

 

(f) No Loan Party owns, or has any present intention of acquiring, any margin security or any margin stock within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called margin securityand margin stock). None of the proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any margin security or margin stock or for any other purpose which might constitute the transactions contemplated hereby a purpose creditwithin the meaning of said Regulations T, U or X, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Exchange Act, or any rules or regulations promulgated under such statutes.

 

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(g) No Loan Party Obligor shall vote to enable, or take any other action to cause or to permit, any Issuer to issue any equity interests of any nature, or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any equity interests of any nature of any Issuer.

 

(h) No Loan Party Obligor shall take, or fail to take, any action that would in any manner impair the value or the enforceability of Agent’s Lien on any of the Investment Property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document with respect to any of the Investment Property.

 

(i) In the case of any Loan Party Obligor which is an Issuer, such Issuer agrees that the terms of Section 11.3(g)(iii) shall apply to such Loan Party Obligor with respect to all actions that may be required of it pursuant to such Section 11.3(g)(iii) regarding the Investment Property issued by it.

 

(j) Each Loan Party Obligor has made all capital contributions heretofore required to be made to the respective Issuer in respect of any Investment Property constituting limited liability company interests and no additional capital contributions are required to be made in respect of the respective limited liability company interests.

 

7.7. Commercial Tort Claims. No Loan Party Obligor has any Commercial Tort Claims pending other than those listed in Section 2 of the Perfection Certificate, and each Loan Party Obligor shall promptly (but in any case, no later than five (5) Business Days thereafter) notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party. Such notice shall constitute such Loan Party Obligor’s authorization to amend such Section 2 to add such Commercial Tort Claim and shall automatically be deemed to amend such Section 2 to include such Commercial Tort Claim.

 

7.8. Jurisdiction of Organization; Location of Collateral. Sections 1(c) and 1(d) of the Perfection Certificate set forth (a) each place of business of each Loan Party Obligor (including its chief executive office), (b) all locations where all Inventory, Equipment, and other Collateral owned by each Loan Party Obligor is kept and (c) whether each such Collateral location and place of business (including each Loan Party Obligor’s chief executive office) is owned by a Loan Party or leased (and if leased, specifies the complete name and notice address of each lessor). No Collateral is located outside the United States or in the possession of any lessor, bailee, warehouseman or consignee, except as expressly indicated in Sections 1(c) and 1(d) of the Perfection Certificate. Each Loan Party Obligor will give Agent at least thirty (30) days’ prior written notice before changing its jurisdiction of organization, opening any additional place of business, changing its chief executive office or the location of its books and records, or moving any of the Collateral to a location other than one of the locations set forth in Sections 1(c) and 1(d) of the Perfection Certificate, and will execute and deliver all Financing Statements, landlord waivers, collateral access agreements, mortgages, and all other agreements, instruments and documents which Agent shall require in connection therewith prior to making such change, all in form and substance reasonably satisfactory to Agent. Without the prior written consent of Agent, no Loan Party Obligor will at any time (i) change its jurisdiction of organization or (ii) allow any Collateral to be located outside of the continental United States of America.

 

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7.9. Financial Statements and Reports; Solvency.

 

(a) All financial statements delivered to Agent and Lenders by or on behalf of any Loan Party have been, and at all times will be, prepared in conformity with GAAP in all material respects (except to the extent that equity expenses are not reflected in interim financial statements) and completely and fairly reflect the financial condition of each Loan Party covered thereby, at the times and for the periods therein stated, in all material respects.

 

(b) As of the date hereof (after giving effect to the Loans to be made on the date hereof, and the consummation of the transactions contemplated hereby), and as of each other day that any Loan is made (after giving effect thereof), (i) the fair saleable value of all of the assets and properties of each Loan Party, individually, exceeds the aggregate liabilities and Indebtedness of each such Loan Party (including contingent liabilities), (ii) each Loan Party, individually, is solvent and able to pay its debts as they come due, (iii) each Loan Party, individually, has sufficient capital to carry on its business as now conducted and as proposed to be conducted, (iv) no Loan Party is contemplating either the liquidation of all or any substantial portion of its assets or property, or the filing of any petition under any state, federal, or other bankruptcy or insolvency law and (v) no Loan Party has knowledge of any Person contemplating the filing of any such petition against any Loan Party.

 

7.10. Tax Returns and Payments; Pension Contributions. Each Loan Party has timely filed all tax returns and reports required by applicable law, has timely paid all applicable Taxes, assessments, deposits and contributions owing by such Loan Party and will timely pay all such items in the future as they became due and payable. Each Loan Party may, however, defer payment of any contested taxes; provided, that such Loan Party (a) in good faith contests its obligation to pay such Taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Agent in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to keep the contested taxes from becoming a Lien upon any of the Collateral and (d) maintains adequate reserves therefor in conformity with GAAP. No Loan Party is aware of any claims or adjustments proposed for any prior tax years that could result in additional taxes becoming due and payable by any Loan Party. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable laws. Each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of each Loan Party, nothing has occurred that would prevent or cause the loss of such tax-qualified status. There are no pending or, to the best knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000 of any Loan Party. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in liabilities individually or in the aggregate of any Loan Party in excess of $100,000. No ERISA Event has occurred, and no Loan Party is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, in each case that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000. Each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, in each case except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is sixty percent (60%) or higher and no Loan Party knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below sixty percent (60%) as of the most recent valuation date. No Loan Party or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Loan Party or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Pension Plan has been terminated by the plan administrator thereof or by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000.

 

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7.11. Compliance with Laws; Intellectual Property; Licenses.

 

(a) Each Loan Party has complied, and will continue at all times to comply, in all material respects with all provisions of all applicable laws and regulations, including those relating to the ownership of real or personal property, the conduct and licensing of each Loan Party’s business, the payment and withholding of Taxes, ERISA and other employee matters, and safety and environmental matters.

 

(b) No Loan Party has received written notice of default or violation, or is in default or violation, with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, local, municipal or other Governmental Authority relating to any aspect of any Loan Party’s business, affairs, properties or assets. No Loan Party has received written notice of or been charged with, or is, to the knowledge of any Loan Party, under investigation with respect to, any violation in any material respect of any provision of any applicable law.

 

(c) No Loan Party Obligor owns any Intellectual Property, except as set forth in Section 4 of the Perfection Certificate. Except as set forth in Section 4 of the Perfection Certificate, none of the Intellectual Property owned by any Loan Party Obligor is the subject of any licensing or franchise agreement pursuant to which such Loan Party Obligor is the licensor or franchisor. Each Loan Party Obligor shall promptly (but in any event within thirty (30) days thereafter) notify Agent in writing of any additional Intellectual Property rights acquired or arising after the Closing Date and shall submit to Agent a supplement to Section 4 of the Perfection Certificate to reflect such additional rights; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party Obligor shall execute a separate security agreement granting Agent a security interest in such Intellectual Property (whether owned on the Closing Date or thereafter), in form and substance reasonably acceptable to Agent and suitable for registering such security interest in such Intellectual Property with the United States Patent and Trademark Office and/or United States Copyright Office, as applicable; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party owns or has, and will at all times continue to own or have, the valid right to use all material patents, trademarks, copyrights, software, computer programs, equipment designs, network designs, equipment configurations, technology and other Intellectual Property used, marketed and sold in such Loan Party’s business, and each Loan Party is in compliance, and will continue at all times to comply, in all material respects with all licenses, user agreements and other such agreements regarding the use of Intellectual Property. No Loan Party has any knowledge that, or has received any notice claiming that, any of such Intellectual Property infringes upon or violates the rights of any other Person.

 

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(d) Each Loan Party has and will continue at all times to have, all federal, state, local and other licenses and permits required to be maintained in connection with such Loan Party’s business operations, and all such licenses and permits are valid and in full force and effect. Each Loan Party has, and will continue at all times to have, complied with the requirements of such licenses and permits in all material respects, and has received no written notice of any pending or threatened proceedings for the suspension, termination, revocation or limitation thereof. No Loan Party is aware of any facts or conditions that could reasonably be expected to cause or permit any of such licenses or permits to be voided, revoked or withdrawn.

 

7.12. Litigation. Section 1(e) of the Perfection Certificate discloses all claims, proceedings, litigation or investigations pending or (to the best of each Loan Party Obligor’s knowledge) threatened against any Loan Party as of the Second Amendment Effective Date. There is no claim, suit, litigation, proceeding or investigation pending or (to the best of each Loan Party Obligor’s knowledge) threatened by or against or affecting any Loan Party in any court or before any Governmental Authority (or any basis therefor known to any Loan Party Obligor) which may result, either separately or in the aggregate, in liability in excess of $100,000 for the Loan Parties, in any Material Adverse Effect, or in any material impairment in the ability of any Loan Party to carry on its business in substantially the same manner as it is now being conducted.

 

7.13. Use of Proceeds. All proceeds of all Loans shall be used by Borrowers solely (a) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby, (b) for Borrowers’ working capital purposes and (c) for such other purposes as specifically permitted pursuant to the terms of this Agreement. All proceeds of all Loans will be used solely for lawful business purposes.

 

7.14. Insurance.

 

(a) Each Loan Party will at all times carry property, liability and other insurance, with insurers reasonably acceptable to Agent, in such form and amounts, and with such deductibles and other provisions, as Agent shall reasonably require, but in any event, in such amounts and against such risks as is usually carried by companies engaged in similar business and owning similar properties in the same general areas in which such Loan Party operates, and each Borrower will provide Agent with evidence reasonably satisfactory to Agent that such insurance is, at all times, in full force and effect. A true and complete listing of such insurance as of the Second Amendment Effective Date, including issuers, coverages and deductibles, is set forth in Section 5 of the Perfection Certificate. Each property insurance policy shall name Agent as lender loss payee and shall contain a lender’s loss payable endorsement, each liability insurance policy shall name Agent as an additional insured, and each business interruption insurance policy shall be collaterally assigned to Agent, all in form and substance reasonably satisfactory to Agent. All policies of insurance shall provide that they may not be cancelled or changed without at least thirty (30) days’ (or, with respect to nonpayment of premiums, ten (10) days’) prior written notice to Agent, and shall otherwise be in form and substance reasonably satisfactory to Agent. Borrower Representative shall advise Agent promptly of any policy cancellation, non-renewal, reduction, or material amendment with respect to any insurance policies maintained by any Loan Party or any receipt by any Loan Party of any notice from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any of such policies, and Borrower Representative shall promptly deliver to Agent copies of all notices and related documentation received by any Loan Party in connection with the same.

 

(b) Borrower Representative shall deliver to Agent no later than fifteen (15) days prior to the expiration of any then current insurance policies, insurance certificates evidencing renewal of all such insurance policies required by this Section 7.14. Borrower Representative shall deliver to Agent, upon Agent’s request, certificates evidencing such insurance coverage in such form as Agent shall specify.

 

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(c) IF ANY LOAN PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO AGENT) OR TO PAY ANY PREMIUM RELATING THERETO, THEN AGENT, WITHOUT WAIVING OR RELEASING ANY OBLIGATION OR DEFAULT BY ANY BORROWER HEREUNDER, MAY (BUT SHALL BE UNDER NO OBLIGATION TO) OBTAIN AND MAINTAIN SUCH POLICIES OF INSURANCE AND PAY SUCH PREMIUMS AND TAKE SUCH OTHER ACTIONS WITH RESPECT THERETO AS AGENT DEEMS ADVISABLE UPON NOTICE TO BORROWER REPRESENTATIVE. SUCH INSURANCE, IF OBTAINED BY AGENT, MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S INTERESTS OR PAY ANY CLAIM MADE BY OR AGAINST ANY LOAN PARTY WITH RESPECT TO THE COLLATERAL. SUCH INSURANCE MAY BE MORE EXPENSIVE THAN THE COST OF INSURANCE ANY LOAN PARTY MAY BE ABLE TO OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY UPON THE APPLICABLE LOAN PARTY PROVIDING EVIDENCE THAT IT HAS OBTAINED THE INSURANCE AS REQUIRED ABOVE. ALL SUMS DISBURSED BY AGENT IN CONNECTION WITH ANY SUCH ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGES RELATING THERETO AND REASONABLE INTERNAL AND EXTERNAL ATTORNEY COSTS, SHALL CONSTITUTE LOANS HEREUNDER, SHALL BE PAYABLE ON DEMAND BY BORROWERS TO AGENT AND, UNTIL PAID, SHALL BEAR INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO LOANS HEREUNDER.

 

7.15. Financial, Collateral and Other Reporting / Notices. Each Loan Party has kept, and will at all times keep, adequate records and books of account with respect to its business activities and the Collateral in which proper entries are made in accordance with GAAP reflecting all its financial transactions (except for the amortization of liquidated damages which is presented in sales and marketing for internal purposes and to the extent that equity expenses are not reflected in interim financial statements). Each Loan Party Obligor will cause to be prepared and furnished to Agent, in each case in a form and in such detail as is acceptable to Agent the following items:

 

(a) Annual Financial Statements. Not later than one hundred and eighty (180) days after the close of Fiscal Year 2018 and one hundred twenty (120) days after the close of each subsequent Fiscal Year, unqualified, audited financial statements of each Loan Party as of the end of such Fiscal Year, including balance sheet, income statement, and statement of cash flow for such Fiscal Year, in each case on a consolidated and consolidating basis, certified by a firm of independent certified public accountants of recognized standing selected by Borrowers but acceptable to Agent, together with a copy of any management letter issued in connection therewith. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants and (ii) any Default or Event of Default is then in existence;

 

(b) Interim Financial Statements. Not later than thirty (30) days after the end of each month hereafter, including the last month of each Fiscal Year, unaudited interim financial statements of each Loan Party as of the end of such month and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such month and the then-elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year and the corresponding figures from the budget for the Fiscal Year covered by such financial statements, in each case on a consolidated and consolidating basis, certified by the principal financial officer of Borrower Representative as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations (including management discussion and analysis of such results) of each Loan Party for such month and period subject only to changes from ordinary course year-end audit adjustments and except that such statements need not contain footnotes. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants, and (ii) any Default or Event of Default is then in existence;

 

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(c) Borrowing Base / Collateral Reports / Insurance Certificates / Perfection Certificates / Other Items. The items described on Annex I hereto by the respective dates set forth therein.

 

(d) Projections, Etc. Not later than ten (10) days prior to the end of each Fiscal Year, monthly business projections for the following Fiscal Year for the Loan Parties on a consolidated and consolidating basis, which projections shall include for each such period Borrowing Base and ABL Borrowing Base projections, profit and loss projections, balance sheet projections, income statement projections and cash flow projections;

 

(e) Shareholder Reports, Etc. Promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which each Loan Party has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which any Loan Party files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or any national securities exchange;

 

(f) ERISA Reports. Copies of any annual report to be filed pursuant to the requirements of ERISA in connection with each Plan subject thereto promptly upon request by Agent and in addition, each Loan Party shall promptly notify Agent upon having knowledge of any ERISA Event; and

 

(g) Tax Returns. Each federal and state income tax return filed by any Loan Party or Other Obligor promptly (but in no event later than ten (10) days following the filing of such return), together with such supporting documentation as is supplied to the applicable tax authority with such return and proof of payment of any amounts owing with respect to such return.

 

(h) Notification of Certain Changes. Promptly (and in no case later than the earlier of (i) three (3) Business Days after the occurrence of any of the following and (ii) such other date that such information is required to be delivered pursuant to this Agreement or any other Loan Document) notification to Agent in writing of (A) the occurrence of any Default or Event of Default, (B) the occurrence of any event that has had, or may have, a Material Adverse Effect, (C) any change in any Loan Party’s officers or directors, (D) any investigation, action, suit, proceeding or claim (or any material development with respect to any existing investigation, action, suit, proceeding or claim) relating to any Loan Party, any officer or director of a Loan Party (in his or her capacity as an officer or director of a Loan Party), the Collateral or which may result in a Material Adverse Effect, (E) any material loss or damage to the Collateral, (F) any event or the existence of any circumstance that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, any Default, or any Event of Default, or which would make any representation or warranty previously made by any Loan Party to Agent untrue in any material respect or constitute a material breach if such representation or warranty was then being made, (G) any actual or alleged breaches of any Material Contract or termination or threat to terminate any Material Contract or any material amendment to or modification of a Material Contract, or the execution of any new Material Contract by any Loan Party and (H) any change in any Loan Party’s certified independent accountant. In the event of each such notice under this Section 7.15(h), Borrower Representative shall give notice to Agent of the action or actions that each Loan Party has taken, is taking, or proposes to take with respect to the event or events giving rise to such notice obligation.

 

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(i) Amendments to ABL Loan Documents. Promptly following the occurrence of such event, any amendment, waiver, supplement, or other modification of any ABL Loan Document (accompanied by a true, correct and complete copy thereof).

 

(j) Other Information. Promptly upon request, such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or each Loan Party’s and each Other Obligor’s business or financial condition or results of operations;

 

(k) Notices Under Material Contracts. Promptly upon any delivery to Loan Party or any of their Subsidiaries of any material notices under any Material Contract (including any notice of default or termination or intent to terminate), a written statement describing such event, with copies of such amendments, notices or new contracts (if applicable), delivered to Agent, and a description of any actions being taken pursuant thereto; and

 

(l) Amendments to Third Lien Loan Documents. Promptly following the occurrence of such event, any amendment, waiver, supplement, or modification of any Third Lien Loan Document (accompanied by a true, correct and complete copy thereof); and

 

(m) Notice Under Merger Agreement. Promptly upon any delivery to Loan Party or any of their Subsidiaries of any material notices under the Merger Agreement, a written statement describing such event, with copies of such notices or documents (if applicable), delivered to Agent, and a description of any actions being taken pursuant thereto.

 

7.16. Litigation Cooperation. Should any third-party suit, regulatory action, or any other judicial, administrative, or similar proceeding be instituted by or against Agent or any Lender with respect to any Collateral or in any manner relating to any Loan Party, this Agreement, any other Loan Document or the transactions contemplated hereby, each Loan Party Obligor shall, without expense to Agent or any Lender, make available each Loan Party, such Loan Party’s officers, employees and agents, and any Loan Party’s books and records, without charge, but only to the extent that Agent or such Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding, subject in all events to confidentiality obligations owed to third-parties and preservation of the lawyer-client privilege between a Loan Party and its attorneys.

 

7.17. Maintenance of Collateral, Etc. Each Loan Party Obligor will maintain all of the Collateral in good working condition, ordinary wear and tear excepted, and no Loan Party Obligor will use the Collateral for any unlawful purpose.

 

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7.18. Material Contracts. Except as expressly disclosed in Section 1(h) of the Perfection Certificate as of the Second Amendment Effective Date, no Loan Party is (a) a party to any contract which has had or could reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (x) any contract to which it is a party or by which any of its assets or properties is bound, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in liabilities in excess of $100,000 or (y) any Material Contract. Except for the contracts and other agreements listed in Section 1(h) of the Perfection Certificate, no Loan Party is party, as of the Second Amendment Effective Date, to any (i) employment agreements covering the management of any Loan Party, (ii) collective bargaining agreements or other labor agreements covering any employees of any Loan Party, (iii) agreements for managerial, consulting or similar services to which any Loan Party is a party or by which it is bound, (iv) agreements regarding any Loan Party, its assets or operations or any investment therein to which any of its equity holders is a party, (v) patent licenses, trademark licenses, copyright licenses or other lease or license agreements to which any Loan Party is a party, either as lessor or lessee, or as licensor or licensee, (vi) distribution, marketing or supply agreements to which any Loan Party is a party, (vii) customer agreements to which any Loan Party is a party (in each case with respect to any contract of the type described in the preceding clauses (i), (iii), (iv), (v), (vi) and (vii) requiring payments by or to any Loan Party of more than $2,500,000 in the aggregate in any Fiscal Year), (viii) partnership agreements to which any Loan Party is a partner, limited liability company agreements to which any Loan Party is a member or manager, or joint venture agreements to which any Loan Party is a party, (ix) real estate leases, (x) any Service Contract that has been assigned an Orderly Liquidation Value pursuant to an appraisal of Service Contracts delivered pursuant to this Agreement or (xi) any other contract to which any Loan Party is a party, in each case with respect to this clause (xi) the breach, nonperformance or cancellation of which, could reasonably be expected to have a Material Adverse Effect (each such contract and agreement, described in the preceding clauses (i) to (xi), a Material Contract). The Material Contracts listed in the Perfection Certificate are in full force and effect and there are no events of defaults thereunder or any event which with notice or passage of time, or both, would constitute an event of default thereunder.

 

7.19. No Default. No Default or Event of Default has occurred and is continuing.

 

7.20. No Material Adverse Change. Since December 31, 2017 there has been no material adverse change in the condition (financial or otherwise), business, operations, or properties of any Loan Party or any Other Obligor.

 

7.21. Full Disclosure. Excluding projections and other forward-looking information, pro forma financial information and information of a general economic or industry nature, no report, notice, certificate, information or other statement delivered or made (including, in electronic form) by or on behalf of any Loan Party, any Other Obligor or any of their respective Affiliates to Agent or any Lender in connection with this Agreement or any other Loan Document contains or will at any time contain any untrue statement of a material fact, or omits or will at any time omit to state any material fact necessary to make any statements contained herein or therein not misleading. Except for matters of a general economic or political nature which do not affect any Loan Party or any Other Obligor uniquely, there is no fact presently known to any Loan Party Obligor which has not been disclosed to Agent, which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Any projections and other forward-looking information and pro forma financial information contained in such materials were prepared in good faith based upon assumptions that were believed by such Loan Party to be reasonable at the time prepared and at the time furnished in light of conditions and facts then known (it being recognized that such projections and other forward-looking information and pro forma financial information are not to be viewed as facts and that actual results during the period or periods covered by any such projections or information may differ from the projected results, and such differences may be material).

 

7.22. Sensitive Payments. No Loan Party (a) has made or will at any time make any contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the applicable laws of the United States or the jurisdiction in which made or any other applicable jurisdiction, (b) has established or maintained or will at any time establish or maintain any unrecorded fund or asset for any purpose or made any false or artificial entries on its books, (c) has made or will at any time make any payments to any Person with the intention that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment or (d) has engaged in or will at any time engage in any trading with the enemy or other transactions violating any rules or regulations of the Office of Foreign Assets Control or any similar applicable laws, rules or regulations.

 

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7.23. Holdings. Holdings does not and shall not at any time (a) engage in any business activities other than serving as a passive holding company for each applicable Loan Party, (b) have any material assets other than the outstanding shares of equity interests issued by each applicable Loan Party, (c) have any Subsidiaries other than the other Loan Party Obligors or (d) have any material liabilities other than the Obligations, the ABL Obligations and the Third Lien Obligations.

 

7.24. Subordinated Debt.

 

(a) Borrower Representative has furnished Agent a true, correct and complete copy of each of the Subordinated Debt Documents. No statement or representation made in any of the Subordinated Debt Documents by any Borrower or any other Loan Party or, to any Borrower Representative’s knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect as of the time that such statement or representation is made. Each of the representations and warranties of the Loan Parties set forth in each of the Subordinated Debt Documents are true and correct in all material respects. No portion of the Subordinated Debt is, or at any time shall be, (i) secured by any assets of any of the Loan Parties or any other Person or any equity issued by any of the Loan Parties or any other Person or (ii) guarantied by any Person (except to the extent expressly permitted by the applicable Subordinated Debt Subordination Agreement).

 

(b) The provisions of each Subordinated Debt Subordination Agreement are enforceable against each holder of the applicable Subordinated Debt. Each Borrower and each other Loan Party Obligor acknowledges that Agent is entering into this Agreement and extending credit and making the Loans in reliance upon this Section 7.24. All Obligations constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Subordinated Debt Documents.

 

7.25. Access to Collateral, Books and Records. At reasonable times, Agent and its representatives or agents shall have the right to inspect the Collateral and to examine and copy each Loan Party’s books and records. Each Loan Party Obligor agrees to give Agent access to any or all of such Loan Party Obligor’s, and each of its Subsidiaries’, premises to enable Agent to conduct such inspections and examinations. Such inspections and examinations shall be at Borrowers’ expense. Agent may, at Borrowers’ expense, use each Loan Party’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Agent, in its sole discretion, deems appropriate. Each Loan Party Obligor hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties; provided, however, that in no event shall this constitute or be construed as a waiver of attorney-client privilege.

 

7.26. Appraisals. Each Loan Party Obligor will permit Agent and each of its representatives or agents to conduct appraisals and valuations of the Collateral at such times and intervals as Agent may designate (including any appraisals that may be required to comply with FIRREA). Such appraisals and valuations shall be at Borrowers’ expense.

 

7.27. Lender Meetings. Upon the request of any Agent or the Required Lenders (which request, so long as no Event of Default shall have occurred and be continuing, shall not be made more than once during each fiscal quarter), participate in a telephonic meeting with the Agents and the Lenders at such time as may be agreed to by Borrower Representative and such Agent or the Required Lenders.

 

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7.28. Interrelated Businesses. Loan Parties make up a related organization of various entities constituting a single economic and business enterprise so that Loan Parties share an identity of interests such that any benefit received by any one of them benefits the others. From time to time each of the Loan Parties may render services to or for the benefit of the other Loan Parties, purchase or sell and supply goods to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other Loan Parties (including inter alia, the payment by such Loan Parties of creditors of the other Loan Parties and guarantees by such Loan Parties of indebtedness of the other Loan Parties and provides administrative, marketing, payroll and management services to or for the benefit of the other Loan Parties). Loan Parties have the same centralized accounting and legal services, certain common officers and directors and generally do not provide stand-alone consolidating financial statements to creditors.

 

7.29. Post-Closing Matters. Loan Party Obligors shall complete each of the post-closing obligations and/or provide to Agent each of the documents, instruments, agreements and information listed on Annex III attached hereto, on or before the date set forth for each such item thereon, each of which shall be completed or provided in form and substance reasonably satisfactory to Agent.

 

7.30. Term Loan Push-Down Reserve. If at any time, and for so long as, the aggregate outstanding principal amount of the Loans exceeds the amount of the Borrowing Base, the Loan Party Obligors shall cause the ABL Agent to implement and maintain the Term Loan Push-Down Reserve.

 

7.31. ABL Obligations.

 

(a) Borrowers have furnished Agent a true, correct and complete copy of each of the ABL Loan Documents. The Liens securing the ABL Obligations and the guarantees of the ABL Obligations shall, in each case, be subject to the terms of the ABL Intercreditor Agreement.

 

(b) Borrowers and each other Loan Party Obligor acknowledge that Agent and Lenders are entering into this Agreement and extending credit and making the Loans in reliance upon the ABL Intercreditor Agreement and this Section 7.31.

 

7.32. Third Lien Obligations.

 

(a) Borrowers have furnished Agent a true, correct and complete copy of each of the Third Lien Loan Documents. The Third Lien Obligations and the Liens securing the Third Lien Obligations and the guarantees of the Third Lien Obligations shall, in each case, be subject to the terms of the Third Lien Subordination Agreement.

 

(b) Borrowers and each other Loan Party Obligor acknowledge that Agent and Lenders are entering into the Third Amendment in reliance upon the Third Lien Subordination Agreement and this Section 7.32.

 

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8. NEGATIVE COVENANTS. No Loan Party Obligor shall, and no Loan Party Obligor shall permit any other Loan Party to:

 

(a) Merge with or into another Person, Divide, or consolidate with another Person, form any new Subsidiary including by any Division thereof, or acquire any interest in any Person other than (i) a Permitted Acquisition; or (ii) the Permitted SPAC Merger.

 

(b) acquire all or a material portion of the assets or the business of any Person other than a Permitted Acquisition;

 

(c) acquire any assets except in the Ordinary Course of Business and as otherwise expressly permitted by this Agreement other than a Permitted Acquisition;

 

(d) substantially change the nature of the business in which it is presently engaged or enter into any transaction outside the Ordinary Course of Business that is not expressly permitted by this Agreement;

 

(e) sell, lease, assign, transfer, return, liquidate, or dispose of any Collateral or other assets with an aggregate value in excess of $100,000 in any calendar month, except that each Loan Party may (i) sell finished goods Inventory in the Ordinary Course of Business and (ii) dispose of worn-out or surplus Equipment to the extent that such Equipment is exchanged for credit against the purchase price of similar replacement Equipment or the proceeds of such disposition are promptly applied to the purchase price of such replacement Equipment;

 

(f) make any loans to, or investments in, any Affiliate or other Person in the form of money or other assets; provided, that (i) Borrowers may make loans to and investments in its wholly-owned domestic Subsidiaries that are Loan Party Obligors and (ii) Holdings may make investments in Borrowers;

 

(g) incur any Indebtedness other than the Obligations and Permitted Indebtedness;

 

(h) create, incur, assume or suffer to exist any Lien or other encumbrance of any nature whatsoever or authorize under the UCC of any jurisdiction a Financing Statement naming the Loan Party as debtor, or execute any security agreement authorizing any secured party thereunder to file such Financing Statement, other than in favor of Agent to secure the Obligations, on any of its assets whether now or hereafter owned, other than Permitted Liens;

 

(i) authorize, enter into, or execute any agreement giving a Secured Party control of a Deposit Account as contemplated by Section 9-104 of the UCC other than in favor of Agent to secure the Obligations and ABL Agent to secure the ABL Obligations, subject to the terms of the ABL Intercreditor Agreement;

 

(j) enter into any covenant or other agreement that restricts or is intended to restrict it from pledging or granting a security interest in, mortgaging, assigning, encumbering or otherwise creating a Lien on any of its property, whether, real or personal, tangible or intangible, existing or hereafter acquired, in favor of Agent;

 

(k) guaranty or otherwise become liable with respect to the obligations (other than (i) the Obligations, (ii) the ABL Obligations, subject to the terms of the ABL Intercreditor Agreement and (iii) the Third Lien Obligations, subject to the terms of the Third Lien Subordination Agreement) of another Person;

 

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(l) pay or distribute any dividends or other distributions on any Loan Party’s stock or other equity interest (except for dividends payable solely in capital stock or other equity interests of such Loan Party and dividends and distributions to Borrowers from a Loan Party Obligor); provided, that notwithstanding the foregoing, Borrowers may declare and accrue any distribution or dividend for members or shareholders; provided further that so long as no Default or Event of Default exists or would result therefrom, to the extent Holdings is treated as a flow-through entity for federal income tax purposes, the Loan Parties may make Permitted Tax Distributions;

 

(m) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Loan Party’s capital stock or other equity interests, except for redemptions of (i) “Incentive Units” (as defined in Holdings’ Governing Documents) in an aggregate amount, for all such redemptions after the Closing Date, not to exceed $250,000, or (ii) any other “Units” (as defined in Holdings’ Governing Documents) so long as no Default or Event of Default exists or would result therefrom and solely to the extent such redemptions are financed with the proceeds of equity interests of Holdings or Subordinated Debt permitted under clause (e) of the definition of Permitted Indebtedness;

 

(n) (i) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any ABL Loan Documents, except to the extent permitted under the ABL Intercreditor Agreement, or (ii) refinance or replace any ABL Obligations, except on terms permitted under the ABL Intercreditor Agreement, which refinancing or replacement of the ABL Obligations shall be subject to the ABL Intercreditor Agreement or another intercreditor agreement in form and substance acceptable to Agent;

 

(o) dissolve or elect to dissolve;

 

(p) engage, directly or indirectly, in a business other than the business which is being conducted on the date hereof, wind up its business operations or cease substantially all, or any material portion, of its normal business operations, or suffer any material disruption, interruption or discontinuance of a material portion of its normal business operations;

 

(q) pay any principal or other amount on any Indebtedness, the payment of which is contractually subordinated to the Obligations in violation of the applicable subordination or intercreditor agreement;

 

(r) enter into any transaction with an Affiliate other than on arms-length terms disclosed to Agent in writing;

 

(s) change its jurisdiction of organization or enter into any transaction which has the effect of changing its jurisdiction of organization except as provided for in Section 7.8;

 

(t) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Loan Party’s Governing Documents, except for such amendments or other modifications required by applicable law or that are not materially adverse to Agent and Lenders, and then, only to the extent such amendments or other modifications are fully disclosed in writing to Agent no less than five (5) Business Days prior to being effectuated;

 

(u) enter into or assume any agreement prohibiting the creation or assumption of any Lien to secure the Obligations upon its properties or assets, whether now owned or hereafter acquired, except in connection with any document or instrument governing Liens permitted pursuant to clause (a) of the definition of Permitted Liens provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien;

 

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(v) create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any such Person (i) to pay or make any dividends or distributions to any Borrower (other than pursuant to any Loan Document, ABL Loan Document or Third Lien Loan Document), (ii) to pay any of the Obligations, or (iii) to make loans or advances or to transfer any of its property or assets to any Borrower (other than pursuant to any Loan Document, ABL Loan Document or Third Lien Loan Document);

 

(w) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of (i) any Subordinated Debt Document in violation of the applicable Subordinated Debt Subordination Agreement, (ii) any ABL Loan Document in violation of the ABL Intercreditor Agreement or (iii) any Third Lien Loan Document in violation of the Third Lien Subordination Agreement; or

 

(x) (i) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Third Lien Loan Document, except to the extent permitted under the Third Lien Subordination Agreement, or (ii) refinance or replace any Third Lien Obligations, except as permitted under the Third Lien Subordination Agreement, which refinancing or replacement of the Third Lien Obligations shall be subject to the Third Lien Subordination Agreement or another subordination agreement in form and substance acceptable to Agent.

 

9. FINANCIAL COVENANTS. Each Loan Party Obligor shall at all times comply with the following Financial Covenants:

 

9.1. Capital Expenditure Limitation. The Loan Parties shall not make any Capital Expenditures if, after giving effect to such Capital Expenditures, the aggregate cost of all Capital Expenditures of the Loan Parties would exceed $15,000,000 during any Fiscal Year.

 

9.2. Minimum Excess Availability. The Loan Parties shall not permit Excess Availability at any time to be less than the greater of (i) $4,000,000 and (ii) the lesser of $6,000,000 and eight percent (8%) of the ABL Borrowing Base then in effect (without giving effect to any Term Loan Push-Down Reserve).

 

10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY.

 

10.1. Release. Each Borrower and each other Loan Party Obligor on behalf of itself and its successors, assigns, heirs and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender and any and all Participants and Affiliates, and their respective successors and assigns, and their respective directors, members, managers, officers, employees, attorneys and agents, including without limitation each Agent-Related Person, and any other Person affiliated with or representing Agent or any Lender (collectively, the Released Parties) of and from any and all liability, including all actual or potential claims, demands or causes of action of any kind, nature or description whatsoever, whether arising in law or equity or under contract or tort or under any state or federal law or otherwise, which any Borrower or any Loan Party or any of their successors, assigns or other legal representatives has had, now has or has made claim to have against any of the Released Parties for or by reason of any act, omission, matter, cause or thing whatsoever, including any liability arising from acts or omissions pertaining to the transactions contemplated by this Agreement and the other Loan Documents, whether based on errors of judgment or mistake of law or fact, from the beginning of time to and including the Closing Date, whether such claims, demands and causes of action are matured or known or unknown. Notwithstanding any provision in this Agreement to the contrary, this Section 10.1 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans. Such release is made on the date hereof and remade upon each request for a Loan by any Borrower.

 

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10.2. Limitation of Liability. In no circumstance will any of the Released Parties be liable for lost profits or other special, punitive, or consequential damages. Notwithstanding any provision in this Agreement to the contrary, this Section 10.2 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

10.3. Indemnity.

 

(a) Each Loan Party Obligor hereby agrees to indemnify the Released Parties and hold them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including internal and external attorneys’ fees), of every nature, character and description, which the Released Parties may sustain or incur based upon or arising out of any of the transactions contemplated by this Agreement or any other Loan Documents or any of the Obligations, any Collateral relating thereto, any drafts thereunder and any errors or omissions relating thereto, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Agent or any Lender relating to any Loan Party or the Obligations (except any such amounts sustained or incurred solely as the result of the gross negligence or willful misconduct of such Released Parties, as finally determined by a court of competent jurisdiction). Notwithstanding any provision in this Agreement to the contrary, this Section 10.3 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

(b) To the extent that any Loan Party Obligor fails to pay any amount required to be paid by it to Agent (or any Released Party of Agent) under paragraph (a) above, each Lender severally agrees to pay to Agent (or such Released Party), such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that any such payment by the Lenders shall not relieve any Loan Party of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred by or asserted against Agent in its capacity as such.

 

11. EVENTS OF DEFAULT AND REMEDIES.

 

11.1. Events of Default. The occurrence of any of the following events shall constitute an Event of Default:

 

(a) Payment. If any Loan Party Obligor or any Other Obligor fails to pay to Agent, when due, any principal or interest payment or any other monetary Obligation required under this Agreement or any other Loan Document;

 

(b) Breaches of Representations and Warranties. If any warranty, representation, statement, report or certificate made or delivered to Agent or any Lender by or on behalf of any Loan Party or any Other Obligor is untrue or misleading in any material respect (except where such warranty or representation is already qualified by Material Adverse Effect, materiality, dollar thresholds or similar qualifications, in which case such warranty or representation shall be accurate in all respects);

 

(c) Breaches of Covenants.

 

(i) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in Section 5.2, 6.1, 6.6, 6.7, 7.2 (limited to the last sentence of Section 7.2), 7.3, 7.7, 7.8, 7.11(c), 7.13, 7.14, 7.15, 7.24, 7.25, 7.29, 7.30, 8 or 9; or

 

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(ii) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in any provision of this Agreement or any other Loan Document and not addressed in clauses Sections 11.1(a), (b) or (c)(i), and the continuance of such default unremedied for a period of ten (10) Business Days; provided, that such ten (10) Business Day grace period shall not be available for any default that is not reasonably capable of being cured within such period or for any intentional default;

 

(d) Judgment. If one or more judgments aggregating in excess of $100,000 is obtained against any Loan Party or any Other Obligor which remains unstayed for more than thirty (30) days or is enforced;

 

(e) Cross-Default. If any default occurs with respect to the ABL Obligations, Third Lien Obligations or any other Indebtedness (other than the Obligations or any Subordinated Debt) of any Loan Party or any Other Obligor if (i) such default shall consist of the failure to pay such Indebtedness when due, whether by acceleration or otherwise or (ii) the effect of such default is to permit the holder, with or without notice or lapse of time or both, to accelerate the maturity of any such Indebtedness or to cause such Indebtedness to become due prior to the stated maturity thereof (without regard to the existence of any subordination or intercreditor agreements);

 

(f) Death or Dissolution. The dissolution, death, termination of existence, insolvency or business failure or suspension or cessation of business as usual of any Loan Party or any Other Obligor (or of any general partner of any Loan Party or any Other Obligor if it is a partnership);

 

(g) Voluntary Bankruptcy or Similar Proceedings. If any Loan Party or any Other Obligor shall apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, admit in writing its inability to pay its debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt or insolvent or be the subject of an order for relief under the Bankruptcy Code or under any bankruptcy or insolvency law of a foreign jurisdiction, or file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;

 

(h) Involuntary Bankruptcy or Similar Proceedings. The commencement of an involuntary case or other proceeding against any Loan Party or any Other Obligor seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or if an order for relief is entered against any Loan Party or any Other Obligor under any bankruptcy, insolvency or other similar applicable law as now or hereafter in effect; provided, that if such commencement of proceedings is involuntary, such action shall not constitute an Event of Default unless such proceedings are not dismissed within forty-five (45) days after the commencement of such proceedings, though Agent and Lenders shall have no obligation to make Loans during such forty-five (45) day period or, if earlier, until such proceedings are dismissed;

 

(i) Revocation or Termination of Guaranty or Security Documents. The actual or attempted revocation or termination of, or limitation or denial of liability under, any guaranty of any of the Obligations, or any security document securing any of the Obligations, by any Loan Party or Other Obligor;

 

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(j) Subordinated Debt; Third Lien Obligations.

 

(i) A default or event of default (as such terms are defined in the applicable Subordinated Debt Documents or the Third Lien Loan Agreement, as applicable) with respect to any Subordinated Debt or the Third Lien Obligations, as applicable, or the occurrence of any condition or event that results in the Subordinated Debt or the Third Lien Obligations, as applicable, becoming due prior to its scheduled maturity as of the Closing Date (or, in the case of the Third Lien Obligations, the Third Lien Debt Incurrence Date) or permits any holder or holders of the Subordinated Debt or the Third Lien Obligations, as applicable, or any trustee or agent on its or their behalf to cause the Subordinated Debt or the Third Lien Obligations, as applicable, to become due, or require the prepayment, repurchase, redemption of defeasance thereof, prior to its scheduled maturity as of the Closing Date (or, in the case of the Third Lien Obligations, the Third Lien Debt Incurrence Date); or

 

(ii) If any Loan Party or Other Obligor makes any payment on account of any Indebtedness or obligation (including the Third Lien Obligations), the payment of which has been contractually subordinated to the Obligations other than payments which are not prohibited by the applicable subordination provisions pertaining thereto (or, in the case of the Third Lien Obligations, the Third Lien Subordination Agreement), or if any Person who has subordinated such Indebtedness or obligations attempts to limit or terminate any applicable subordination provisions pertaining thereto (or, in the case of the Third Lien Obligations, the Third Lien Subordination Agreement);

 

(k) Criminal Indictment or Proceedings. If there is any indictment of any Loan Party, any Loan Party’s officers, any Other Obligor or any Other Obligor’s officers under any criminal statute or commencement of criminal proceedings against any such Person;

 

(l) Change of Control. If (i) current equity owners as of the Closing Date collectively cease to, directly or indirectly, own and control at least 51% of the aggregate Voting Power represented by the issued and outstanding equity interests of Holdings on a fully diluted basis, (ii) such current equity owners as of the Closing Date collectively cease to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Holdings and to direct the management policies and decisions of Holdings, (iii) Holdings ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of Rubicon, CleanCo or Charter or (iv) Charter ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of RiverRoad;

 

(m) Change of Management. If (i) Nate Morris ceases to be employed as, and actively perform the duties of, the chief executive officer of Holdings, or (ii) Christopher Spooner ceases to be employed as, and actively perform the duties of, the vice president of finance of Holdings, in each case unless a successor is appointed within ninety (90) days after the termination of such individual’s employment and such successor is reasonably satisfactory to Agent;

 

(n) Invalid Liens. If any Lien purported to be created by any Loan Document shall cease to be a valid perfected Requisite Priority Lien (subject only to any priority accorded by law to Permitted Liens) on any material portion of the Collateral, or any Loan Party or any Other Obligor shall assert in writing that any Lien purported to be created by any Loan Document is not a valid perfected Requisite Priority Lien (subject only to any priority accorded by law to Permitted Liens) on the assets or properties purported to be covered thereby; except to the extent arising from or related to a failure to file continuation statements in connection with any UCC Financing Statement;

 

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(o) Termination of Loan Documents. If any of the Loan Documents shall cease to be in full force and effect (other than as a result of the discharge thereof in accordance with the terms thereof or by written agreement of all parties thereto);

 

(p) Liquidation Sales. The determination by any Loan Party to employ an agent or other third party or otherwise engage any Person or solicit proposals for the engagement of any Person (i) in connection with the proposed liquidation all or a material portion of its assets, or (ii) to conduct any so-called liquidation or “Going-Out-Of-Business” sales;

 

(q) Loss of Collateral. The (i) uninsured loss, theft, damage or destruction of any of the Collateral, (ii) the insured loss, theft, damage or destruction of any of the Collateral in an amount in excess of $100,000 in the aggregate for all such events during any Fiscal Year, or (iii) except as permitted hereby, the sale, lease or furnishing under a contract of service of, any of the Collateral.

 

(r) Plans. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or any Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $100,000, (ii) the existence of any Lien under Section 430(k) or Section 6321 of the Code or Section 303(k) or Section 4068 of ERISA on any assets of a Loan Party, or (iii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $100,000.

 

(s) ABL Intercreditor Agreement. The lien subordination provisions of the ABL Intercreditor Agreement shall for any reason (other than as a result of any act or omission of Agent or any Lender) be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person, other than Agent or any Lender, shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations or Liens of Agent, for any reason shall not have the priority contemplated by this Agreement or the ABL Intercreditor Agreement.

 

(t) Third Lien Subordination Agreement. The lien or payment subordination provisions of the Third Lien Subordination Agreement shall for any reason (other than as a result of any act or omission of Agent or any Lender) be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person, other than Agent or any Lender, shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations or Liens of Agent, for any reason shall not have the priority contemplated by this Agreement or the Third Lien Subordination Agreement.

 

11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc. Upon the occurrence and during the continuation of an Event of Default, Agent may (in its sole discretion), or at the direction of Required Lenders, shall, (a) terminate all or any portion of its commitment to lend to or extend credit to Borrowers under this Agreement and/or any other Loan Document, without prior notice to any Loan Party and/or (b) demand payment in full of all or any portion of the Obligations (whether or not payable on demand prior to such Event of Default), together with the Prepayment Premium in the amount specified in the Agent Fee Letter and/or (c) take any and all other and further actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity. Notwithstanding the foregoing sentence, upon the occurrence of any Event of Default described in Section 11.1(g) or Section 11.1(h), without notice, demand or other action by Agent all of the Obligations (including the Prepayment Premium in the amount specified in the Agent Fee Letter) shall immediately become due and payable whether or not payable on demand prior to such Event of Default.

 

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11.3. Remedies with Respect to Collateral. Without limiting any rights or remedies Agent or any Lender may have pursuant to this Agreement, the other Loan Documents, under applicable law or otherwise, upon the occurrence and during the continuation of an Event of Default:

 

(a) Any and All Remedies. Agent may take any and all actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity, and the rights and remedies herein and therein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law or otherwise.

 

(b) Collections; Modifications of Terms. Agent may, but shall be under no obligation to: (i) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to, or is subject to a security interest in favor of, Agent; (ii) demand, sue for, collect and give receipts for and take all necessary or desirable steps to collect any Collateral or Proceeds in its or any Loan Party Obligor’s name, and apply any such collections against the Obligations as Agent may elect; (iii) take control of any Collateral and any cash and non-cash Proceeds of any Collateral; (iv) enforce, compromise, extend, renew settle or discharge any rights or benefits of each Loan Party Obligor with respect to or in and to any Collateral, or deal with the Collateral as Agent may deem advisable; and (v) make any compromises, exchanges, substitutions or surrenders of Collateral Agent deems necessary or proper in its reasonable discretion, including extending the time of payment, permitting payment in installments, or otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected without notice to, consent of, or any other action of any Loan Party and without otherwise discharging or affecting the Obligations, the Collateral or the security interests granted to Agent under this Agreement or any other Loan Document.

 

(c) Insurance. Agent may file proofs of loss and claim with respect to any of the Collateral with the appropriate insurer, and may endorse in its own and each Loan Party Obligor’s name any checks or drafts constituting Proceeds of insurance. Any Proceeds of insurance received by Agent may be applied by Agent against payment of all or any portion of the Obligations as Agent may elect in its reasonable discretion.

 

(d) Possession and Assembly of Collateral. Agent may take possession of the Collateral and/or, without removal, render each Loan Party Obligor’s Equipment unusable. Upon Agent’s request, each Loan Party Obligor shall assemble the Collateral and make it available to Agent at one or more places designated by Agent.

 

(e) Set-off. Agent may and, without any notice to, consent of or any other action by any Loan Party (such notice, consent or other action being expressly waived), set-off or apply (i) any and all deposits (general or special, time or demand, provisional or final) at any time held by or for the account of Agent or any Affiliate of Agent and (ii) any Indebtedness at any time owing by Agent or any Affiliate of Agent or any Participant in the Loans to or for the credit or the account of any Loan Party Obligor to the repayment of the Obligations, irrespective of whether any demand for payment of the Obligations has been made.

 

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(f) Disposition of Collateral.

 

(i) Sale, Lease, etc. of Collateral. Agent may, without demand, advertising or notice, all of which each Loan Party Obligor hereby waives (except as the same may be required by the UCC or other applicable law and is not waivable under the UCC or such other applicable law), at any time or times in one or more public or private sales or other dispositions, for cash, on credit or otherwise, at such prices and upon such terms as determined by Agent (provided such price and terms are commercially reasonable within the meaning of the UCC to the extent such sale or other disposition is subject to the UCC requirements that such sale or other disposition must be commercially reasonable), (A) sell, lease, license or otherwise dispose of any and all Collateral and/or (B) deliver and grant options to a third party to purchase, lease, license or otherwise dispose of any and all Collateral. Agent may sell, lease, license or otherwise dispose of any Collateral in its then-present condition or following any preparation or processing deemed necessary by Agent in its reasonable discretion. Agent may be the purchaser at any such public or private sale or other disposition of Collateral, and in such case Agent may make payment of all or any portion of the purchase price therefor by the application of all or any portion of the Obligations due to Agent to the purchase price payable in connection with such sale or disposition. Agent may, if it deems it reasonable, postpone or adjourn any sale or other disposition of any Collateral from time to time by an announcement at the time and place of the sale or disposition to be so postponed or adjourned without being required to give a new notice of sale or disposition; provided, that Agent shall provide the applicable Loan Party Obligor with written notice of the time and place of such postponed or adjourned sale or disposition. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s compliance with any requirements of applicable law in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any sale, lease, license or other disposition of such Collateral.

 

(ii) Deficiency. Each Loan Party Obligor shall remain liable for all amounts of the Obligations remaining unpaid as a result of any deficiency of the Proceeds of the sale, lease, license or other disposition of Collateral after such Proceeds are applied to the Obligations as provided in this Agreement.

 

(iii) Warranties; Sales on Credit. Agent may sell, lease, license or otherwise dispose of the Collateral without giving any warranties and may specifically disclaim any and all warranties, including but not limited to warranties of title, possession, merchantability and fitness. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s disclaimer of any and all warranties in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any such disposition of the Collateral. If Agent sells, leases, licenses or otherwise disposes of any of the Collateral on credit, Borrowers will be credited only with payments actually made in cash by the recipient of such Collateral and received by Agent and applied to the Obligations. If any Person fails to pay for Collateral acquired pursuant this Section 11.3(f) on credit, Agent may re-offer the Collateral for sale, lease, license or other disposition.

 

 

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(g) Investment Property; Voting and Other Rights; Irrevocable Proxy.

 

(i) All rights of each Loan Party Obligor to exercise any of the voting and other consensual rights which it would otherwise be entitled to exercise in accordance with the terms hereof with respect to any Investment Property, and to receive any dividends, payments, and other distributions which it would otherwise be authorized to receive and retain in accordance with the terms hereof with respect to any Investment Property, shall immediately, at the election of Agent (without requiring any notice) cease, and all such rights shall thereupon become vested solely in Agent, and Agent (personally or through an agent) shall thereupon be solely authorized and empowered, without notice, to (A) transfer and register in its name, or in the name of its nominee, the whole or any part of the Investment Property, it being acknowledged by each Loan Party Obligor that any such transfer and registration may be effected by Agent through its irrevocable appointment as attorney-in-fact pursuant to Section 11.3(g)(ii) and Section 6.4, (B) exchange certificates or instruments representing or evidencing Investment Property for certificates or instruments of smaller or larger denominations, (C) exercise the voting and all other rights as a holder with respect to all or any portion of the Investment Property (including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member or as a shareholder (as applicable) of the Issuer), (D) collect and receive all dividends and other payments and distributions made thereon, (E) notify the parties obligated on any Investment Property to make payment to Agent of any amounts due or to become due thereunder, (F) endorse instruments in the name of each Loan Party Obligor to allow collection of any Investment Property, (G) enforce collection of any of the Investment Property by suit or otherwise, and surrender, release, or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any liabilities of any nature of any Person with respect thereto, (H) consummate any sales of Investment Property or exercise any other rights as set forth in Section 11.3(f), (I) otherwise act with respect to the Investment Property as though Agent was the outright owner thereof and (J) exercise any other rights or remedies Agent may have under the UCC, other applicable law or otherwise.

 

(ii) EACH LOAN PARTY OBLIGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS ITS PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY OBLIGOR WITH RESPECT TO ALL OF EACH SUCH LOAN PARTY OBLIGOR’S INVESTMENT PROPERTY WITH THE RIGHT, DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO TAKE ANY OF THE FOLLOWING ACTIONS: (A) TRANSFER AND REGISTER IN AGENT’S NAME, OR IN THE NAME OF ITS NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTE THE PLEDGED EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND COLLECT ANY DIVIDEND OR ANY OTHER PAYMENT OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR, THE INVESTMENT PROPERTY OR ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO INDORSE ANY INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY OBLIGOR FOR THE SAME, (D) EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL ECONOMIC RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS OF EACH LOAN PARTY OBLIGOR AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF THE ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT WHICH AGENT MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND IRREVOCABLE UNTIL (x) ALL OF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND (y) AGENT AND LENDERS HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (IT BEING UNDERSTOOD AND AGREED THAT SUCH OBLIGATIONS WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME PAYMENT, IN WHOLE OR IN PART, OF ANY OF THE OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY LENDER FOR ANY REASON WHATSOEVER, INCLUDING AS A PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE UNDER ANY BANKRUPTCY, INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT HAD NOT BEEN MADE; IT BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR RETURNED, ALL REASONABLE OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING ALL REASONABLE INTERNAL AND EXTERNAL ATTORNEYS’ FEES AND DISBURSEMENTS) INCURRED BY AGENT AND LENDERS IN DEFENDING AND ENFORCING SUCH REINSTATEMENT SHALL HEREBY BE DEEMED TO BE INCLUDED AS A PART OF THE OBLIGATIONS). SUCH APPOINTMENT OF AGENT AS PROXY AND AS ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN ANY GOVERNING DOCUMENTS OF ANY LOAN PARTY OBLIGOR, ANY ISSUER, OR OTHERWISE.

 

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(iii) In order to further effect the foregoing transfer of rights in favor of Agent, during the continuance of an Event of Default, each Loan Party Obligor hereby authorizes and instructs each Issuer of Investment Property pledged by such Loan Party Obligor to comply with any instruction received by such Issuer from Agent without any other or further instruction from such Loan Party Obligor, and each Loan Party Obligor acknowledges and agrees that each Issuer shall be fully protected in so complying, and to pay any dividends, distributions, or other payments with respect to any of the Investment Property directly to Agent.

 

(iv) Upon exercise of the proxy set forth herein, all prior proxies given by any Loan Party Obligor with respect to any of the Pledged Equity or other Investment Property, other than to Agent, are hereby revoked, and no subsequent proxies, other than to Agent will be given with respect to any of the Pledged Equity or any of the other Investment Property unless Agent otherwise subsequently agrees in writing. Agent, as proxy, will be empowered and may exercise the irrevocable proxy to vote the Pledged Equity and the other Investment Property at any and all times during the existence of an Event of Default, including, at any meeting of shareholders or members, as the case may be, however called, and at any adjournment thereof, or in any action by written consent, and may waive any notice otherwise required in connection therewith. To the fullest extent permitted by applicable law, Agent shall have no agency, fiduciary or other implied duties to any Loan Party Obligor, any Issuer, any Loan Party or any other Person when acting in its capacity as such proxy or attorney-in-fact. Each Loan Party Obligor hereby waives and releases any claims that it may otherwise have against Agent with respect to any breach, or alleged breach, of any such agency, fiduciary or other duty.

 

(v) Any transfer to Agent or its nominee, or registration in the name of Agent or its nominee, of the whole or any part of the Investment Property shall be made solely for purposes of effectuating voting or other consensual rights with respect to the Investment Property in accordance with the terms of this Agreement and is not intended to effectuate any transfer of ownership of any of the Investment Property. Notwithstanding the delivery by Agent of any instruction to any Issuer or any exercise by Agent of an irrevocable proxy or otherwise, Agent shall not be deemed the owner of, or assume any obligations or any liabilities whatsoever of the owner or holder of, any Investment Property unless and until Agent expressly accepts such obligations in a duly authorized and executed writing and agrees in writing to become bound by the applicable Governing Documents or otherwise becomes the owner thereof under applicable law (including through a sale as described in Section 11.3(f)). The execution and delivery of this Agreement shall not subject Agent to, or transfer or pass to Agent, or in any way affect or modify, the liability of any Loan Party Obligor under the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise. In no event shall the execution and delivery of this Agreement by Agent, or the exercise by Agent of any rights hereunder or assigned hereby, constitute an assumption of any liability or obligation whatsoever of any Loan Party Obligor to, under, or in connection with any of the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise.

 

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(vi) Compliance with the Securities Act as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, as well as any applicable “Blue Sky” or other state securities laws, if applicable to the Collateral or the portion thereof being sold, may require strict limitations as to the manner in which the Agent or any subsequent transferee may dispose of the Collateral. With respect to any disposition as to which the Securities Act or analogous state securities laws is applicable, each Loan Party Obligor hereby waives any objection to sale in a compliant manner, and agrees that the Agent has no obligation to obtain the maximum possible price for the Collateral so long as the Agent proceeds in a commercially reasonable manner. Without limiting the generality of the foregoing, each Loan Party Obligor agrees that in conducting a disposition of the Collateral as to which the Securities Act or analogous state securities laws applies, Agent may seek to sell the Collateral by private placement, and may restrict bidders and prospective purchasers to those who are willing to represent that they are purchasing for investment only and not for distribution and who otherwise satisfy qualifications designed to ensure compliance with the Securities Act and analogous state securities laws and those that may be established in the Issuer’s Governing Documents. Each Loan Party Obligor acknowledges that in order to protect Agent’s interest, it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, including, without limitation, a public offering under the Securities Act. In order to address these potential compliance requirements, Agent may solicit offers to purchase the Collateral from a limited number of bidders reasonably believed by Agent to be institutional investors or accredited investors. If Agent solicits offers in a commercially reasonable manner, then acceptance by Agent of one or more of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral and Agent will not be responsible or liable for selling all or any portion of the Collateral at a price that Agent deems in good faith to be reasonable. Agent is under no obligation to delay a disposition of any portion of the Collateral that are securities under the Securities Act or applicable “Blue Sky” or other state securities law for the period of time necessary to permit any Loan Party Obligor or the Issuer to register the securities for public sale under the Securities Act or under applicable “Blue Sky” or other state securities laws, even if a Loan Party Obligor or the Issuer agrees to do so. In addition, to the extent not prohibited by applicable law, each Loan Party Obligor waives any right to prior notice (except to the extent expressly provided in this Agreement) or judicial hearing in connection with the taking possession or the disposition of any of the Collateral, including any right which Loan Party Obligor otherwise would have.

 

(vii) To the extent permitted under applicable law, Agent is not required to conduct any foreclosure sale of the Investment Property or any portion thereof.

 

(viii) Agent, at its option, may obtain the appointment of a receiver to take possession of the Investment Property and, at the option of Agent, a receiver may be empowered (i) to collect, receive and enforce all distributions, (ii) to exercise the rights of Agent as provided in this Agreement, (iii) to collect all other amounts owed to any Loan Party Obligor in respect of the Investment Property as and when due to any Loan Party Obligor, (iv) to otherwise collect, sell or dispose of the Investment Property, (v) to exercise all rights in and under the Investment Property; and (vi) to turn over all net proceeds to Agent. Each Loan Party Obligor irrevocably and unconditionally agrees that a receiver may be appointed by a court to take the actions listed above without regard to the adequacy of the security for the Obligations, and the actions of the receiver may be taken in the name of the receiver, any Loan Party Obligor or Agent.

 

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(ix) Agent may elect to conduct a sale of an economic interest in any Investment Property constituting limited liability company interests that does not result in the purchaser being admitted as a substitute limited liability company member in the Issuer, and that any sale or dispositions made in good faith will be considered commercially reasonable, notwithstanding the possibility that a substantially higher price might be realized if the purchaser were able to be admitted as a substitute limited liability company member rather than the holder of only an economic interest in the Issuer.

 

(x) Agent may disclose to prospective purchasers all of the information relating to the Investment Property (and the applicable Issuer) that is in the Agent’s possession or otherwise available to the Agent.

 

(xi) Each Loan Party Obligor hereby authorizes and instructs their respective Issuer to comply with any instruction received by it from Agent in writing that (i) states that an Event of Default has occurred and is continuing and (ii) is otherwise in accordance with the terms of the provisions of this Agreement as to Investment Property, without any other or further instructions from the respective Loan Party Obligor, and such Loan Party Obligor agrees that Issuer be fully protected in so complying.

 

(h) Election of Remedies. Agent shall have the right in Agent’s sole discretion to determine which rights, security, Liens or remedies Agent may at any time pursue, foreclose upon, relinquish, subordinate, modify or take any other action with respect to, without in any way impairing, modifying or affecting any of Agent’s other rights, security, Liens or remedies with respect to any Collateral or any of Agent’s rights or remedies under this Agreement or any other Loan Document.

 

(i) Agent’s Obligations. Each Loan Party Obligor agrees that Agent shall not have any obligation to preserve rights to any Collateral against prior parties or to marshal any Collateral of any kind for the benefit of any other creditor of any Loan Party Obligor or any other Person. Agent shall not be responsible to any Loan Party Obligor or any other Person for loss or damage resulting from Agent’s failure to enforce its Liens or collect any Collateral or Proceeds or any monies due or to become due under the Obligations or any other liability or obligation of any Loan Party Obligor to Agent.

 

(j) Waiver of Rights by Loan Party Obligors. Except as otherwise expressly provided for in this Agreement or by non-waivable applicable law, each Loan Party waives (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent on which any Loan Party Obligor may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this regard, (ii) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent to exercise any of its remedies and (iii) the benefit of all valuation, appraisal, marshaling and exemption laws. If any notice of a proposed sale or other disposition of any part of the Collateral is required under applicable law, each Loan Party Obligor agrees that ten (10) calendar days prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made is commercially reasonable.

 

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12. LOAN GUARANTY.

 

12.1. Guaranty. Each Loan Party Obligor hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guaranties to Agent, for the ratable benefit of the Lenders, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, all of the Obligations and all reasonable costs and expenses, including all court costs and reasonable attorneys’ and paralegals’ fees (including internal and external counsel and paralegals) and expenses of Agent or any Lender in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, any Borrower, any Loan Party Obligor or any Other Obligor of all or any part of the Obligations (and such costs and expenses paid or incurred shall be deemed to be included in the Obligations). Each Loan Party Obligor further agrees that the Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guaranty notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf of any branch or Affiliate of Agent that extended any portion of the Obligations.

 

12.2. Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of collection. Each Loan Party Obligor waives any right to require Agent to sue or otherwise take action against any Borrower, any other Loan Party Obligor, any Other Obligor, or any other Person obligated for all or any part of the Obligations, or otherwise to enforce its payment against any Collateral securing all or any part of the Obligations.

 

12.3. No Discharge or Diminishment of Loan Guaranty.

 

(a) Except as otherwise expressly provided for herein, the obligations of each Loan Party Obligor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of all of the Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of any Borrower or any Obligor; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or any Obligor or their respective assets or any resulting release or discharge of any obligation of any Borrower or any Obligor; or (iv) the existence of any claim, setoff or other rights which any Loan Party Obligor may have at any time against any Borrower, any Obligor, Agent, or any other Person, whether in connection herewith or in any unrelated transactions.

 

(b) The obligations of each Loan Party Obligor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Borrower or any Obligor of the Obligations or any part thereof.

 

(c) Further, the obligations of any Loan Party Obligor hereunder shall not be discharged or impaired or otherwise affected by: (i) the failure of Agent to assert any claim or demand or to enforce any remedy with respect to all or any part of the Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Obligations; (iii) any release, non-perfection or invalidity of any indirect or direct security for all or any part of the Obligations or all or any part of any obligations of any Obligor; (iv) any action or failure to act by Agent with respect to any Collateral; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Loan Party Obligor or that would otherwise operate as a discharge of any Loan Party Obligor as a matter of law or equity (other than the indefeasible payment in full in cash of all of the Obligations).

 

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12.4. Defenses Waived. To the fullest extent permitted by applicable law, each Loan Party Obligor hereby waives any defense based on or arising out of any defense of any Loan Party Obligor or the unenforceability of all or any part of the Obligations from any cause, or the cessation from any cause of the liability of any Loan Party Obligor, other than the indefeasible payment in full in cash of all of the Obligations. Without limiting the generality of the foregoing, each Loan Party Obligor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower, any Obligor, or any other Person. Each Loan Party Obligor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder. Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any Collateral, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any Obligor or exercise any other right or remedy available to it against any Borrower or any Obligor, without affecting or impairing in any way the liability of any Loan Party Obligor under this Loan Guaranty except to the extent the Obligations have been fully and indefeasibly paid in cash. To the fullest extent permitted by applicable law, each Loan Party Obligor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan Party Obligor against any Borrower or any Obligor or any security.

 

12.5. Rights of Subrogation. No Loan Party Obligor will assert any right, claim or cause of action, including a claim of subrogation, contribution or indemnification that it has against any Borrower or any Obligor, or any Collateral, until the Termination Date.

 

12.6. Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or any other Person, or otherwise, each Loan Party Obligor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not Agent is in possession of this Loan Guaranty. If acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Obligations shall nonetheless be payable by the Loan Party Obligors forthwith on demand by Agent. This Section 12.6 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

12.7. Information. Each Loan Party Obligor assumes all responsibility for being and keeping itself informed of each Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that each Loan Party Obligor assumes and incurs under this Loan Guaranty, and agrees that Agent shall not have any duty to advise any Loan Party Obligor of information known to it regarding those circumstances or risks.

 

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12.8. Termination. To the maximum extent permitted by law, each Loan Party Obligor hereby waives any right to revoke this Loan Guaranty as to future Obligations. If such a revocation is effective notwithstanding the foregoing waiver, each Loan Party Obligor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agent, (b) no such revocation shall apply to any Obligations in existence on the date of receipt by Agent of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms or other terms and conditions thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Agent, (d) no payment by any Borrower, any other Loan Party Obligor, or from any other source, prior to the date of Agent’s receipt of written notice of such revocation shall reduce the maximum obligation of any Loan Party Obligor hereunder and (e) any payment, by any Borrower or from any source other than a Loan Party Obligor which has made such a revocation, made subsequent to the date of such revocation, shall first be applied to that portion of the Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of any Loan Party Obligor hereunder.

 

12.9. Maximum Liability. The provisions of this Loan Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Loan Party Obligor under this Loan Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Loan Party Obligor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the amount of such liability shall, without any further action by the Loan Party Obligors, Agent or any Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Loan Party Obligor’s Maximum Liability). This Section 12.9 with respect to the Maximum Liability of each Loan Party Obligor is intended solely to preserve the rights of Agent and the Lenders to the maximum extent not subject to avoidance under applicable law, and no Loan Party Obligor or any other Person shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Loan Party Obligor hereunder shall not be rendered voidable under applicable law. Each Loan Party Obligor agrees that the Obligations may at any time and from time to time exceed the Maximum Liability of each Loan Party Obligor without impairing this Loan Guaranty or affecting the rights and remedies of Agent hereunder; provided, that nothing in this sentence shall be construed to increase any Loan Party Obligor’s obligations hereunder beyond its Maximum Liability.

 

12.10. Contribution. In the event any Loan Party Obligor shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Loan Guaranty (such Loan Party Obligor a Paying Guarantor), each other Loan Party Obligor (each a Non-Paying Guarantor) shall contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s Applicable Payment Percentageof such payment or payments made, or losses suffered, by such Paying Guarantor. For purposes of this Section 12.10, each Non-Paying Guarantor’s Applicable Payment Percentagewith respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was made by reference to the ratio of (x) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from any Borrower after the date hereof (whether by loan, capital infusion or by other means) to (y) the aggregate Maximum Liability of all Loan Party Obligors hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Loan Party Obligor, the aggregate amount of all monies received by such Loan Party Obligors from any Borrower after the date hereof (whether by loan, capital infusion or by other means). Nothing in this provision shall affect any Loan Party Obligor’s several liability for the entire amount of the Obligations (up to such Loan Party Obligor’s Maximum Liability). Each of the Loan Party Obligors covenants and agrees that its right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of all of the Obligations. This provision is for the benefit of Agent and the Lenders and the Loan Party Obligors and may be enforced by any one, or more, or all of them, in accordance with the terms hereof.

 

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12.11. Liability Cumulative. The liability of each Loan Party Obligor under this Section 12 is in addition to and shall be cumulative with all liabilities of each Loan Party Obligor to Agent and the Lenders under this Agreement and the other Loan Documents to which such Loan Party Obligor is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES.

 

(a) Any and all payments by or on account of any obligation of the Loan Party Obligors hereunder or under any other Loan Document shall to the extent permitted by applicable laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable laws require the Loan Party Obligors to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such laws as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(b) If any Loan Party Obligor shall be required by applicable law to withhold or deduct any Taxes from any payment, then (i) such Loan Party Obligor shall withhold or make such deductions as are required based upon the information and documentation it has received pursuant to subsection (e) below, (ii) such Loan Party Obligor shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the applicable law and (iii) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Loan Party Obligors shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made. As soon as practicable after any payment of Taxes by any Loan Party Obligor to a Governmental Authority pursuant to this Section, Borrower Representative shall deliver to Agent (or, upon request, such other Recipient), the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment of Taxes, a copy of any return required by applicable law to report such payment or other evidence of such payment reasonably satisfactory to Agent (or such other Recipient).

 

(c) Without limiting the provisions of subsections (a) and (b) above, the Loan Party Obligors shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.

 

(d) Without limiting the provisions of subsections (a) through (c) above, each Loan Party Obligor shall, and does hereby, on a joint and several basis, indemnify Agent, each Lender and each other Recipient (and their respective directors, officers, employees, affiliates and agents) and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes and Other Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid or incurred by Agent, any Lender or any other Recipient on account of, or in connection with any Loan Document or a breach by a Loan Party Obligor thereof, and any penalties, interest and related expenses and losses arising therefrom or with respect thereto (including the fees, charges and disbursements of any internal or external counsel or other tax advisor for Agent, any Lender or any other Recipient (or their respective directors, officers, employees, affiliates, and agents)), whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of any such payment or liability delivered to Borrower Representative shall be conclusive absent manifest error. Notwithstanding any provision in this Agreement to the contrary, this Section 13 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

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(e) Each Lender shall deliver to Borrower Representative and each Lender and each Participant shall deliver to Agent, at the time or times prescribed by applicable laws or as reasonably requested by Agent, such properly completed and executed documentation prescribed by applicable laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit Borrower Representative or Agent, as the case may be, to determine (x) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (y) if applicable, the required rate of withholding or deduction and (z) such Lender’s or Participant’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Recipient by the Loan Party Obligors pursuant to this Agreement or otherwise to establish such Recipient’s status for withholding tax purposes in the applicable jurisdiction; provided, that each Recipient shall only be required to deliver such documentation as it may legally provide. Without limiting the generality of the foregoing, if a Borrower is resident for tax purposes in the United States:

 

(i) each Lender (or Participant) that is a United States personwithin the meaning of Section 7701(a)(30) of the Code shall deliver to Borrower Representative and Agent (or any Lender granting a participation as applicable) an executed original of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable law or reasonably requested by Borrower Representative or Agent (or Lender granting a participation) as will enable Borrower Representative or Agent (or Lender granting a participation) as the case may be, to determine whether or not such Lender (or Participant) is subject to backup withholding or information reporting requirements under the Code;

 

(ii) each Lender (or Participant) that is not a United States personwithin the meaning of Section 7701(a)(30) of the Code (a Non-U.S. Recipient) shall deliver to Borrower Representative and Agent (or any Lender granting a participation in case the Non-U.S. Recipient is a Participant) on or prior to the date on which such Non-U.S. Person becomes a party to this Agreement or a Participant (and from time to time thereafter upon the reasonable request of Borrower Representative or Agent but only if such Non-U.S. Recipient is legally entitled to do so), whichever of the following is applicable: (A) executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (B) executed originals of Internal Revenue Service Form W-8ECI; (C) executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation; (D) each Non-U.S. Recipient claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, shall provide (x) a certificate to the effect that such Non-U.S. Recipient is not (1) a bankwithin the meaning of section 881(c)(3)(A) of the Code, (2) a 10 percent shareholder of Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (3) a controlled foreign corporationdescribed in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN; and/or (E) executed originals of any other form prescribed by applicable law (including FATCA) as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable law to permit Borrower Representative or Agent to determine the withholding or deduction required to be made. Each Non-U.S. Recipient shall promptly notify Borrower Representative and Agent (or any Lender granting a participation if the Non-U.S. Recipient is a Participant) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

 

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(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower Representative and Agent at the time or times prescribed by applicable laws and at such time or times reasonably requested by Borrower Representative or Agent such documentation prescribed by applicable laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower Representative or Agent as may be necessary for Borrower Representative and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this subsection (f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

14. AGENT

 

14.1. Appointment. Each of the Lenders hereby irrevocably appoints Agent as its agent and authorizes Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent, each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) make Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein and execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents; (e) manage, supervise or otherwise deal with Collateral; (f) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (g) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents, (h) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, applicable law or otherwise, including the determination of eligibility of Accounts, the necessity and amount of Reserves and all other determinations and decisions relating to ordinary course administration of the credit facilities contemplated hereunder; and (i) incur and pay such expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents, whether or not any Loan Party is obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Documents or otherwise. The provisions of this Article are solely for the benefit of Agent and the Lenders, and the Loan Parties shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” as used herein or in any other Loan Documents (or any similar term) with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

14.2. Rights as a Lender. The Person serving as Agent hereunder, if it is a Lender, shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Loan Party or any Subsidiary or any Affiliate thereof as if it were not Agent hereunder without notice to or consent of the other Lenders.

 

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14.3. Duties and Obligations. Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders, and, (c) except as expressly set forth in the Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any Subsidiary that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity. Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct as determined by a final nonappealable judgment of a court of competent jurisdiction. Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to Agent by a Borrower or a Lender, and Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to Agent. Agent shall be under no obligation to any Lender 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 to inspect the books and records or properties of any Loan Party.

 

14.4. Reliance. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional (who may be counsel for any Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document, unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable 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. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

 

14.5. Actions through Sub-Agents. Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by Agent. Agent may also perform its duties through employees and other Agent-Related Persons. Agent shall not be responsible for the negligence or misconduct of any sub-agent, employee or Agent Professional that it selects as long as such selection was made without gross negligence or willful misconduct. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Affiliates and other related parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the related parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

 

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14.6. Resignation. Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, Agent may resign at any time by notifying the Lenders and Borrower Representative. Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower Representative, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of its appointment as Agent hereunder by its successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The fees payable by Borrowers to a successor Agent shall be the same as those payable to its predecessor, unless otherwise agreed by Borrower Representative and such successor. Notwithstanding the foregoing, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectiveness of its resignation to the Lenders and Borrower Representative, whereupon, on the date of effectiveness of such resignation stated in such notice, (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents, provided that, solely for purposes of maintaining any security interest granted to the Agent under any Loan Document for the benefit of the Lenders, the retiring Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Lenders and, in the case of any Collateral in the possession of Agent, shall continue to hold such Collateral, in each case until such time as a successor Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreed that the retiring Agent shall have no duly or obligation to take any further action under any Loan Document, including any action required to maintain the perfection of any such security interest), and (b) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, provided that (i) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of any Person other than Agent shall be made directly to such Person and (ii) all notices and other communications required or contemplated to be given or made to Agent shall also directly be given or made to each Lender. Following the effectiveness of the Agent’s resignation from its capacity as such, the provisions of this Article, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective related parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent and in respect of the matters referred to in the proviso under clause (a) above.

 

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14.7. Non-Reliance.

 

(a) Each Lender acknowledges and agrees that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender further acknowledges the extensions of credit made hereunder are commercial loans and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document, and all applicable laws relating to the transactions contemplated hereby, and made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender shall, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning any Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own credit analysis and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document and in deciding whether or to the extent to which it will continue as a Lender or assign or otherwise transfer its rights, interests and obligations hereunder. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. Each Lender acknowledges that Agent does not have any duty or responsibility, either initially or on a continuing to provide such Lender with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement.

 

(b) Each Lender hereby agrees that (i) it has requested a copy of each appraisal, audit or field examination report prepared by or on behalf of Agent; (ii) Agent (A) makes no representation or warranty, express or implied, as to the completeness or accuracy of any such report or any of the information contained therein or any inaccuracy or omission contained in or relating to any such report and (B) shall not be liable for any information contained in any such report; (iii) such reports are not comprehensive audits or examinations, and that any Person performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ officer certificates and Loan Documents provided hereunder and that Agent undertakes no obligation to update, correct or supplement such reports; (iv) it will keep all such reports confidential and strictly for its internal use, not share any such report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (v) without limiting the generality of any other indemnification provision contained in this Agreement, (A) it will hold Agent and any such other Person preparing any such report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any such report in connection with any extension of credit that the indemnifying Lender has made or may make to any Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (B) it will pay and protect, and indemnify, defend, and hold Agent and any such other Person preparing any such report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonable attorneys’ fees of both internal and external counsel) of Agent or any such other Person as the direct or indirect result of any third parties who might obtain all or part of any such report through the indemnifying Lender.

 

14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties.

 

(a) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of Agent) authorized to act for, any other Lender. Agent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement.

 

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(b) In its capacity, Agent is a “representative” of the Lenders within the meaning of the term “secured party” as defined in the UCC. Each Lender authorizes Agent to enter into each of the Loan Documents to which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Lender (other than Agent) shall have the right individually to seek to realize upon the security granted by any Loan Document, it being understood and agreed that such rights and remedies may be exercised solely by Agent for the benefit of the Lenders upon the terms of the Loan Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Obligations, Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Lenders any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of Agent on behalf of the Lenders.

 

(c) Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the UCC can be perfected by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions. Agent shall have no obligation whatsoever to any of the Lenders (i) to verify or assure that the Collateral exists or is owned by any Borrower or its Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement or eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein,

 

14.9. Credit Bidding. The Loan Parties and the Lenders hereby irrevocably authorize Agent, during the continuance of an Event of Default and in exercise of remedies permitted under Section 12 of this Agreement or applicable law, based upon the instruction of the Required Lenders, to Credit Bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (and the Loan Parties shall approve Agent as a qualified bidder and such Credit Bid as qualified bid) at any sale thereof conducted by Agent, based upon the instruction of the Required Lenders, under any provisions of the UCC, as part of any sale or investor solicitation process conducted by any Loan Party, any interim receiver, receiver, receiver and manager, administrative receiver, trustee, agent or other Person pursuant or under any insolvency laws; provided, however, that (i) the Required Lenders may not direct Agent in any manner that does not treat each of the Lenders equally, without preference or discrimination, in respect of consideration received as a result of the Credit Bid, (ii) the acquisition documents shall be commercially reasonable and contain customary protections for minority holders such as among other things, anti-dilution and tag-along rights, (iii) the exchanged debt or equity securities must be freely transferable, without restriction (subject to applicable securities laws) and (iv) reasonable efforts shall be made to structure the acquisition in a manner that causes the governance documents pertaining thereto to not impose any obligations or liabilities upon the Lenders individually (such as indemnification obligations). Agent, based upon the instruction of the Required Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such Credit Bid or purchase and in connection therewith Agent may reduce the Obligations owed to the Lenders (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration. For purposes of the preceding sentence, the term “Credit Bid” shall mean, an offer submitted by Agent (on behalf of the Lender group), based upon the instruction of the Required Lenders, to acquire the property of any Loan Party or any portion thereof in exchange for and in full and final satisfaction of all or a portion (as determined by Agent, based upon the instruction of the Required Lenders) of the claims and Obligations under this Agreement and other Loan Documents.

 

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14.10. Certain Collateral Matters. The Lenders irrevocably authorize Agent, at its option and in its discretion, (a) to release any Lien granted to or held by Agent under any Loan Document (i) upon payment in full of all Loans and all other obligations of Borrowers hereunder; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder (including the release of any guarantor); (iii) subject to Section 15.5 if approved, authorized or ratified in writing by the Required Lenders; or (iv) to the extent required under the terms of the ABL Intercreditor Agreement; (b) to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is permitted by clause (a) of the definition of Permitted Liens (it being understood that Agent may conclusively rely on a certificate from Borrower Representative in determining whether the Indebtedness secured by any such Lien is permitted hereunder); and (c) enter into and perform, or take any other actions in connection with, the ABL Intercreditor Agreement, Third Lien Subordination Agreement and any Subordinated Debt Subordination Agreement. Each Lender hereby agrees, solely for the benefit of Agent, that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement, Third Lien Subordination Agreement or any Subordinated Debt Subordination Agreement. Upon request by Agent at any time, the Lenders will confirm in writing Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 14.10. Agent may, and at the direction of Required Lenders shall, give blockage notices in connection with any Subordinated Debt and each Lender hereby authorizes Agent to give such notices. Each Lender further agrees that it will not act unilaterally to deliver such notices.

 

14.11. Restriction on Actions by Lenders. Each Lender agrees that it shall not, without the express written consent of Agent, and shall, upon the written request of Agent (to the extent it is lawfully entitled to do so), set off against the Obligations, any amounts owing by such Lender to a Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken, any action, including the commencement of any legal or equitable proceedings to foreclose any loan or otherwise enforce any security interest in any of the Collateral or to enforce all or any part of this Agreement or the other Loan Documents. All Enforcement Actions under this Agreement and the other Loan Documents against the Loan Parties or any third party with respect to the Obligations or the Collateral may only be taken by Agent (at the direction of the Required Lenders or as otherwise permitted in this Agreement) or by its agents at the direction of Agent.

 

14.12. Expenses. Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Agent to reimburse Agent for such reasonable out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses by a Loan Party, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable share thereof. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any such costs or out of pocket expenses (including reasonable Agent Professional fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

 

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14.13. Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent will promptly notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with this Agreement; provided, that unless and until Agent has received any such request, 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.

 

14.14. Liability of Agent. None of the Agent-Related Persons shall (a) be liable to any Lender for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any of their respective Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower, or any of their respective Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lenders 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 to inspect the books and records or properties of any Borrower or their respective Subsidiaries.

 

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15. GENERAL PROVISIONS.

 

15.1. Notices.

 

(a) Notice by Approved Electronic Communications. Agent and each of its Affiliates is authorized to transmit, post or otherwise make or communicate, in its sole discretion (but shall not be required to do so), by Approved Electronic Communications in connection with this Agreement or any other Loan Document and the transactions contemplated therein. All uses of Approved Electronic Communications shall be governed by and subject to, in addition to the terms of this Agreement, the separate terms, conditions and privacy policy posted or referenced in such system (or such terms, conditions and privacy policy as may be updated from time to time, including on such system) and any related contractual obligations executed by Agent and Loan Parties in connection with the use of such system. Each of the Loan Parties, the Lenders and Agent hereby acknowledges and agrees that the use of Approved Electronic Communications is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing Agent and each of its Affiliates to transmit Approved Electronic Communications. All Approved Electronic Communications shall be provided as isand as available. None of Agent or any of its Affiliates or related persons warrants the accuracy, adequacy or completeness of any electronic platform or electronic transmission and disclaims all liability for errors or omissions therein. No warranty of any kind is made by Agent or any of its Affiliates or related persons in connection with any electronic platform or electronic transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects. Each Borrower and each other Loan Party executing this Agreement agrees that Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Approved Electronic Communication or otherwise required for any Approved Electronic Communication. No Approved Electronic Communications shall be denied legal effect merely because it is made electronically. Approved Electronic Communications that are not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Approved Electronic Communication, an E-Signature, upon which Agent and the Loan Parties may rely and assume the authenticity thereof. Each Approved Electronic Communication containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each E-Signature shall be deemed sufficient to satisfy any requirement for a signatureand each Approved Electronic Communication shall be deemed sufficient to satisfy any requirement for a writing, in each case including pursuant to this Agreement, any other Loan Document, the UCC, the Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each party or beneficiary hereto agrees not to contest the validity or enforceability of an Approved Electronic Communication or E-Signature under the provisions of any applicable law requiring certain documents to be in writing or signed; provided, that nothing herein shall limit such party’s or beneficiary’s right to contest whether an Approved Electronic Communication or E-Signature has been altered after transmission.

 

(b) All Other Notices. All notices, requests, demands and other communications under or in respect of this Agreement or any transactions hereunder, other than those approved for or required to be delivered by Approved Electronic Communications, shall be in writing and shall be personally delivered or mailed (by prepaid registered or certified mail, return receipt requested), sent by prepaid recognized overnight courier service, or by email to the applicable party at its address or email address indicated below,

 

If to Agent:

 

Pathlight Capital LP

18 Shipyard Drive, Suite 2C Hingham, MA 02043

Attention: Kyle ShonakShawn Pennels

Email: kshonak@pathlightcapital.comspennels@pathlightcapital.com

 

with a copy to (which shall not constitute notice to Agent):

 

Choate, Hall & Stewart LLP

Two International Place

Boston, MA 02110

Attention: Kevin Simard

Email: ksimard@choate.com

 

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If to Borrower Representative, any Borrower or any other Loan Party:

 

Rubicon Global, LLC

950 East Paces Ferry Rd NE

Suite 1900

Atlanta, Georgia 30326

Attention: Michael Heller and Bill Meyer

Email: Michael.Heller@rubiconglobal.com and

Bill.Meyer@rubiconglobal.com

 

with a mandatory copy to:

 

Chamberlain Hrdlicka White Williams & Aughtry, P.C.

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303 Attention: Scott A. Augustine

Email: scott.augustine@chamberlainlaw.com

 

or, as to each party, at such other address as shall be designated by such party in a written notice to the other party delivered as aforesaid. All such notices, requests, demands and other communications shall be deemed given (i) when personally delivered, (ii) three (3) Business Days after being deposited in the mails with postage prepaid (by registered or certified mail, return receipt requested), (iii) one (1) Business Day after being delivered to the overnight courier service, if prepaid and sent overnight delivery, addressed as aforesaid and with all charges prepaid or billed to the account of the sender or (iv) when sent by email transmission to an email address designated by such addressee and the sender receives a confirmation of transmission.

 

15.2. Severability. If any provision of this Agreement or any other Loan Document is held invalid or unenforceable, either in its entirety or by virtue of its scope or application to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or not applicable to given circumstances, or excised from this Agreement or such other Loan Document, as the situation may require, and this Agreement and the other Loan Documents shall be construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included herein or therein, as the case may be.

 

15.3. Integration. This Agreement and the other Loan Documents represent the final, entire and complete agreement between each Loan Party party hereto and thereto and Agent and supersede all prior and contemporaneous negotiations, oral representations and agreements, all of which are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

15.4. Waivers. The failure of Agent and the Lenders at any time or times to require any Loan Party to strictly comply with any of the provisions of this Agreement or any other Loan Documents shall not waive or diminish any right of Agent later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of Agent or its agents or employees, but only by a specific written waiver signed by an authorized officer of Agent and any necessary Lenders and delivered to Borrowers. Once an Event of Default shall have occurred, it shall be deemed to continue to exist and not be cured or waived unless specifically waived in writing by an authorized officer of Agent and Required Lenders and delivered to Borrowers. Each Loan Party Obligor waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, Instrument, Account, General Intangible, Document, Chattel Paper, Investment Property or guaranty at any time held by Agent on which such Loan Party Obligor is or may in any way be liable, and notice of any action taken by Agent, unless expressly required by this Agreement, and notice of acceptance hereof.

 

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15.5. Amendments.

 

(a) No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that, except to the extent set forth in Section 14.9 hereof, no amendment, modification, waiver or consent shall (i) extend or increase the Term Loan Commitment of any Lender without the written consent of such Lender, (ii) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby; (iv) amend or modify the definitions of Borrowing Base, Eligible Accounts, Eligible Billed Accounts, Eligible Billed Aged Accounts, Eligible Billed Cross-Aged Accounts, Eligible Unbilled Accounts, Eligible Uninvoiced Accounts, Eligible Service Contracts, Eligible Service Contracts Component or any components thereof (including, without limitation, any Advance Rates) in a manner that makes more credit available to the Borrowers, without the written consent of each Lender; or (v) release any guarantor from its obligations under any Guaranty, other than as part of or in connection with any disposition permitted hereunder, or release or subordinate its liens on all or any substantial part of the Collateral granted under any of the other Loan Documents (except as permitted by Section 14.10), change the definition of Required Lenders, any provision of Section 6.2, any provision of this Section 15.4, the provisions of Section 14.9 or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case set forth in this clause (v), the written consent of all Lenders. No provision of Section 14 or other provision of this Agreement affecting Agent in its capacity as such shall be amended, modified or waived without the consent of Agent. No provision of this Agreement affecting any Loan Party shall be amended or modified without the prior written consent of Borrower Representative.

 

(b) If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of all Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then, so long as Agent is not a Non-Consenting Lender, Agent and/or a Person or Persons reasonably acceptable to Agent shall have the right to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent and/or such Person or Persons, all of the Loans of such Non-Consenting Lenders for an amount equal to the principal balance of all such Loans held by such Non-Consenting Lenders and all accrued interest, fees, expenses and other amounts then due with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Assumption.

 

15.6. Time of Essence. Time is of the essence in the performance by each Loan Party Obligor of each and every obligation under this Agreement and the other Loan Documents.

 

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15.7. Expenses, Fee and Costs Reimbursement. Each Borrower hereby agrees to promptly pay (a) all reasonable out of pocket costs and expenses of Agent (including the out of pocket fees, costs and expenses of internal and external legal counsel to, and appraisers, accountants, consultants and other professionals and advisors retained by or on behalf of, Agent) in connection with (i) all loan proposals and commitments pertaining to the transactions contemplated hereby (whether or not such transactions are consummated), (ii) the examination, review, due diligence investigation, documentation, negotiation, and closing of the transactions contemplated by the Loan Documents (whether or not such transactions are consummated), (iii) the creation, perfection and maintenance of Liens pursuant to the Loan Documents, (iv) the performance or enforcement by Agent of its rights and remedies under the Loan Documents (or determining whether or how to perform or enforce such rights and remedies), (v) the administration of the Loans (including usual and customary fees for wire transfers and other transfers or payments received by Agent on account of any of the Obligations) and Loan Documents, (vi) any amendments, modifications, consents and waivers to and/or under any and all Loan Documents (whether or not such amendments, modifications, consents or waivers are consummated), (vii) any periodic public record searches conducted by or at the request of Agent (including, title investigations and public records searches), pending litigation and tax lien searches and searches of applicable corporate, limited liability company, partnership and related records concerning the continued existence, organization and good standing of certain Persons), (viii) protecting, storing, insuring, handling, maintaining, auditing, examining, valuing or selling any Collateral, (ix) any litigation, dispute, suit or proceeding relating to any Loan Document and (x) any workout, collection, bankruptcy, insolvency and other enforcement proceedings under any and all of the Loan Documents (it being agreed that (A) such costs and expenses may include the costs and expenses of workout consultants, investment bankers, financial consultants, appraisers, valuation firms and other professionals and advisors retained by or on behalf of Agent (B) each Lender shall also be entitled to reimbursement for all reasonable out of pocket costs and expense of the type described in this clause (x), provided that, to the extent of an actual or reasonably perceived conflict of interest, such reimbursement shall be limited to one additional counsel for the Lenders as a whole), and (b) without limiting the preceding clause (a), all reasonable out of pocket costs and expenses of Agent in connection with Agent’s reservation of funds in anticipation of the funding of the initial Loans to be made hereunder. Any fees, costs and expenses owing by any Borrower or other Loan Party Obligor hereunder shall be due and payable within three (3) days after written demand therefor.

 

15.8. Benefit of Agreement; Assignability. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender; provided, that neither each Borrower nor any other Loan Party Obligor may assign or transfer any of its rights under this Agreement without the prior written consent of Agent and each Lender, and any prohibited assignment shall be void. No consent by Agent or any Lender to any assignment shall release any Loan Party Obligor from its liability for any of the Obligations. Each Lender shall have the right to assign all or any of its rights and obligations under the Loan Documents to one or more other Persons in accordance with Section 15.9. Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, a Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement and the other Loan Documents to secure any obligations of such Lender, including any pledge or grant to secure obligations to a Federal Reserve Bank.

 

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15.9. Assignments.

 

(a) Any Lender may at any time assign to one or more Persons (any such Person, an “Assignee”) all or any portion of such Lender’s Loans, with the prior written consent of Agent and, so long as no Event of Default exists, Borrower Representative (which consents shall not be unreasonably withheld or delayed and shall not be required for an assignment by a Lender to a Lender (other than a Defaulting Lender) or an Affiliate of a Lender (other than an Affiliate of a Defaulting Lender) or an Approved Fund (other than an Approved Fund of a Defaulting Lender)). Except as Agent may otherwise agree, any such assignment shall be in a minimum aggregate amount equal to $1,000,000 or, if less, the remaining Loans held by the assigning Lender (provided, that an assignment to a Lender, an Affiliate of a Lender or an Approved Fund shall not be subject to the foregoing minimum assignment limitations). The Loan Parties and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an Assignee until Agent shall have received and accepted an effective Assignment and Assumption executed, delivered and fully completed by the applicable parties thereto and a processing fee of $3,500. Notwithstanding anything herein to the contrary, no assignment may be made to any equity holder of a Loan Party, any Affiliate of any equity holder of a Loan Party, any Loan Party, any holder of Subordinated Debt of a Loan Party, any holder of any Debt that is secured by liens or security interests that have been contractually subordinated to the liens and security interests securing the Obligations, or any Affiliate of any of the foregoing Persons without the prior written consent of Agent, which consent may be withheld in Agent’s sole discretion and, in any event, if granted, may be conditioned on such terms and conditions as Agent shall require in its sole discretion, including, without limitation, a limitation on the aggregate amount of Loans which may be held by such Person and/or its Affiliates and/or limitations on such Person’s and/or its Affiliates’ voting and consent rights and/or rights to attend Lender meetings or obtain information provided to other Lenders. Any attempted assignment not made in accordance with this Section 15.9 shall be null and void. Each Borrower shall be deemed to have granted its consent to any assignment requiring its consent hereunder unless Borrower Representative has expressly objected to such assignment within five (5) Business Days after receipt of written notice thereof.

 

(b) From and after the date on which the conditions described in Section 15.9(a) above have been met, (i) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned to such Assignee pursuant to the applicable Assignment and Assumption, shall have the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to the applicable Assignment and Assumption, shall be released from its rights (other than its indemnification rights) and obligations hereunder. Upon the request of the Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment and Assumption, Borrowers shall execute and deliver to Agent for delivery to the Assignee (and, as applicable, the assigning Lender) a promissory note in the principal amount of the Assignee’s Term Loan (and, as applicable, a promissory note in the principal amount of the Term Loan retained by the assigning Lender). Upon receipt by Agent of such promissory note(s), the assigning Lender shall return to Borrowers any prior promissory note held by it.

 

(c) Agent shall, as a non-fiduciary agent of Borrowers, maintain a copy of each Assignment and Assumption delivered and accepted by it and register (the “Register”) for the recordation of names and addresses of the Lenders and principal and stated interest of each Loan owing to each Lender from time to time and whether such Lender is the original Lender or the Assignee. No assignment shall be effective unless and until the Assignment and Assumption is accepted and registered in the Register. All records of transfer of a Lender’s interest in the Register shall be conclusive, absent manifest error, as to the ownership of the interests in the Loans. Agent shall not incur any liability of any kind with respect to any Lender with respect to the maintenance of the Register. Each Lender granting a participation shall, as a non-fiduciary agent of the Borrowers, maintain a register containing information similar to that of the Register in a manner such that the loans hereunder are in “registered form” for the purposes of the Code. This Section shall be construed so that the Loans are at all times maintained in “registered form” for the purpose of the Code and any related regulations (and any successor provisions).

 

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15.10. Participations. Anything in this Agreement or any other Loan Document to the contrary notwithstanding, any Lender may, at any time and from time to time, without in any manner affecting or impairing the validity of any Obligations, sell to one or more Persons participating interests in its Loans or other interests hereunder or under any other Loan Document (any such Person, a Participant). In the event of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder and under the other Loan Documents shall remain unchanged for all purposes, (b) Borrowers and such Lender shall continue to deal solely and directly with each other in connection with such Lender’s rights and obligations hereunder and under the other Loan Documents and (c) all amounts payable by Borrowers shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender; provided, that a Participant shall be entitled to the benefits of Section 13 as if it were a Lender if Borrower Representative is notified of the Participation and the Participant complies with Section 13. Each Borrower agrees that if amounts outstanding under this Agreement or any other Loan Document are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and the other Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided, that such right of set-off shall not be exercised without the prior written consent of such Lender and shall be subject to the obligation of each Participant to share with such Lender its share thereof. Each Borrower also agrees that each Participant shall be entitled to the benefits of Section 15.9 as if it were a Lender. Notwithstanding the granting of any such participating interests, (i) Borrowers shall look solely to the applicable Lender for all purposes of this Agreement, the Loan Documents and the transactions contemplated hereby, (ii) Borrowers shall at all times have the right to rely upon any amendments, waivers or consents signed by the applicable Lender as being binding upon all of the Participants and (iii) all communications in respect of this Agreement and such transactions shall remain solely between Borrowers and the applicable Lender (exclusive of Participants) hereunder. If a Lender grants a participation hereunder, such Lender shall maintain, as a non-fiduciary agent of Borrowers, a register as to the participations granted and transferred under this Section containing the same information specified in Section 15.9 on the Register as if each Participant were a Lender to the extent required to cause the Loans to be in registered form for the purposes of Sections 163(F), 165(J), 871, 881, and 4701 of the Code.

 

15.11. Headings; Construction. Section and subsection headings are used in this Agreement only for convenience and do not affect the meanings of the provisions that they precede.

 

15.12. USA PATRIOT Act Notification. Agent hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it may be required to obtain, verify and record certain information and documentation that identifies such Person, which information may include the name and address of each such Person and such other information that will allow Agent to identify such Persons in accordance with the USA PATRIOT Act.

 

15.13. Counterparts; Fax/Email Signatures. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same agreement. This Agreement may be executed by signatures delivered by facsimile or electronic mail, each of which shall be fully binding on the signing party.

 

15.14. GOVERNING LAW. THIS AGREEMENT, ALONG WITH ALL OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE IN SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS AGREEMENT AND ALL SUCH OTHER LOAN DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

 

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15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS IN THE COUNTY OF COOK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR IN ANY OTHER COURT (IN ANY JURISDICTION) SELECTED BY THE AGENT IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR BASED ON 28 U.S.C. § 1404, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, AMENDMENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER’S’ NOTICE ADDRESS (ON BEHALF OF BORROWERS OR SUCH LOAN PARTY OBLIGOR) SET FORTH IN SECTION 15.1 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAIL, OR, AT THE AGENT’S OPTION, BY SERVICE UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR IN ANY OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS.

 

15.16. Publication. Each Borrower and each other Loan Party Obligor consents to the publication by Agent of a tombstone, press releases or similar advertising material relating to the financing transactions contemplated by this Agreement, and Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 

15.17. Confidentiality. Agent and each Lender agree to use commercially reasonable efforts not to disclose Confidential Information to any Person without the prior consent of Borrower Representative; provided, that nothing herein contained shall limit any disclosure of the tax structure of the transactions contemplated hereby, or the disclosure of any information (a) to the extent required by applicable law, statute, rule, regulation or judicial process or in connection with the exercise of any right or remedy under any Loan Document, or as may be required in connection with the examination, audit or similar investigation of Agent or any of its Affiliates, (b) to examiners, auditors, accountants or any regulatory authority, (c) to the officers, partners, managers, directors, employees, agents and advisors (including independent auditors, lawyers and counsel) of Agent and each Lender or any of their respective Affiliates, (d) in connection with any litigation or dispute which relates to this Agreement or any other Loan Document to which Agent or any Lender is a party or is otherwise subject, (e) to a subsidiary or Affiliate of Agent or any Lender, (f) to any Assignee or Participant (or prospective Assignee or Participant) which agrees to be bound by this Section 15.17 and (g) to any lender or other funding source of Agent or any Lender (each reference to Agent and Lender in the foregoing clauses shall be deemed to include (i) the actual and prospective Assignees and Participants referred to in clause (f) and the lenders and other funding sources referred to in clause (g), as applicable for purposes of this Section 15.17), and further provided, that in no event shall Agent or any Lender be obligated or required to return any materials furnished by or on behalf of any Borrower or any other Loan Party or Obligor. The obligations of Agent and Lenders under this Section 15.17 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter or provision in respect of this financing or any other financing previously signed and delivered by Agent or any Lender to any Borrower or any of its Affiliates.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender have signed this Agreement as of the date first set forth above.

 

Agent:
     
PATHLIGHT CAPITAL LP
     
By: Pathlight Partners GP, LLC, its General Partner

 

By:
Name:  
Its:  

 

Lenders:
     
PATHLIGHT CAPITAL FUND I LP
     
By: Pathlight Partners GP, LLC, its General Partner

 

By:
Name:  
Its:  

 

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Loan Party Obligors:
   
RUBICON GLOBAL, LLC, as a Borrower and a Loan Party Obligor

 

By:
Name:  
Its:  

 

RIVERROAD WASTE SOLUTIONS, INC., as a Borrower and a Loan Party Obligor

 

By:
Name:  
Its:  

 

RUBICON TECHNOLOGIES, LLC, as a Loan Party Obligor

 

By:
Name:  
Its:  

 

CLEANCO LLC, as a Loan Party Obligor

 

By:
Name:  
Its:  

 

CHARTER WASTE MANAGEMENT, INC., as a Loan Party Obligor

 

By:
Name:  
Its:  

 

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Exhibit 10.20

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY, INCLUDING ANY LIENS GRANTED PURSUANT THERETO, ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT, DATED AS OF DECEMBER 22, 2021 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT FROM TIME TO TIME, THE “SUBORDINATION AGREEMENT”) AMONG (A) ECLIPSE BUSINESS CAPITAL LLC, A DELAWARE LIMITED LIABILITY COMPANY, IN ITS CAPACITY AS ADMINISTRATIVE AGENT (IN SUCH CAPACITY, THE “REVOLVING AGENT”) FOR THE REVOLVING CREDITORS REFERRED TO THEREIN, (B) PATHLIGHT CAPITAL LP, AS DELAWARE LIMITED PARTNERSHIP, IN ITS CAPACITY AS ADMINISTRATIVE AGENT (IN SUCH CAPACITY, THE “TERM AGENT” AND, TOGETHER WITH THE REVOLVING AGENT, COLLECTIVELY, THE “SENIOR AGENTS” AND EACH, INDIVIDUALLY, A “SENIOR AGENT”) FOR THE TERM CREDITORS REFERRED TO THEREIN, (C) MIZZEN CAPITAL, LP, A DELAWARE LIMITED PARTNERSHIP, IN ITS CAPACITY AS ADMINISTRATIVE AGENT FOR THE SUBORDINATED CREDITORS REFERRED TO THEREIN, AND (D) (I) RUBICON TECHNOLOGIES, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“HOLDINGS”), (II) RUBICON GLOBAL, LLC, A DELAWARE LIMITED LIABILITY COMPANY (THE “COMPANY”) AND (III) EACH OF HOLDINGS’ OTHER SUBSIDIARIES WHICH ARE OR MAY BECOME SIGNATORIES TO THERETO, TO (1) THE SENIOR DEBT (AS DEFINED THEREIN) INCURRED FROM TIME TO TIME PURSUANT TO THE SENIOR DEBT DOCUMENTS (AS DEFINED THEREIN), AND (II) THE LIENS GRANTED TO THE SENIOR AGENTS TO SECURE THE SENIOR DEBT.

 

 

LOAN AND SECURITY AGREEMENT

 

Dated as of December 22, 2021

 

by and among

 

RUBICON GLOBAL, LLC

 

and

 

RIVERROAD WASTE SOLUTIONS, INC.,

as Borrowers and Loan Party Obligors,

 

RUBICON TECHNOLOGIES, LLC, CLEANCO LLC,

CHARTER WASTE MANAGEMENT, INC. and RUBICON TECHNOLOGIES

INTERNATIONAL, INC.,

as Loan Party Obligors

 

the Lenders from time to time party hereto,

 

and

 

MIZZEN CAPITAL, LP,

as Agent

 

 

 

 

 

TABLE OF CONTENTS

 

      Page
1. DEFINITIONS   1
  1.1. Certain Defined Terms   1
  1.2. Accounting Terms and Determinations   18
  1.3. Other Definitional Provisions and References   19
         
2. LOANS   19
  2.1. Term Loans   19
  2.2. Reserved   20
  2.3. Repayments   20
  2.4. Prepayments; Application of Prepayments   20
  2.5. Obligations Unconditional   21
  2.6. Reversal of Payments   22
  2.7. Notes   22
  2.8. Defaulting Lenders   22
  2.9. Appointment of Borrower Representative   23
  2.10. Joint and Several Liability   24
  2.11. Warrants   26
         
3. INTEREST AND FEES   26
  3.1. Interest   26
  3.2. Fees   26
  3.3. Computation of Interest and Fees   26
  3.4. Loan Account; Monthly Accountings   26
  3.5. Further Obligations; Maximum Lawful Rate   27
         
4. CONDITIONS PRECEDENT   27
  4.1. Conditions to Funding Term Loans   27
         
5. COLLATERAL   28
  5.1. Grant of Security Interest   28
  5.2. Possessory Collateral   29
  5.3. Further Assurances   29
  5.4. UCC Financing Statements   29
  5.5. Subordination Agreement   30
         
6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS   30
  6.1. Lock Boxes and Blocked Accounts   30
  6.2. Application of Payments   30
  6.3. Notification; Verification   31
  6.4. Power of Attorney   31
  6.5. Disputes   32
  6.6. Invoices   32

 

 

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7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS   33
  7.1. Existence and Authority   33
  7.2. Names; Trade Names and Styles   33
  7.3. Title to Collateral; Third Party Locations; Permitted Liens   34
  7.4. Accounts and Chattel Paper   34
  7.5. Electronic Chattel Paper   34
  7.6. Capitalization; Investment Property   34
  7.7. Commercial Tort Claims   36
  7.8. Jurisdiction of Organization; Location of Collateral   36
  7.9. Financial Statements and Reports; Solvency   36
  7.10. Tax Returns and Payments; Pension Contributions   37
  7.11. Compliance with Laws; Intellectual Property; Licenses   38
  7.12. Litigation   38
  7.13. Use of Proceeds   39
  7.14. Insurance   39
  7.15. Financial, Collateral and Other Reporting / Notices   40
  7.16. Litigation Cooperation   42
  7.17. Maintenance of Collateral, Etc   42
  7.18. Material Contracts   42
  7.19. No Default   43
  7.20. No Material Adverse Change   43
  7.21. Full Disclosure   43
  7.22. Sensitive Payments   43
  7.23. Holdings   43
  7.24. Subordinated Debt   43
  7.25. Access to Collateral, Books and Records   44
  7.26. Appraisals   44
  7.27. Lender Meetings   44
  7.28. Interrelated Businesses   44
  7.29. Post-Closing Matters   44
  7.30. ABL Obligations and Term Loan Obligations   45
  7.31. Warrants   45
         
8. NEGATIVE COVENANTS   45
       
9. FINANCIAL COVENANT   48
       
10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY   48
  10.1. Release   48
  10.2. Limitation of Liability   48
  10.3. Indemnity   48
         
11. EVENTS OF DEFAULT AND REMEDIES   49
  11.1. Events of Default   49
  11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc   52
  11.3. Remedies with Respect to Collateral   52

 

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12. LOAN GUARANTY   58
  12.1. Guaranty   58
  12.2. Guaranty of Payment   58
  12.3. No Discharge or Diminishment of Loan Guaranty   58
  12.4. Defenses Waived   59
  12.5. Rights of Subrogation   59
  12.6. Reinstatement; Stay of Acceleration   59
  12.7. Information   60
  12.8. Termination   60
  12.9. Maximum Liability   60
  12.10. Contribution   61
  12.11. Liability Cumulative   61
         
13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES   61
       
14. AGENT   63
  14.1. Appointment   63
  14.2. Rights as a Lender   64
  14.3. Duties and Obligations   64
  14.4. Reliance   64
  14.5. Actions through Sub-Agents   65
  14.6. Resignation   65
  14.7. Non-Reliance   66
  14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties   67
  14.9. Credit Bidding   67
  14.10. Certain Collateral Matters   68
  14.11. Restriction on Actions by Lenders   68
  14.12. Expenses   68
  14.13. Notice of Default or Event of Default   69
  14.14. Liability of Agent   69
         
15. GENERAL PROVISIONS   70
  15.1. Notices   70
  15.2. Severability   71
  15.3. Integration   71
  15.4. Waivers   71
  15.5. Amendments   72
  15.6. Time of Essence   72
  15.7. Expenses, Fee and Costs Reimbursement   73
  15.8. Benefit of Agreement; Assignability   73
  15.9. Assignments   73
  15.10. Participations   75
  15.11. Headings; Construction   75
  15.12. USA PATRIOT Act Notification   75
  15.13. Counterparts; Fax/Email Signatures   75
  15.14. GOVERNING LAW   75
  15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS   76
  15.16. Publication   76
  15.17. Confidentiality   76

 

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Attachments:

 

Perfection Certificate
Annex I   Reporting
Annex II   Term Loan Commitment Schedule
Annex III   Post-Closing Obligations
Annex IV   Liquidity Testing Example
Exhibit A   Closing Checklist
Exhibit B   Form of Account Debtor Notification
Exhibit C   Form of Compliance Certificate
Exhibit D   Form of Assignment and Assumption Agreement
Exhibit E   Form of Warrant

 

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LOAN AND SECURITY AGREEMENT

 

This LOAN AND SECURITY AGREEMENT (as it may be amended, restated or otherwise modified from time to time pursuant to the terms hereof, this “Agreement”) is entered into on December 22, 2021, by and among RUBICON GLOBAL, LLC, a Delaware limited liability company (“Rubicon”), and RIVERROAD WASTE SOLUTIONS, INC., a New Jersey corporation (“RiverRoad”; together with Rubicon, each a “Borrower” and collectively the “Borrowers”), RUBICON TECHNOLOGIES, LLC, a Delaware limited liability company (“Holdings”), CLEANCO LLC, a New Jersey limited liability company (“Cleanco”), CHARTER WASTE MANAGEMENT, INC., a Delaware corporation (“Charter”), RUBICON TECHNOLOGIES INTERNATIONAL, INC., a Delaware corporation (“International”), the Lenders party hereto from time to time, and MIZZEN CAPITAL, LP, as agent for the Lenders (in such capacity, “Agent”). The Annexes and Exhibits to this Agreement, as well as the Perfection Certificate attached to this Agreement, are an integral part of this Agreement and are incorporated herein by reference.

 

1. DEFINITIONS.

 

1.1. Certain Defined Terms.

 

Unless otherwise defined herein, the following terms are used herein as defined in the UCC: Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financing Statement, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper.

 

As used in this Agreement, the following terms have the following meanings:

 

ABL Agent means Encina Business Credit, LLC, in its capacity as “Agent” under (and as defined in) the ABL Loan Agreement, and any of its successors in such capacity.

 

ABL Borrowing Base means the “Borrowing Base” under (and as defined in) the ABL Loan Agreement as in effect on the date hereof or as amended from time to time.

 

ABL Loan Agreement means that certain Loan and Security Agreement dated as of December 14, 2018, by and among the Loan Party Obligors, the lenders party thereto and ABL Agent, as amended from time to time.

 

ABL Loan Documents means the “Loan Documents” as defined in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time.

 

ABL Obligations means the “Obligations” as defined in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time.

 

Accepting Lenders has the meaning set forth in Section 2.4(d).

 

Acquisition Cash Consideration” means, with respect to any calendar month, the aggregate cash consideration paid by the Loan Parties in respect of any Permitted Acquisition during such month.

 

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Affiliatemeans, with respect to any Person, any other Person in control of, controlled by, or under common control with the first Person, and any other Person who has a substantial interest, direct or indirect, in the first Person or any of its Affiliates, including, any officer or director of the first Person or any of its Affiliates (and if that Person is an individual, any member of the immediate family (including parents, siblings, spouse, children, stepchildren, nephews, nieces and grandchildren) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust); provided, that neither Agent, any Lender nor any of their respective Affiliates shall be deemed an Affiliateof Borrower for any purposes of this Agreement. For the purpose of this definition, a substantial interestshall mean the direct or indirect legal or beneficial ownership of more than ten (10%) percent of any class of equity or similar interest.

 

Agent” has the meaning set forth in the preamble to this Agreement, and includes any successor agent appointed in accordance with Section 14.6 herein.

 

Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, members, managers, attorneys, and agents.

 

Agent Professionals” means attorneys, accountants, appraisers, auditors, business valuation experts, liquidation agents, collection agencies, auctioneers, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Agreementand this Agreement has the meaning set forth in the preamble to this Agreement.

 

Allocable Amounts” has the meaning set forth in Section 2.10(f)(ii) of this Agreement.

 

Applicable Interest Rate” means fifteen percent (15%) per annum; provided, that, in the event that the Term Loans are not repaid on or prior to the first anniversary of the Closing, then, from and after the first anniversary of the Closing, the “Applicable Interest Rate” shall equal fourteen percent (14%) per annum.

 

Applicable Payment Percentage” has the meaning set forth in Section 12.10 of this Agreement.

 

Applicable Premium Percentage” means, as of the date of any prepayment, repayment or acceleration of the Loans, (i) in the event such prepayment, repayment or acceleration shall occur on or prior to March 31, 2022, five (5.0%) percent, (ii) in the event such prepayment, repayment or acceleration shall occur after March 31, 2022 but on or prior to July 31, 2022, three and one-half (3.5%) percent, (iii) in the event such prepayment, repayment or acceleration shall occur after July 31, 2022 but on or prior to August 31, 2022, three (3.0%) percent, (iv) in the event such prepayment, repayment or acceleration shall occur after August 31, 2022 but on or prior to September 30, 2022, two and one half (2.5%) percent, and (v) in the event such prepayment, repayment or acceleration shall occur after September 30, 2022 but on or prior to the date that is one year following the Closing Date, two (2.0%) percent.

 

Approved Electronic Communication means each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, facsimile or any other equivalent electronic service, whether owned, operated or hosted by Agent, any of its Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent pursuant to this Agreement or any other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information or material; provided, that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that Agent specifically instructs a Person to deliver in physical form.

 

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Approved Fundmeans any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business, in each case that is administered, managed, advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Assigneehas the meaning set forth in Section 15.9(a).

 

Assignment and Assumptionmeans an assignment and assumption agreement substantially in the form of Exhibit D.

 

Assignment of Claims Act”, means the Assignment of Claims Act of 1940, as amended, currently codified at 31 U.S.C. 3727 and 41 U.S.C. 6305, and includes the prior historically referenced Federal Anti-Claims Act (31 U.S.C. 3727) and the Federal Anti-Assignment Act (41 U.S.C. 6305).

 

Bankruptcy Code means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

 

Blocked Account has the meaning set forth in Section 6.1.

 

Borrowerand Borrowers has the meaning set forth in the preamble to this Agreement.

 

Borrower Representativemeans Rubicon, in such capacity pursuant to the provisions of Section 2.9, or any permitted successor Borrower Representative selected by Borrowers and approved by Agent.

 

Business Day means a day other than a Saturday or Sunday or any other day on which Agent or banks in New York are authorized to close.

 

Capital Expenditures means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of Borrowers, but excluding expenditures made in connection with the acquisition, replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with cash awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

Capitalized Lease means any lease which is or should be capitalized on the balance sheet of the lessee thereunder in accordance with GAAP.

 

Change of Control has the meaning set forth in Section 11.1(l).

 

Closing Date means December 22, 2021.

 

Codemeans the Internal Revenue Code of 1986, as amended.

 

Collateralmeans all property and interests in property in or upon which a security interest, mortgage, pledge or other Lien is granted pursuant to this Agreement or the other Loan Documents, including all of the property of each Loan Party Obligor described in Section 5.1.

 

Collectionshas the meaning set forth in Section 6.1.

 

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Compliance Certificate means a compliance certificate substantially in the form of Exhibit C hereto to be signed by the Chief Financial Officer or President of Borrower Representative.

 

Confidential Information means confidential information that any Loan Party furnishes to the Agent pursuant to any Loan Document concerning any Loan Party’s business, but does not include any such information once such information has become, or if such information is, generally available to the public or available to the Agent (or other applicable Person) from a source other than the Loan Parties which is not, to the Agent’s knowledge, bound by any confidentiality obligation in respect thereof.

 

Control Agreement” means an agreement with respect to any deposit, securities or commodities account, in form and substance reasonably satisfactory to Agent, establishing control (as defined in the UCC to the extent applicable) of such account by Agent and is executed and delivered by the bank (with respect to a deposit account), securities intermediary (with respect to a securities account), or commodities intermediary (with respect to a commodities account) maintaining such account, the applicable Loan Party Obligor, Agent, ABL Agent and Term Loan Agent.

 

Credit Bid” has the meaning set forth in Section 14.9 of this Agreement.

 

Declining Lender has the meaning set forth in Section 2.4(d).

 

Defaultmeans any event or circumstance which with notice or passage of time, or both, would constitute an Event of Default.

 

Default Rate has the meaning set forth in Section 3.1.

 

Defaulting Lender means any Lender that (a) has failed, within one (1) Business Day of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to Agent or any other Lender any other amount required to be paid by it hereunder, (b) has notified Borrower Representative or Agent in writing, or it or its parent has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement or generally under other agreements in which it or its parent commits to extend credit, (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such certification in form and substance satisfactory to Agent, (d) had an involuntary proceeding commenced or an involuntary petition filed seeking (i) liquidation, reorganization or other relief in respect of such Lender or its parent or its or its parent’s debts, or of a substantial part of its or its parent’s assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Lender or its parent or for a substantial part of its or its parent’s assets, or (e) shall have or whose parent shall have (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consented to the institution of, or failed to contest in a timely and appropriate manner, any proceeding or petition described in clause (d) of this definition, (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or a substantial part of its assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) made a general assignment for the benefit of creditors or (vi) taken any action for the purpose of effecting any of the foregoing.

 

-4-

 

 

Division” in reference to any Person which is an entity, means the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity. The word “Divide” when capitalized, shall have a correlative meaning.

 

Dollar Equivalent Amount means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent.

 

Dollarsor $ means United States Dollars.

 

EBITDA” means, with respect to Holdings and its consolidated Subsidiaries for any period, determined on a consolidated basis in accordance with GAAP, (a) the consolidated net income of Holdings and its consolidated Subsidiaries for such period determined in accordance with GAAP, plus (b) solely to the extent deducted in the calculation of consolidated net income of Holdings and its consolidated Subsidiaries for such period, the sum of, without duplication:

 

(i) the consolidated interest expense of Holdings and its consolidated Subsidiaries for such period;

 

(ii) the consolidated tax expense of Holdings and its consolidated Subsidiaries for such period; and

 

(iii) the consolidated depreciation and amortization expense of Holdings and its consolidated Subsidiaries for such period.

 

E-Signaturemeans the process of attaching to or logically associating with an Approved Electronic Communication an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Approved Electronic Communication) with the intent to sign, authenticate or accept such Approved Electronic Communication.

 

Electronic Signatures in Global and National Commerce Act” means 15 U.S.C. § 7001 et seq.

 

Enforcement Action” means any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral, whether by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu of foreclosure, action in any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or otherwise.

 

ERISAmeans the Employee Retirement Income Security Act of 1974 and all rules, regulations and orders promulgated thereunder.

 

ERISA Affiliate means any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code and Section 302 of ERISA).

 

-5-

 

 

ERISA Event means: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employer as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

 

Event of Default has the meaning set forth in Section 11.1.

 

Excess Availability has the meaning set forth in the ABL Loan Agreement as in effect on the date hereof or as amended from time to time.

 

Exchange Act” means the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.

 

Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of Agent or any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof); (b) in the case of a Non-U.S. Recipient (as defined in Section 13(e)), U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Non-U.S. Recipient with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which such Non-U.S. Recipient becomes a party to this Agreement, acquires a participation or changes its Lending Office, except in each case to the extent that, pursuant to Section 13, amounts with respect to such Taxes were payable either to such Non-U.S. Recipient’s assignor (or Lender granting such participation) immediately before such assignment or grant of participation or to such Non-U.S. Recipient immediately before it changed its Lending Office; (c) United States federal withholding Taxes that would not have been imposed but for such Recipient’s failure to comply with Section 13(e) (except where the failure to comply with Section 13(e) was the result of a change in law, ruling, regulation, treaty, directive, or interpretation thereof by a Governmental Authority after the date the Recipient became a party to this Agreement or a Participant) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

Extraordinary Receipt means any cash or cash equivalents received by or paid to or for the account of any Person not in the Ordinary Course of Business, (i) including tax refunds, pension plan reversions in respect of a funding surplus, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments, but (ii) excluding any purchase price adjustments.

 

FATCAmeans Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

-6-

 

 

FIRREAmeans the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

Fiscal Year means the fiscal year of Borrowers which ends on December 31 of each year.

 

FRBmeans the Board of Governors of the Federal Reserve System or any successor thereto.

 

GAAPmeans generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession) which are applicable to the circumstances as of the date of determination, in each case consistently applied.

 

Governing Documents means, with respect to any Person, the certificate of incorporation, articles of incorporation, certificate of formation, certificate of limited partnership, by-laws, operating agreement, limited liability company agreement, limited partnership agreement or other similar governance document of such Person.

 

Governmental Authority means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantor Payment has the meaning set forth in Section 2.10(f)(i).

 

Guaranty” or “Guarantied”, as applied to any Indebtedness, liability or other obligation, means (a) a guaranty, directly or indirectly, in any manner, including by way of endorsement (other than endorsements of negotiable instruments for collection in the Ordinary Course of Business), of any part or all of such Indebtedness, liability or obligation and (b) an agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or intended to assure, the payment or performance (or payment of damages in the event of non-performance) of any part or all of such Indebtedness, liability or obligation by any means (including the purchase of securities or obligations, the purchase or sale of property or services or the supplying of funds).

 

Indebtednessmeans (without duplication), with respect to any Person, (a) all obligations or liabilities of such Person, contingent or otherwise, for borrowed money, (b) all obligations of such Person represented by promissory notes, bonds, debentures or the like, or on which interest charges are customarily paid, (c) all liabilities secured by any Lien on such Person’s property owned or acquired, whether or not such liability shall have been assumed by such Person, (d) all obligations of such Person under conditional sale or other title-retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade payables which are less than ninety (90) days past the invoice date incurred in the Ordinary Course of Business, but including the maximum potential amount payable under any earn-out or similar obligations), (f) all Capitalized Leases of such Person, (g) all obligations (contingent or otherwise) of such Person as an account party or applicant in respect of letters of credit and bankers’ acceptances or in respect of financial or other hedging obligations, (h) all equity interests issued by such Person subject to repurchase or redemption at any time on or prior to the Scheduled Maturity Date (valued at, in the case of redeemable preferred equity interests, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such equity interests plus accrued and unpaid dividends), other than voluntary repurchases or redemptions that are at the sole option of such Person, (i) all principal outstanding under any synthetic lease, off-balance sheet loan or similar financing product of such Person and (j) all Guaranties, endorsements (other than for collection in the Ordinary Course of Business) and other contingent obligations of such Person in respect of the obligations of others.

 

-7-

 

 

Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Initial Declined Proceeds has the meaning set forth in Section 2.4(d).

 

Intellectual Property means the collective reference to all rights, priorities 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 and trademark licenses 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.

 

Investment Property means the collective reference to (a) all investment property as such term is defined in Section 9-102 of the UCC, (b) all financial assets as such term is defined in Section 8-102(a)(9) of the UCC and (c) whether or not constituting investment property as so defined, all Pledged Equity.

 

IPO” means either (x) an initial public offering registered under the Securities Act (other than on Form S-8 or S-4 (or any successor thereof)) pursuant to which common equity of Holdings, any Subsidiary of Holdings or one of more of direct or indirect parents of Holdings (or a corporate successor to any of the foregoing) has been distributed pursuant to an effective registration statement filed with the United States Securities and Exchange Commission in accordance with the Securities Act (whether alone or in conjunction with a secondary public offering) or pursuant to Rule 144 promulgated thereunder, or (y) the consummation of the SPAC Transaction.

 

Issuersmeans the collective reference to each issuer of Investment Property.

 

Lendermeans each Person listed on the Term Loan Commitment Schedule and any other Person that shall have become a Lender hereunder pursuant to an Assignment and Assumption, other than any such Person that ceases to be a Lender hereunder pursuant to an Assignment and Assumption.

 

Lienmeans any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest or other security arrangement and any other preference, priority, or preferential arrangement in the nature of a security interest of any kind or nature whatsoever, including any conditional sale contract or other title-retention agreement, the interest of a lessor under a Capitalized Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

 

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Liquidity” means, as of any date of determination, an amount equal to the sum of (i) the Excess Availability as of such date of determination (which, in the case of any Mid Month Repayment Testing Date, shall be equal to the Excess Availability as of the immediately prior Month End Repayment Testing Date), plus (ii) the amount of Unrestricted Cash as of such date of determination, minus (iii) the Minimum Excess Availability Amount as of such date of determination; provided, that, in the event that Holdings or any of its Subsidiaries shall receive cash proceeds from either (x) the issuance and sale of any equity interests of Holdings or any of its Subsidiaries or (y) the incurrence by Holdings or any of its Subsidiaries of any Subordinated Debt (any such proceeds are herein referred to as “Capital Raise Proceeds”), such Capital Raise Proceeds shall not constitute “Liquidity” hereunder to the extent that, substantially contemporaneously with the receipt of any such Capital Raise Proceeds, Holdings or any of its Subsidiaries shall apply such Capital Raise Proceeds to pay the purchase price payable in connection with a Permitted Acquisition.

 

Liquidity Test Amount” means, with respect to any Repayment Testing Date, the sum of (i) $30,000,000, plus (ii) the aggregate amount of outstanding Obligations as of such Repayment Testing Date, minus (iii) the Six Month Cash Burn Amount as of such Repayment Testing Date. An illustrative example of a hypothetical calculation of the “Liquidity Test Amount” and “Liquidity” as of a Repayment Testing Date is set forth on Annex IV hereto.

 

Loan Account has the meaning set forth in Section 3.4.

 

Loan Documents means, collectively, this Agreement, the Subordination Agreement, the Warrants and all notes, guaranties, security agreements, mortgages, certificates, landlord’s agreements, Lock Box and Blocked Account agreements, Compliance Certificates, each Subordinated Debt Subordination Agreement and all other agreements, documents and instruments now or hereafter executed or delivered by any Borrower, any Loan Party, or any Other Obligor in connection with, or to evidence the transactions contemplated by, this Agreement.

 

Loan Guaranty means the guaranty encompassed in Section 12.

 

Loan Party means, individually, Holdings, each Borrower, or any Subsidiary; and Loan Parties means, collectively, Holdings, each Borrower and all Subsidiaries.

 

Loan Party Obligor means, individually, each Borrower or any Obligor that is a Loan Party; and Loan Party Obligorsmeans, collectively, each Borrower and each Obligor that is a Loan Party.

 

Loansmeans the Term Loans.

 

Lock Box has the meaning set forth in Section 6.1.

 

Material Adverse Effect means any event, act, omission, condition or circumstance which, which individually or in the aggregate, has or could reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets or condition, financial or otherwise, of any Loan Party or any Other Obligor, as applicable, (b) the ability of any Loan Party or any Other Obligor, as applicable, to perform any of its obligations under any of the Loan Documents, (c) the validity or enforceability of, or Agent’s and Lenders’ rights and remedies under, any of the Loan Documents, (d) the ability of Agent and Lenders to realize upon Collateral in which Agent has previously perfected a Lien or (e) the existence, perfection or priority of any security interest granted in any Loan Document and covering Collateral in which Agent has previously perfected a Lien.

 

Material Contract means has the meaning set forth in Section 7.18.

 

Maturity Date means the Scheduled Maturity Date (or, if earlier, the Termination Date), or such earlier date as (i) the Obligations may be accelerated in accordance with the terms of this Agreement (including pursuant to Section 11.2), (ii) the corporate headquarters of any Borrower or any other Loan Party shall be relocated to a location outside the United States, (iii) the occurrence of any Trigger Event, or (iv) the Maturity Date under (and as defined in) the ABL Loan Agreement or the Term Loan Agreement shall occur.

 

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Maximum ABL Facility Amount” means (i) $63,000,000 in principal, minus (ii) all permanent reductions of the commitments to extend credit under the ABL Loan Documents so long as any repayments to be made in connection with such commitment reductions have been made.

 

Maximum Term Facility Amount” means (i) $66,000,000 in principal, minus (ii) the amount of any permanent repayment of the Term Loan Obligations made after the date hereof.

 

Maximum Lawful Rate has the meaning set forth in Section 3.5.

 

Maximum Liability has the meaning set forth in Section 12.9.

 

Mid Month Repayment Testing Date” means the 15th day of each calendar month occurring after the Closing Date.

 

Mid Month Repayment Testing Report” has the meaning set forth in clause (m) of Annex I to this Agreement.

 

Month End Repayment Testing Date” means the last day of each calendar month occurring after the Closing Date.

 

Month End Repayment Testing Report” has the meaning set forth in clause (l)(iii) of Annex I to this Agreement.

 

Monthly Cash Burn Amount” means, with respect to any calendar month, an amount equal, without duplication, to (i) the EBITDA of Holdings and its consolidated Subsidiaries for such month, plus (ii) the consolidated corporate bonus accrual (discretionary and non-cash intrayear) of Holdings and its consolidated Subsidiaries for such month, plus (iii) the consolidated stock-based compensation expense of Holdings and its consolidated Subsidiaries for such month, plus (iv) the consolidated liquidated damages accrual of Holdings and its consolidated Subsidiaries for such month, minus (v) the aggregate amount of property and equipment purchases of Holdings and its consolidated Subsidiaries for such month, minus (vi) the aggregate amount of regularly scheduled cash principal payments made in respect of any Indebtedness of Holdings and its consolidated Subsidiaries during such month; provided, that, (A) any aggregate cash consideration paid by the Loan Parties in respect of any Permitted Acquisition during such month shall be excluded from the calculation of Monthly Cash Burn Amount for such month, and (B) in the event that the Monthly Cash Burn Amount with respect to any calendar month, as determined in accordance with the foregoing, shall be greater than zero, then, notwithstanding anything to the contrary set forth herein, the “Monthly Cash Burn Amount” for such calendar month shall be deemed to be equal to zero.

 

Multiemployer Plan means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

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Net Proceeds means:

 

(a) with respect to any sale or other disposition, any Extraordinary Receipt, or any casualty or taking, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (v) the principal amount of any Indebtedness that is secured by the applicable asset by a Permitted Lien which is senior to the Agent’s Lien on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction, (w) the reasonable and customary out-of-pocket expenses incurred by the Loan Parties in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party to third parties (other than Affiliates)), (x) taxes reasonably estimated to be actually payable by any Loan Party in connection therewith, (y) reasonable reserves as determined in good faith by a responsible officer of a Loan Party, in accordance with GAAP, for any liabilities or indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchasers and other retained liabilities in respect of such disposition undertaken by any Loan Party in connection with such disposition, provided, that to the extent that any such amount ceases to be so reserved, the amount thereof shall be deemed to be Net Proceeds of such disposition at such time, and (z) in the case of Extraordinary Receipts consisting of indemnity payments, any amount applied to compensate or reimburse the applicable Loan Party for replacing, repairing or restoring any assets or otherwise remedying the condition giving rise to the claim for indemnification or paying claims and settlements to third Persons giving rise to the claim for indemnification, provided, that to the extent that any such amount is not so applied within 180 days, the amount thereof shall be deemed to be Net Proceeds of such Extraordinary Receipt at such time; and

 

(b) with respect to the incurrence or issuance of any Indebtedness, the excess of (i) the sum of the cash and cash equivalents received in connection with such transaction over (ii) the sum of (x) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Loan Parties in connection therewith and (y) the amount of all taxes paid or reasonably estimated to be actually payable by the Loan Parties in connection therewith.

 

Non-Consenting Lender has the meaning set forth in Section 15.5(b).

 

Non-Paying Guarantor has the meaning set forth in Section 12.10.

 

Non-U.S. Recipient has the meaning set forth in Section 13(e)(ii).

 

Obligationsmeans all present and future Loans, advances, debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by any Borrower or any other Loan Party Obligor to Agent and Lenders, whether evidenced by this Agreement or any other Loan Document, whether arising from an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect, whether absolute or contingent, whether due or to become due and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.

 

Obligormeans any guarantor, endorser, acceptor, surety or other Person liable on, or with respect to, any of the Obligations or who is the owner of any property which is security for any of the Obligations, other than a Borrower.

 

Ordinary Course of Businessmeans, in respect of any transaction involving any Person, the ordinary course of business of such Person, as conducted by such Person as of the Closing Date and, without obligation on the part of such Person to undertake such practices, any practices that are utilized to improve past practices or to conform with customary operating procedures for a similar business, as reasonably determined by such Person.

 

Other Obligor means any Obligor other than a Loan Party Obligor.

 

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Other Taxes means all present or future stamp, court or documentary, property, excise, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

Participanthas the meaning set forth in Section 15.10(b).

 

Paying Guarantor has the meaning set forth in Section 12.10.

 

PBGCmeans the Pension Benefit Guaranty Corporation.

 

Pension Act means the Pension Protection Act of 2006.

 

Pension Funding Rules means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA, and any sections of the Code or ERISA related thereto that are enacted after the date of this Agreement.

 

Pension Plan means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by a Loan Party and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

Perfection Certificate means the Perfection Certificate attached to this Agreement as of the Closing Date, together with any updates thereto as contemplated by this Agreement or otherwise permitted by Agent from time to time.

 

Permitted Acquisition” means any consensual acquisition by any Loan Party Obligor (other than asset acquisitions by Holdings), whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the equity interests of, or a business line or unit or a division of, any Person; in each case, provided:

 

(i) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such acquisition;

 

(ii) at or prior to the closing of such acquisition, Agent will be granted a Requisite Priority Lien (subject only to Permitted Liens) in substantially all the assets (wherever located) acquired pursuant thereto constituting Collateral (including, if applicable, any equity interests of any Person being acquired), and the Loan Party Obligors and such Person shall have executed such documents and taken such actions as may be reasonably required by Agent in connection therewith (including, without limitation, the delivery of (A) certified copies of the resolutions of the governing board of any applicable Loan Party Obligor and such Person authorizing such Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and substance reasonably acceptable to Agent, with respect to the transactions described herein (if required), (C) evidence of insurance of the business to be acquired consistent with the requirements of this Agreement and (D) any joinders or other agreements required pursuant to Section 5.3);

 

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(iii) the Borrower Representative shall have furnished Agent with ten (10) Business Days’ (or such shorter period as may be agreed by Agent) prior written notice of such intended acquisition and shall have furnished Agent with a current draft of the applicable material acquisition documents (and final copies thereof as and when executed);

 

the Borrower Representative shall have furnished to Agent at least ten (10) Business Days (or such shorter period as may be agreed by Agent) prior to the date on which any such acquisition is to be consummated or such shorter time as Agent may allow, a certificate of a responsible officer of Borrower, in form and substance reasonably satisfactory to Agent, certifying that all of the other requirements for a Permitted Acquisition will be satisfied on or prior to the closing date of such acquisition; provided, further that no hostile takeover or non-consensual transaction shall qualify as a Permitted Acquisition.

 

Permitted Discretion means a determination made by Agent in good faith and in the exercise of reasonable (from the perspective of an asset-based secured lender) business judgment.

 

Permitted Indebtedness means (a) the Obligations; (b) the Indebtedness existing on the date hereof described in Section 7 of the Perfection Certificate; in each case along with extensions, refinancings, modifications, amendments and restatements thereof; provided, that (i) the principal amount thereof is not increased, (ii) if secured by a Permitted Lien, no additional collateral beyond that existing as of the Closing Date is granted to secure such Indebtedness; (iii) if such Indebtedness is subordinated to any or all of the Obligations, the applicable subordination terms shall not be modified without the prior written consent of Agent and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party; (c) Capitalized Leases and purchase-money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $18,000,000 at any time outstanding; (d) Indebtedness incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (e) Subordinated Debt owing by Borrower solely to the extent such Subordinated Debt is subject to, and permitted by, a Subordinated Debt Subordination Agreement; (f) Indebtedness incurred under the ABL Loan Agreement in an aggregate principal amount not to exceed the Maximum ABL Facility Amount at any time outstanding; and (g) Indebtedness incurred under the Term Loan Agreement in an aggregate principal amount not to exceed the Maximum Term Facility Amount at any time outstanding.

 

Permitted Liens means (a) purchase-money security interests in specific items of Equipment securing Permitted Indebtedness described under clause (c) of the definition of Permitted Indebtedness; (b) Liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained provided the same have no priority over any of Agent’s security interests; (c) Liens of materialmen, mechanics, carriers, or other similar Liens arising in the Ordinary Course of Business and securing obligations which are not delinquent or are being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained; (d) Liens which constitute banker’s Liens, rights of set-off, or similar rights as to Deposit Accounts or other funds maintained with a bank or other financial institution (but only to the extent such banker’s Liens, rights of set-off or other rights are in respect of customary service charges relative to such Deposit Accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to any Loan Party); (e) cash deposits or pledges of an aggregate amount not to exceed $100,000 to secure the payment of worker’s compensation, unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the Ordinary Course of Business; (f) judgment Liens in respect of judgments that do not constitute an Event of Default; (g) Liens securing the ABL Obligations, subject to the terms of the Subordination Agreement, including the relative Lien priorities set forth therein; and (h) Liens securing the Term Loan Obligations, subject to the terms of the Subordination Agreement, including the relative Lien priorities set forth therein.

 

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Permitted Tax Distributions” means, with respect to any Person, for any taxable period after the Closing Date during which time such Person is a pass-through entity for income tax purposes, any dividend or distribution to any holder of such Person’s stock or other equity interests to permit such holders to pay federal income taxes and all relevant state and local income taxes at a rate equal to the highest marginal applicable tax rate for the applicable tax year, however denominated imposed as a result of taxable income allocated to such holder as a partner of such Person under federal, state, and local income tax laws, taking into account applicable deductions, losses, and credits of such Person (including, without limitation, deductions pursuant to Section 199A of the Internal Revenue Code) and allocated to such holder in proportion and to the extent of such holder’s stock or other equity interests of such Person.

 

Personmeans any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government or any agency or political division thereof, or any other entity.

 

Planmeans any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of any Loan Party or any such plan to which any Loan Party (or with respect to any plan subject to Section 412 of the Code or Section 302 or Title IV of ERISA, any ERISA Affiliate) is required to contribute on behalf of any of its employees.

 

Pledged Equity means the equity interests listed on Sections 1(f) and 1(g) of the Perfection Certificate, together with any other equity interests, certificates, options, or rights or instruments of any nature whatsoever in respect of the equity interests of any Person that may be issued or granted to, or held by, any Loan Party Obligor while this Agreement is in effect, and including, to the extent attributable to, or otherwise related to, such pledged equity interests, all of such Loan Party Obligor’s (a) interests in the profits and losses of each Issuer, (b) rights and interests to receive distributions of each Issuer’s assets and properties and (c) rights and interests, if any, to participate in the management of each Issuer related to such pledged equity interests.

 

Prepayment Event” means, without duplication:

 

(a) any sale or other disposition (including pursuant to a sale and leaseback transaction) of any Collateral, except for (i) sales and other dispositions permitted under clauses (i) and (ii) of Sections 8(e) and (ii) other sales and other dispositions permitted under Section 8(e) of Collateral with an aggregate value not to exceed $250,000 in any Fiscal Year;

 

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of (and payments in lieu thereof), any Collateral in an amount in excess of $250,000;

 

(c) the incurrence by a Loan Party of any Indebtedness (other than Permitted Indebtedness); or

 

(d) the receipt by any Loan Party of any Extraordinary Receipts.

 

Prepayment Premium” means, with respect to (x) any prepayment or repayment of the Loans on or prior to the date that is one year following the Closing Date for which the Prepayment Premium is payable hereunder or (y) any acceleration of the Loans pursuant to Section 11.2 on or prior to the date that is one year following the Closing Date, an amount equal to the Applicable Premium Percentage of the aggregate principal amount of the Loans so prepaid, repaid or accelerated.

 

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Pro Rata Share” means with respect to all matters relating to any Lender the percentage obtained by dividing (i) the outstanding principal amount of such Lender’s Term Loans by (ii) the aggregate outstanding principal amount of all Term Loans, in each case as any such percentages may be adjusted by assignments pursuant to an Assignment and Assumption.

 

Qualified Equity Contribution” means a cash equity contribution in the form of common equity, preferred equity, other equity made to Holdings or redemption of warrants for common equity, preferred equity, or other equity of Holdings, in each case, which, by its terms (or by the terms of any security or other equity interests into which it is convertible or for which it is exchangeable), (i) does not mature or become mandatorily redeemable pursuant to a sinking fund obligation, (ii) is not redeemable at the option of the holder thereof, in whole or in part, (iii) does not provide for the scheduled payments of dividends in cash, or (iv) is not or will not become convertible into or exchangeable for debt securities or other equity interests that would constitute Indebtedness.

 

Recipientmeans any Agent, any Lender, any Participant, or any other recipient of any payment to be made by or on account of any Obligation of any Loan Party under this Agreement or any other Loan Document, as applicable.

 

Registerhas the meaning set forth in Section 15.9(c).

 

Rejection Notice has the meaning set forth in Section 2.4(d).

 

Released Parties has the meaning set forth in Section 10.1.

 

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

 

Repayment Testing Date” means each Month End Repayment Testing Date and each Mid Month Repayment Testing Date, as applicable.

 

Repayment Testing Report” means each Month End Repayment Testing Report and Mid Month Repayment Testing Report, as applicable.

 

Reportable Event means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

 

Required Lenders means at any time Lenders (other than Defaulting Lenders) then holding Term Loans representing at least fifty-one percent (51%) of the aggregate principal amount of all Term Loans of such Lenders outstanding at such time; provided, that if there are two or more Lenders, then Required Lenders shall include at least two (2) Lenders (Lenders that are Affiliates or Approved Funds of one (1) another being considered as one Lender for purposes of this proviso).

 

Requisite Priority means, with respect to any particular type of Collateral, the priority of Agent’s Lien therein as set forth in the Subordination Agreement.

 

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Restricted Accounts means Deposit Accounts (a) established and used (and at all times will be used) solely for the purpose of paying current payroll obligations of Loan Parties (and which do not (and will not at any time) contain any deposits other than those necessary to fund current payroll), in each case in the Ordinary Course of Business, or (b) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, but solely to the extent that all funds on deposit therein are solely held for the benefit of, and owned by, employees (and will continue to be so held and owned) pursuant to such plan.

 

SBA” means the U.S. Small Business Administration.

 

SBA Regulations” means Title 13 of the Code of Federal Regulations, as amended and in effect from time to time.

 

Scheduled Maturity Date means December 22, 2022.

 

Second Offer has the meaning set forth in Section 2.4(d).

 

Securities Act means the Securities of Act of 1933, as amended.

 

Six Month Cash Burn Amount” means, with respect to any Repayment Testing Date, the product of (i) the aggregate Monthly Cash Burn Amount for the most recently completed three full calendar month period ended on or prior to such Repayment Testing Date, times (ii) two (2).

 

SPAC Transaction means a business combination transaction between Holdings and a special purpose acquisition company in which the special purpose acquisition company is the parent or successor of Holdings following the transaction or any other transaction resulting in a SPAC UP-C structure.

 

Stated Rate has the meaning set forth in Section 3.5.

 

Subordinated Debt means unsecured debt of a Loan Party that is in an amount and on terms satisfactory to Agent and is subject to a Subordinated Debt Subordination Agreement.

 

Subordinated Debt Documents means the documents approved by Agent in writing to govern the Subordinated Debt.

 

Subordinated Debt Subordination Agreement means a subordination agreement with terms and conditions satisfactory to Agent that governs the respective priority and rights of the applicable Subordinated Debt and the Obligations and is entered into by the holders of such Subordinated Debt (or their agent), the Agent and Borrower Representative (and any other relevant Loan Parties).

 

Subordination Agreement means that certain Subordination and Intercreditor Agreement, dated as of the Closing Date, by and between Agent, ABL Agent, Term Loan Agent and the Loan Party Obligors, as amended from time to time in accordance with the terms thereof.

 

Subsidiarymeans any corporation or other entity of which a Person owns, directly or indirectly, through one or more intermediaries, more than 50% of the capital stock or other equity interest at the time of determination. Unless the context indicates otherwise, references to a Subsidiary shall be deemed to refer to a Subsidiary of a Borrower.

 

Taxesmeans 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.

 

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Term Loan Agent means Pathlight Capital LP, in its capacity as “Agent” under (and as defined in) the Term Loan Agreement, and any of its successors in such capacity.

 

Term Loan Agreement means that certain Loan and Security Agreement dated as of March 29, 2019, by and among the Loan Party Obligors, the lenders party thereto and Term Loan Agent, as amended by that certain First Amendment to Loan and Security Agreement, dated as of February 27, 2020, that certain Second Amendment to Loan and Security Agreement, dated as of March 24, 2021, and that certain Third Amendment to Loan and Security Agreement, dated as of October 15, 2021, and as further amended from time to time.

 

Term Loan Borrowing Base means the “Borrowing Base” under (and as defined in) the Term Loan Agreement as in effect on the date hereof or as amended from time to time.

 

Term Loan Commitmentmeans (a) as to any Lender, the commitment of such Lender to make Term Loans as set forth in the Term Loan Commitment Schedule and (b) as to all Lenders, the aggregate commitment of all Lenders to make Term Loans, which aggregate commitment equals $20,000,000.

 

Term Loan Commitment Schedule” means the Term Loan Commitment Schedule attached hereto as Annex II.

 

Term Loan Documents means the “Loan Documents” as defined in the Term Loan Agreement as in effect on the date hereof or as amended from time to time.

 

Term Loan Obligations means the “Obligations” as defined in the Term Loan Agreement as in effect on the date hereof or as amended from time to time.

 

Term Loans has the meaning set forth in Section 2.1.

 

Termination Date means the date on which all of the Obligations have been paid in full in cash and all of Agent and Lenders’ lending commitments under this Agreement and under each of the other Loan Documents have been terminated.

 

Trigger Event” means, without duplication:

 

(a) the consummation of any IPO so long as the net cash proceeds of such IPO shall be at least $110,000,000 (it being agreed that, with respect to a SPAC Transaction contemplated by clause (y) of the definition of IPO, the “net cash proceeds” of such SPAC Transaction shall include, without limitation, (i) all cash amounts held in the trust account of the applicable special purpose acquisition company in respect of such SPAC Transaction (the “SPAC Acquiror”) as of the closing of such SPAC Transaction (calculated after deducting any amounts payable from such trust account at such closing in respect of any required redemptions of the common stock of such SPAC Acquiror in connection with such SPAC Transaction, but prior to the payment of any transaction expenses in connection with such SPAC Transaction), and (ii) the aggregate cash proceeds receivable by the SPAC Acquiror (or any successor thereto) from the “PIPE” investment in respect of such SPAC Transaction; or

 

(b) the occurrence of any Change of Control.

 

UCCmeans, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of New York or other applicable jurisdiction.

 

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Uniform Electronic Transactions Act” means that certain Uniform Electronic Transactions Act published by the Uniform Law Commission in 1999 giving electronic signatures the same effect as traditional handwritten signatures under the statute of frauds.

 

Unrestricted Cash” means, as of any date of determination, cash of Holdings and its Subsidiaries that would not appear as “Restricted” for purposes of GAAP on the consolidated balance sheet of Holdings and its Subsidiaries unless such cash is “Restricted” in favor of the holders of (or otherwise on account of) (a) Liens granted to the ABL Agent securing the ABL Obligations, (b) Liens granted to the Term Loan Agent securing the Term Loan Obligations, (c) Liens granted to the Agent securing the Obligations, or (d) Liens (i) arising by operation of law in favor of the applicable depository bank where such Unrestricted Cash is held or (ii) under the applicable depositary or similar agreement with such depository bank; provided, that, Unrestricted Cash shall not include any cash of Holdings or its Subsidiaries denominated in a currency other than U.S. Dollars or held in any non-U.S. jurisdiction.

 

Voting Power” means, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person. The holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or similar governing body of such Person.

 

Warrant Equity” means (i) all membership interests of Holdings issued or issuable pursuant to, and upon the exercise of, any Warrant, and (ii) any securities issued or issuable pursuant to the Warrants with respect to the membership interests referred to in the foregoing clause by way of an equity dividend or equity split or in connection with a combination or subdivision of equity interests, reclassification, merger, consolidation or other reorganization of Holdings.

 

Warrantshas the meaning set forth in Section 2.11.

 

1.2. Accounting Terms and Determinations.

 

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and either Borrower Representative or Agent shall so request, Required Lenders and Borrower Representative shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower Representative shall provide to Agent and Lenders financial statements and other documents required under this Agreement and the other Loan Documents which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (Codification of Accounting Standards 825-10) to value any Indebtedness or other liabilities of any Loan Party at fair value, as defined therein.

 

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Notwithstanding anything to the contrary contained in the paragraph above or the definitions of Capital Expenditures or Capitalized Leases, in the event of a change in GAAP after the Closing Date requiring all leases to be capitalized, only those leases (assuming for purposes of this paragraph that they were in existence on the Closing Date) that would constitute Capitalized Leases on the Closing Date shall be considered Capitalized Leases (and all other such leases shall constitute operating leases) and all calculations and deliverables under this Agreement or the other Loan Documents shall be made in accordance therewith (other than the financial statements delivered pursuant to this Agreement; provided that all such financial statements delivered to Agent and Lenders in accordance with the terms of this Agreement after the date of such change in GAAP shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such change).

 

1.3. Other Definitional Provisions and References.

 

References in this Agreement to Articles, Sections, Annexes, Exhibits or Schedules shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. Include, includes and including shall be deemed to be followed by without limitation. Or shall be construed to mean and/or. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References fromor through any date mean, unless otherwise specified, from and including or through and including, respectively. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds. Time is of the essence for each performance obligation of the Loan Parties under this Agreement and each Loan Document. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any agreement, instrument or document (a) shall include all schedules, exhibits, annexes and other attachments thereto and (b) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document). The words asset and property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise specified herein Dollar ($) baskets set forth in the representations and warranty, covenants and event of default provisions of this Agreement (and other similar baskets) are calculated as of each date of measurement by the Dollar Equivalent Amount thereof as of such date of measurement. Reference to a Loan Party’s “knowledge” or similar concept means actual knowledge of a senior officer, or knowledge that a senior officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.

 

2. LOANS.

 

2.1. Term Loans. Subject to the terms and conditions of this Agreement, on the Closing Date, each Lender severally (and not jointly) agrees to make a term loan to Borrowers (collectively, the “Term Loans”), in an amount equal to such Lender’s Term Loan Commitment. All Term Loans shall be made in and repayable in Dollars. Amounts repaid in respect of Term Loans may not be reborrowed, and upon each Lender’s making of the Term Loans on the Closing Date, any then outstanding Term Loan Commitment of such Lender shall be terminated.

 

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2.2. Reserved.

 

2.3. Repayments. All remaining outstanding Term Loans and other monetary Obligations (including all accrued and unpaid fees described in Section 3.2) shall be payable in full on the Maturity Date.

 

2.4. Prepayments; Application of Prepayments.

 

(a) Voluntary Prepayments. Subject to the terms of the Subordination Agreement, the Borrowers may, upon irrevocable notice from the Borrower Representative to the Agent, from time to time voluntarily prepay Term Loans in whole or in part, subject to payment of any applicable Prepayment Premium; provided that (i) such notice must be received by the Agent not later than 11:00 a.m. ET three (3) Business Days prior to the date of such prepayment and (ii) such prepayment shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining outstanding principal amount of the Term Loans). The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower Representative, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Each such prepayment shall be applied to the Term Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

(b) Mandatory Prepayments.

 

(i) If any Prepayment Event occurs, then, subject to the terms of the Subordination Agreement, to the extent of any remaining Net Proceeds received by the Loan Parties on account thereof after application of such proceeds to (x) outstanding ABL Obligations in accordance with the ABL Loan Agreement and (y) outstanding Term Loan Obligations in accordance with the Term Loan Agreement, the Borrowers shall, within five (5) Business Days (or immediately in the case of any incurrence of any Indebtedness that is not Permitted Indebtedness) after receipt of such Net Proceeds, prepay the Term Loans in an amount equal to such remaining Net Proceeds, together with any applicable Prepayment Premium; provided, however, that the Borrowers shall be permitted to replace, repair, restore or rebuild Collateral that is subject to any casualty or other insured damage or any taking under power of eminent domain or by condemnation or similar proceeding of (and payments in lieu thereof), so long as (i) no Default or Event of Default has occurred and is continuing and (ii) any such Net Proceeds on account of such Prepayment Event not used to replace, repair, restore or rebuild such Collateral within 180 days after the receipt of such Net Proceeds shall be applied to the prepayment of the Term Loans in accordance with this Section 2.4(b)(i) and Section 2.4(c).

 

(ii) If all Commitments under (and as defined in) the ABL Loan Agreement are terminated prior to the Scheduled Maturity Date under (and as defined in) the ABL Loan Agreement, the Borrowers shall, subject to the terms of the Subordination Agreement, immediately prepay all of the Loans.

 

(iii) If, as of any Repayment Testing Date, Liquidity (calculated as of such Repayment Testing Date) shall be not less than the Liquidity Test Amount in respect of such Repayment Testing Date, then, subject to the terms of the Subordination Agreement, the Borrowers shall, within ten (10) Business Days after the date on which the Repayment Testing Report in respect of such Repayment Testing Date shall have been delivered (or shall have been required to be so delivered) pursuant to clause (l)(iii) or clause (m), as applicable, of Annex I to this Agreement, prepay the entire amount of the Obligations then outstanding; provided that, for avoidance of doubt, such prepayment shall only be required to the extent such payments are permitted pursuant to the terms of the Subordination Agreement.

 

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(c) Application of Prepayments. Prepayments made pursuant to Section 2.4(a) or 2.4(b) shall be applied to the outstanding Term Loans of the Lenders, ratably in accordance with their respective Pro Rata Shares (subject to Section 2.4(d)).

 

(d) Option to Decline Proceeds. Upon the occurrence of any Prepayment Event, the Borrower Representative shall promptly provide the Agent with a written notice of such Prepayment Event and any associated prepayment required under Section 2.4(b), including the date and amount of such prepayment. The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. Each Lender may reject all or part of its Pro Rata Share of such prepayment (other than a prepayment in respect of Indebtedness that is not Permitted Indebtedness) (such declined amounts, the “Initial Declined Proceeds”) by providing written notice (each, a “Rejection Notice”) to the Agent no later than 3:00 p.m. ET, two (2) Business Days prior to the date of such prepayment as set forth in the applicable notice of prepayment (any such Lender, a “Declining Lender”); provided, that, if a Lender fails to deliver a Rejection Notice to the Agent within the time frame specified above, such failure will be deemed an acceptance by such Lender of its Pro Rata Share of such mandatory prepayment. If there are any Initial Declined Proceeds, the Agent shall then provide written notice (the “Second Offer”) to Lenders other than the Declining Lenders (such Lenders, the “Accepting Lenders”) of the additional amount available (due to such Declining Lenders’ declining such prepayment) to prepay Term Loans owing to such Accepting Lenders, with such available amount to be allocated on a pro rata basis among the Accepting Lenders that accept the Second Offer. Any Lenders declining prepayment pursuant to such Second Offer shall give written notice thereof to the Agent by 4:00 p.m. ET time no later than one (1) Business Day prior to the date of such prepayment as set forth in the applicable notice of prepayment; provided, that, if a Lender fails to deliver a Rejection Notice to the Agent within the time frame specified above, such failure will be deemed an acceptance of such Lender’s pro rata share of the Second Offer. Amounts remaining after the allocation to Accepting Lenders as set forth above may be retained by the applicable Loan Parties.

 

2.5. Obligations Unconditional.

 

(a) The payment and performance of all Obligations shall constitute the absolute and unconditional obligations of each Loan Party Obligor, and shall be independent of any defense or right of set-off, recoupment or counterclaim that any Loan Party Obligor or any other Person might otherwise have against Agent, any Lender or any other Person. All payments required by this Agreement or the other Loan Documents shall be made in Dollars (unless payment in a different currency is expressly provided otherwise in the applicable Loan Document) and paid free of any deductions or withholdings for any taxes or other amounts and without abatement, diminution or set-off. If any Loan Party Obligor is required by applicable law to make such a deduction or withholding from a payment under this Agreement or under any other Loan Document, such Loan Party Obligor shall pay to Agent such additional amount as shall be necessary to ensure that, after the making of such deduction or withholding, Agent receives (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made. Each Loan Party Obligor shall (a) pay the full amount of any deduction or withholding that it is required to make by law, to the relevant authority within the payment period set by applicable law and (b) promptly after any such payment, deliver to Agent an original (or certified copy) official receipt issued by the relevant authority in respect of the amount withheld or deducted or, if the relevant authority does not issue such official receipts, such other evidence of payment of the amount withheld or deducted as is reasonably acceptable to Agent.

 

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(b) If, at any time and from time to time after the Closing Date (or at any time before or after the Closing Date with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith), (a) any change in any existing law, regulation, treaty or directive or in the interpretation or application thereof, (b) any new law, regulation, treaty or directive enacted or application thereof or (c) compliance by Agent with any request or directive (whether or not having the force of law) from any Governmental Authority, central bank or comparable agency (i) subjects Agent or any Lender to any tax, levy, impost, deduction, assessment, charge or withholding of any kind whatsoever with respect to any Loan Document, or changes the basis of taxation of payments to Agent or any Lender of any amount payable thereunder (except for net income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by federal, state, local or other taxing authorities with respect to interest or fees payable hereunder or under any other Loan Document or changes in the rate of tax on the overall net income of Agent, any Lender or their respective members) or (ii) imposes on Agent or any Lender any other condition or increased cost in connection with the transactions contemplated thereby or participations therein, and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or continuing any Loan or to reduce any amount receivable hereunder or under any other Loan Documents, then, in each such case, Borrowers shall promptly pay to Agent or such Lender, when notified to do so by Agent or such Lender, any additional amounts necessary to compensate Agent or such Lender, on an after-tax basis, for such additional cost or reduced amount as determined by Agent or such Lender, but only to the extent such amounts relate to this Agreement or the Loan Documents. Each such notice of additional amounts payable pursuant to this Section 2.5(b) submitted by Agent or any Lender, as applicable, to Borrower Representative shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(c) This Section 2.5 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

2.6. Reversal of Payments. To the extent that any payment or payments made to or received by Agent or any Lender pursuant to this Agreement or any other Loan Document are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to any trustee, receiver or other Person under any state, federal or other bankruptcy or other such applicable law, then, to the extent thereof, such amounts (and all Liens, rights and remedies relating thereto) shall be revived as Obligations (secured by all such Liens) and continue in full force and effect under this Agreement and under the other Loan Documents as if such payment or payments had not been received by Agent or such Lender. This Section 2.6 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

2.7. Notes. The Loans shall, at the request of any Lender, be evidenced by one or more promissory notes in form and substance reasonably satisfactory to such Lender. However, if such Loans are not so evidenced, such Loans may be evidenced solely by entries upon the books and records maintained by Agent.

 

2.8. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a) Any amount payable to a Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) may, in Agent’s sole discretion, in lieu of being distributed to such Defaulting Lender, be retained by Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to Agent hereunder, (ii) second, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent, (iii) third, if so determined by Agent and Borrowers, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment of any amounts owing to Borrowers or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by Borrowers or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (v) fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.

 

(b) No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver, consent or any other action the Lenders or the Required Lenders have taken or may take hereunder, provided that any waiver, amendment or modification requiring the consent of all Lenders or each directly affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

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2.9. Appointment of Borrower Representative.

 

(a) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent and attorney-in-fact to request and receive Loans in the name or on behalf of such Borrower and any other Borrowers, deliver Notices of Borrowing, give instructions with respect to the disbursement of the proceeds of the Loans, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) in the name or on behalf of any Borrower or Borrowers pursuant to this Agreement and the other Loan Documents. Agent may disburse the Loans to such bank account of Borrower Representative or a Borrower or otherwise make such Loans to a Borrower, in each case as Borrower Representative may designate or direct, without notice to any other Borrower. Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

 

(b) Borrower Representative hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 2.9. Borrower Representative shall ensure that the disbursement of any Loans that are at any time requested by or to be remitted to or for the account of a Borrower requested on behalf of a Borrower hereunder, shall be remitted or issued to or for the account of such Borrower.

 

(c) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

 

(d) Any notice, election, representation, warranty, agreement or undertaking made or delivered by or on behalf of any Borrower by Borrower Representative shall be deemed for all purposes to have been made or delivered by such Borrower, as the case may be, and shall be binding upon and enforceable against such Borrower to the same extent as if made or delivered directly by such Borrower.

 

(e) No resignation by or termination of the appointment of Borrower Representative as agent and attorney-in-fact as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to Agent. If the Borrower Representative resigns under this Agreement, Borrowers shall be entitled to appoint a successor Borrower Representative (which shall be a Borrower and shall be reasonably acceptable to Agent as such successor). Upon the acceptance of its appointment as successor Borrower Representative hereunder, such successor Borrower Representative shall succeed to all the rights, powers and duties of the retiring Borrower Representative and the term “Borrower Representative” shall mean such successor Borrower Representative for all purposes of this Agreement and the other Loan Documents, and the resigning or terminated Borrower Representative’s appointment, powers and duties as Borrower Representative shall be thereupon terminated.

 

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2.10. Joint and Several Liability.

 

(a) Joint and Several. Each Borrower hereby agrees that such Borrower is jointly and severally liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each other Borrower. Each Borrower agrees that its obligation hereunder shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.10 shall be absolute and unconditional, irrespective of, and unaffected by,

 

(i) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

 

(ii) the absence of any action to enforce this Agreement (including this Section 2.10) or any other Loan Document or the waiver or consent by Agent or any Lender with respect to any of the provisions thereof;

 

(iii) the existence, value or condition of, or failure to perfect Agent’s Lien against, any security for the Obligations or any action, or the absence of any action, by Agent in respect thereof (including the release of any such security);

 

(iv) the insolvency of any Loan Party or Other Obligor; or

 

(v) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

 

(b) Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent to marshal assets or to proceed in respect of the Obligations against any other Loan Party or Other Obligor, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 2.10 and such waivers, Agent and Lenders would decline to enter into this Agreement.

 

(c) Benefit of Joint and Several Obligations. Each Borrower agrees that the provisions of this Section 2.10 are for the benefit of Agent and Lenders and their successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower, Agent and any Lender, the obligations of such other Borrower under the Loan Documents.

 

(d) Subordination of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor with respect to any other Loan Party or any Other Obligor until the Obligations are indefeasibly paid in full in cash. Each Borrower acknowledges and agrees that this subordination is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 2.10, and that Agent and Lenders and their successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 2.10(d).

 

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(e) Election of Remedies. If Agent may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2.10. If, in the exercise of any of its rights and remedies, Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Agent and waives any claim based upon such action, even if such action by Agent shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent.

 

(f) Contribution with Respect to Guaranty Obligations.

 

(i) To the extent that any Borrower shall make a payment under this Section 2.10 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

(ii) As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Section 2.10 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

(iii) This Section 2.10(f) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 2.10(f) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.10(a). Nothing contained in this Section 2.10(f) shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

 

(iv) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of each Borrower to which such contribution and indemnification is owing.

 

(v) The rights of the indemnifying Borrowers against other Loan Parties under this Section 2.10(f) shall be exercisable upon the full and indefeasible payment of the Obligations.

 

(g) Liability Cumulative. The liability of Borrowers under this Section 2.10 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

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2.11. Warrants. As an inducement to the Lenders to make the Term Loans on the Closing Date, and in consideration thereof, on the Closing Date, Holdings will issue and deliver to each Lender a warrant, exercisable for such number of membership interests of Holdings set forth therein, at an initial exercise price as set forth therein (subject to adjustment as provided therein), such warrants to be substantially in the form of Exhibit E attached hereto (all such warrants issued pursuant to this Agreement, or delivered in substitution or exchange for any thereof, being collectively called the “Warrants” and, individually, a “Warrant”), duly executed and dated the Closing Date, and registered in each such Lender’s name or in the name of its nominee.

 

3. INTEREST AND FEES.

 

3.1. Interest. All Loans and other monetary Obligations shall bear interest at a rate per annum equal to the Applicable Interest Rate, and accrued interest shall be payable (a) on the first day of each month in arrears, (b) upon a prepayment of Loan in accordance with Section 2.4 and (c) on the Maturity Date; provided, that after the occurrence and during the continuation of an Event of Default, all Loans and other monetary Obligations shall bear interest at a rate per annum equal to two (2) percentage points (2.00%) in excess of the rate otherwise applicable thereto (the Default Rate), and all such interest shall be payable on demand.

 

3.2. Fees.

 

(a) Closing Fee. On the Closing Date, the Borrowers shall pay the Agent, for the benefit of all Lenders holding a Term Loan Commitment, a closing fee in an aggregate amount equal to the product of (i) the aggregate Term Loan Commitment of all of the Lenders, times (ii) two percent (2.00%), which aggregate closing fee shall be allocated among the Lenders in proportion to their respective Term Loan Commitments. All closing fees payable pursuant to this clause (a) shall be fully earned as of the date hereof, shall not be subject to offset and shall not be refundable for any reason whatsoever.

 

(b) Application Fee. On the Closing Date, the Borrowers shall pay the Agent, for the benefit of all Lenders holding a Term Loan Commitment, an application fee in an aggregate amount equal to the product of (i) the aggregate Term Loan Commitment of all of the Lenders, times (ii) one percent (1.00%), which aggregate application fee shall be allocated among the Lenders in proportion to their respective Term Loan Commitments. All application fees payable pursuant to this clause (b) shall be fully earned as of the date hereof, shall not be subject to offset and shall not be refundable for any reason whatsoever.

 

3.3. Computation of Interest and Fees. All interest and fees shall be calculated daily on the outstanding monetary Obligations based on the actual number of days elapsed in a year of 360 days.

 

3.4. Loan Account; Monthly Accountings. Agent shall maintain a loan account for Borrowers reflecting all outstanding Loans, along with interest accrued thereon and such other items reflected therein (the “Loan Account”), and shall provide Borrower Representative with a monthly accounting reflecting the activity in the Loan Account. Each accounting shall be deemed correct, accurate and binding on Borrowers and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Agent), unless Borrower Representative notifies Agent in writing to the contrary within thirty (30) days after such account is rendered, describing the nature of any alleged errors or omissions. However, Agent’s failure to maintain the Loan Account or to provide any such accounting shall not affect the legality or binding nature of any of the Obligations. Interest, fees and other monetary Obligations due and owing under this Agreement may, in Agent’s discretion, be charged to the Loan Account and capitalized by adding such Obligations to the principal balance of the Loans, and will thereafter be deemed to be Loans and will bear interest at the same rate as other Loans.

 

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3.5. Further Obligations; Maximum Lawful Rate. With respect to all monetary Obligations for which the interest rate is not otherwise specified herein (whether such Obligations arise hereunder or under any other Loan Document, or otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time with respect to the Loans and shall be payable upon demand by Agent. In no event shall the interest charged with respect to any Loan or any other Obligation exceed the maximum amount permitted under applicable law. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable or other amounts hereunder or under any other Loan Document (the Stated Rate) would exceed the highest rate of interest or other amount permitted under any applicable law to be charged (the Maximum Lawful Rate), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest and other amounts payable shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the extent permitted by applicable law, continue to pay interest and such other amounts at the Maximum Lawful Rate until such time as the total interest and other such amounts received is equal to the total interest and other such amounts which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable or such other amounts payable. Thereafter, the interest rate and such other amounts payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest or other such amounts received by Agent exceed the amount which it could lawfully have received had the interest and other such amounts been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Agent has received interest or other such amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other Obligations (other than interest) payable hereunder, and if no such principal or other Obligations are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

 

4. CONDITIONS PRECEDENT.

 

4.1. Conditions to Funding Term Loans.

 

Each Lender’s obligation to fund the Term Loans under this Agreement on the Closing Date is subject to the following conditions precedent (as well as any other conditions set forth in this Agreement or any other Loan Document), all of which must be satisfied in a manner acceptable to Agent (and as applicable, pursuant to documentation which in each case is in form and substance acceptable to Agent):

 

(a) each Loan Party Obligor shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable Persons to have duly executed and or delivered, to Agent such agreements, instruments, documents, proxies and certificates as Agent may require, including such other agreements, instruments, documents and certificates listed on the closing checklist attached hereto as Exhibit A;

 

(b) Agent shall have completed its business and legal due diligence pertaining to the Loan Parties and their respective businesses and assets, including reviews of existing field examinations, with results thereof satisfactory to Agent in its sole discretion;

 

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(c) each Lender’s obligations and commitments under this Agreement shall have been approved by such Lender’s investment committee;

 

(d) since December 31, 2020, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party;

 

(e) Borrowers shall have paid to Agent all fees due on the date hereof, and shall have paid or reimbursed Agent for all of Agent’s costs, charges and expenses incurred through the Closing Date;

 

(f) each of the representations and warranties set forth in this Agreement and in the other Loan Documents shall be true and correct in all respects as of the Closing Date (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), both before and after giving effect to the borrowing of the Term Loans and any application of the proceeds thereof on or about the Closing Date;

 

(g) as of the Closing Date, both before and after giving effect to the borrowing of the Term Loans and any application of the proceeds thereof on or about the Closing Date, no Default or Event of Default shall have occurred and be continuing;

 

(h) each of (i) the ABL Agent, the required lenders under the ABL Loan Agreement and the Loan Parties shall have executed and delivered an amendment to the ABL Loan Agreement, and such amendment shall be in form and substance acceptable to the Agent, and (ii) the Term Loan Agent, the required lenders under the Term Loan Agreement and the Loan Parties shall have executed and delivered an amendment to the Term Loan Agreement, and such amendment shall be in form and substance reasonably acceptable to the Agent;

 

(i) [Reserved]; and

 

(j) Holdings shall have (i) entered into a definitive binding agreement with respect to the SPAC Transaction, and such agreement shall be in form and substance reasonably acceptable to Agent, and (ii) entered into definitive binding agreements providing for a Qualified Equity Contribution to Holdings in an aggregate amount not less than $100.0 million, and such agreements shall be in form and substance acceptable to Agent.

 

5. COLLATERAL.

 

5.1. Grant of Security Interest. To secure the full payment and performance of all of the Obligations, each Loan Party Obligor hereby assigns to Agent and grants to Agent, for itself and on behalf of the Lenders, a continuing security interest in all property of each Loan Party Obligor, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including: (a) all Accounts and all Goods whose sale, lease or other disposition by any Loan Party Obligor has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, any Loan Party Obligor; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guaranty claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory; (d) all Goods (other than Inventory), including Equipment, vehicles, and Fixtures; (e) all Investment Property, including all rights, privileges, authority, and powers of each Loan Party Obligor as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member, equity holder or shareholder, as applicable, of each Issuer and any rights related to any Loan Party Obligors’ capital account within the Issuer in respect of Investment Property; (f) all Deposit Accounts, bank accounts, deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims, including those listed in Section 2 of the Perfection Certificate (if any); (i) all Supporting Obligations; (j) all life insurance policies; (k) all leases; (l) any other property of any Loan Party Obligor now or hereafter in the possession, custody or control of Agent or any agent or any parent, Affiliate or Subsidiary of Agent, any Lender or any Participant with Lender in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (m) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property (including hazard, flood and credit insurance), and all of each Loan Party Obligor’s books and records relating to any of the foregoing and to any Loan Party’s business.

 

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5.2. Possessory Collateral. Subject to the Subordination Agreement, promptly, but in any event no later than five (5) Business Days after any Loan Party Obligor’s receipt of any portion of the Collateral evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper and any Investment Property consisting of certificated securities, such Loan Party Obligor shall deliver the original thereof to Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Agent (in form and substance acceptable to Agent). If an endorsement or assignment of any such items shall not be made for any reason, Agent is hereby irrevocably authorized, as attorney and agent-in-fact (coupled with an interest) for each Loan Party Obligor, to endorse or assign the same on such Loan Party Obligor’s behalf. The requirements of this Section 5.2 are subject to Section 5.5.

 

5.3. Further Assurances. Each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as may from time to time be necessary or desirable or as Agent may from time to time require in order to (a) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (b) establish, create, preserve, protect and perfect a Requisite Priority Lien (subject only to Permitted Liens) in favor of Agent in all the Collateral (wherever located) from time to time owned by the Loan Party Obligors and in all capital stock and other equity from time to time issued by the Loan Parties (other than Holdings) (including appraisals of real property in compliance with FIRREA), (c) cause Holdings and each Subsidiary to guaranty all of the Obligations, all pursuant to documentation that is in form and substance reasonably satisfactory to Agent and (d) facilitate the collection of the Collateral. Without limiting the foregoing, each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) to Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Agent, as Agent may request from time to time to perfect, protect and maintain Agent’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.

 

5.4. UCC Financing Statements. Each Loan Party Obligor authorizes Agent to file, transmit or communicate, as applicable, from time to time, UCC Financing Statements, along with amendments and modifications thereto, in all filing offices selected by Agent, listing such Loan Party Obligor as the Debtor and Agent as the Secured Party, and describing the collateral covered thereby in such manner as Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor,” or words of similar effect, in each case without such Loan Party Obligor’s signature. Each Loan Party Obligor also hereby ratifies its authorization for Agent to have filed, in any filing office, any Financing Statements filed prior to the date hereof.

 

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5.5. Subordination Agreement. In accordance with the terms of the Subordination Agreement, all Collateral delivered to ABL Agent or Term Loan Agent, as applicable, shall be held by the ABL Agent or Term Loan Agent, as applicable, as gratuitous bailee for Agent and the Lenders solely for the purpose of perfecting the security interest granted under this Agreement. Notwithstanding anything herein to the contrary, to the extent any Loan Party Obligor is required hereunder to deliver Collateral to Agent and is unable to do so as a result of having concurrently or previously delivered such Collateral to ABL Agent in accordance with the terms of the ABL Loan Documents or to Term Loan Agent in accordance with the terms of the Term Loan Documents, such Loan Party Obligor’s obligations hereunder with respect to such delivery shall be deemed satisfied by such delivery to ABL Agent or Term Loan Agent, as applicable, acting as gratuitous bailee of Agent and the Lenders.

 

6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS.

 

6.1. Lock Boxes and Blocked Accounts.

 

(a) Each Loan Party Obligor hereby represents and warrants that all Deposit Accounts and all other depositary and other accounts maintained by each Loan Party Obligor as of the Closing Date are described in Section 3 of the Perfection Certificate, which description includes for each such account the name of the Loan Party Obligor maintaining the account, the name of the financial institution at which the account is maintained, the account number and the purpose of the account. After the Closing Date, no Loan Party Obligor shall open any new Deposit Account or any other depositary or other account without the prior written consent of Agent and without updating Section 3 of the Perfection Certificate to reflect such Deposit Account or other account. No Deposit Account or other account of any Loan Party Obligor shall at any time constitute a Restricted Account other than accounts expressly indicated on Section 3 of the Perfection Certificate as being Restricted Accounts (and each Loan Party Obligor hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of Restricted Account to qualify as a Restricted Account). Subject to the Subordination Agreement, each Loan Party Obligor will, at its expense, establish (and revise from time to time as Agent may require) procedures acceptable to Agent, in Agent’s sole discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party Obligor’s Accounts and other Collateral (Collections), which shall include (a) directing all Account Debtors to send all Account proceeds directly to a post office box either in the name of such Loan Party Obligor (and subject to a Control Agreement) or, at Agent’s option, in the name of Agent (a Lock Box) and (b) depositing all Collections received by such Loan Party Obligor into one or more bank accounts maintained in the name of such Loan Party Obligor (and subject to a Control Agreement) or, at Agent’s option, in the name of Agent (each, a Blocked Account), and/or (c) a combination of the foregoing. Subject to the Subordination Agreement, each Loan Party Obligor agrees to execute, and to cause its depository banks and other account holders to execute, Control Agreements with respect to such Lock Boxes and Blocked Accounts (and all other accounts that do not constitute Restricted Accounts) and other documentation as Agent shall require from time to time in connection with the foregoing, all in form and substance acceptable to Agent, and in any event such arrangements and documents must be in place prior to any such account being opened with respect to such account, in each case excluding Restricted Accounts.

 

6.2. Application of Payments. All amounts paid to or received by Agent in respect of monetary Obligations, from whatever source (whether from any Borrower or any other Loan Party Obligor pursuant to such other Loan Party Obligor’s guaranty of the Obligations, any realization upon any Collateral or otherwise) shall be applied by Agent to the Obligations as follows:

 

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(i) FIRST, to reimburse Agent for all out-of-pocket costs and expenses, and all indemnified losses, incurred by Agent which are reimbursable to Agent in accordance with this Agreement or any of the other Loan Documents;

 

(ii) SECOND, to any accrued but unpaid fees owing to Agent and Lenders under this Agreement and/or any other Loan Documents;

 

(iii) THIRD, to any unpaid accrued interest on the Obligations;

 

(iv) FOURTH, to the outstanding principal of the Term Loans; and

 

(v) FIFTH, to the payment of any other outstanding Obligations; and after payment in full in cash of all of the outstanding monetary Obligations, any further amounts paid to or received by Agent in respect of the Obligations (so long as no monetary Obligations are outstanding) shall be paid over to Borrowers or such other Person(s) as may be legally entitled thereto.

 

6.3. Notification; Verification. Agent or its designee may, from time to time: (a) whether or not a Default or Event of Default has occurred, verify directly with the Account Debtors of the Loan Party Obligors (or by any manner and through any medium Agent considers advisable) the validity, amount and other matters relating to the Accounts and Chattel Paper of the Loan Party Obligors, by means of mail, telephone or otherwise, either in the name of the applicable Loan Party Obligor or Agent or such other name as Agent may choose; (b) whether or not a Default or Event of Default has occurred, notify Account Debtors of the Loan Party Obligors that Agent has a security interest in the Accounts of the Loan Party Obligors and direct such Account Debtors to make payment thereof directly to Agent; each such notification to be sent on the letterhead of such Loan Party Obligor and substantially in the form of Exhibit B annexed hereto; and (c) following the occurrence and during the continuance of a Default or Event of Default, demand, collect or enforce payment of any Accounts and Chattel Paper (but without any duty to do so) and, in furtherance of the foregoing, each Loan Party Obligor hereby authorizes Account Debtors to make payments directly to Agent and to rely on notice from Agent without further inquiry. Agent may on behalf of each Loan Party Obligor endorse all items of payment received by Agent that are payable to such Loan Party Obligor for the purposes described above.

 

6.4. Power of Attorney.

 

Without limiting any of Agent’s and the other Lenders’ other rights under this Agreement or any other Loan Document, each Loan Party Obligor hereby grants to Agent an irrevocable power of attorney, coupled with an interest, authorizing and permitting Agent (acting through any of its officers, employees, attorneys or agents), at Agent’s option but without obligation, with or without notice to such Loan Party Obligor, and at each Loan Party Obligor’s expense, to do any or all of the following, in such Loan Party Obligor’s name or otherwise:

 

(a) at any time, whether or not an Event of Default has occurred or is continuing, (i) execute on behalf of such Loan Party Obligor any documents that Agent may, in its sole discretion, deem advisable in order to perfect, protect and maintain Agent’s security interests, and priority thereof, in the Collateral and to fully consummate all the transactions contemplated by this Agreement and the other Loan Documents (including such Financing Statements and continuation Financing Statements, and amendments or other modifications thereto, as Agent shall deem necessary or appropriate) and to notify Account Debtors of the Loan Party Obligors in the manner contemplated by Section 6.3, (ii) endorse such Loan Party Obligor’s name on all checks and other forms of remittances received by Agent, (iii) pay any sums required on account of such Loan Party Obligor’s taxes or to secure the release of any Liens therefor, (iv) pay any amounts necessary to obtain, or maintain in effect, any of the insurance described in Section 7.14, (v) receive and otherwise take control in any manner of any cash or non-cash items of payment or Proceeds of Collateral, (vi) receive, open and dispose of all mail addressed to such Loan Party Obligor at any post office box or lockbox maintained by Agent for such Loan Party Obligor or at any other business premises of Agent and (vii) endorse or assign to Agent on such Loan Party Obligor’s behalf any portion of Collateral evidenced by an agreement, Instrument or Document if an endorsement or assignment of any such items is not made by such Loan Party Obligor pursuant to Section 5.2; and

 

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(b) at any time, after the occurrence and during the continuance of an Event of Default, (i) execute on behalf of such Loan Party Obligor any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real or personal property which is part of the Collateral or in which Agent has an interest, (ii) execute on behalf of such Loan Party Obligor any invoices relating to any Accounts, any draft against any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of mechanic’s, materialman’s or other Lien, (iii) execute on behalf of such Loan Party Obligor any notice to any Account Debtor, (iv) pay, contest or settle any Lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same, (v) grant extensions of time to pay, compromise claims relating to, and settle Accounts, Chattel Paper and General Intangibles for less than face value and execute all releases and other documents in connection therewith, (vi) settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor, (vii) instruct any third party having custody or control of any Collateral or books or records belonging to, or relating to, such Loan Party Obligor to give Agent the same rights of access and other rights with respect thereto as Agent has under this Agreement or any other Loan Document, (viii) change the address for delivery of such Loan Party Obligor’s mail, (ix) vote any right or interest with respect to any Investment Property, and (x) instruct any Account Debtor to make all payments due to any Loan Party Obligor directly to Agent.

 

Any and all sums paid, and any and all costs, expenses, liabilities, obligations and reasonable attorneys’ fees (internal and external counsel) of Agent with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Each Loan Party Obligor agrees that Agent’s rights under the foregoing power of attorney and any of Agent’s other rights under this Agreement or the other Loan Documents shall not be construed to indicate that Agent or any Lender is in control of the business, management or properties of any Loan Party Obligor.

 

6.5. Disputes. Each Loan Party Obligor shall promptly notify Agent of all disputes or claims relating to its Accounts and Chattel Paper. Each Loan Party Obligor agrees that it will not, without Agent’s prior written consent, compromise or settle any of its Accounts or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts or Chattel Paper; except (unless otherwise directed by Agent during the existence of a Default or an Event of Default) such Loan Party Obligor may take any of such actions in the Ordinary Course of Business consistent with past practices, provided that Borrower Representative promptly reports the same to Agent.

 

6.6. Invoices. At Agent’s request, each Loan Party Obligor will cause all invoices and statements that it sends to Account Debtors or other third parties to be marked and authenticated, in a manner reasonably satisfactory to Agent, to reflect Agent’s security interest therein and payment instructions (including, but not limited to, in a manner to meet the requirements of Section 9-404(a)(2) of the UCC).

 

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7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS.

 

To induce Agent and the Lenders to enter into this Agreement, each Loan Party Obligor represents, warrants and covenants as follows (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof and be deemed remade as of each date on which any Loan is made (except to the extent any such representation or warranty expressly relates only to any earlier or specified date, in which case such representation or warranty will be made as of such earlier or specified date) and (ii) shall not be affected by any knowledge of, or any investigation by, Agent or any Lender and (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date):

 

7.1. Existence and Authority. Each Loan Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdiction is identified in Section 1(a) of the Perfection Certificate) and is qualified to do business in each jurisdiction in which the operation of its business requires that it be qualified (which each such jurisdiction is identified in Section 1(a) of the Perfection Certificate) or, if such Loan Party is not so qualified, such Loan Party may cure any such failure without losing any of its rights, incurring any liens or material penalties, or otherwise affecting Agent’s rights. Each Loan Party has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby and, in the case of Holdings, to issue the Warrants and the Warrant Equity issuable upon exercise thereof. The execution, delivery and performance by each Loan Party Obligor of this Agreement and all of the other Loan Documents to which such Loan Party Obligor is a party, and, in the case of Holdings, the issuance of the Warrants and the Warrant Equity issuable upon exercise thereof, have been duly and validly authorized, do not violate such Loan Party Obligor’s Governing Documents or any applicable law or any material agreement or instrument or any court order which is binding upon any Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon any Loan Party or its property, and do not require the consent of any Person. No Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of any of the Loan Documents and, in the case of Holdings, the issuance of the Warrants and the Warrant Equity issuable upon exercise thereof. This Agreement and each of the other Loan Documents have been duly executed and delivered by, and are enforceable against, each of the Loan Party Obligors who have signed them, in accordance with their respective terms. Section 1(f) of the Perfection Certificate sets forth the ownership of each Borrower and its Subsidiaries and, as of the Closing Date, Holdings.

 

7.2. Names; Trade Names and Styles. The name of each Loan Party Obligor set forth on Section 1(b) of the Perfection Certificate is its correct and complete legal name as of the date hereof, and except as stated in Section 1(b) of the Perfection Certificate, and no Loan Party Obligor has used any other name at any time in the past five (5) years, or at any time will use any other name, in any tax filing made in any jurisdiction. Listed in Section 1(b) of the Perfection Certificate are all prior names used by each Loan Party Obligor at any time in the past five (5) years and all of the present and prior trade names used by any Loan Party Obligor at any time in the past five (5) years. Borrower Representative shall give Agent at least thirty (30) days’ prior written notice (and will deliver an updated Section 1(b) of the Perfection Certificate to reflect the same) before it or any other Loan Party Obligor changes its legal name or does business under any other name.

 

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7.3. Title to Collateral; Third Party Locations; Permitted Liens. Each Loan Party Obligor has, and at all times will continue to have, good and marketable title to all of the Collateral. The Collateral now is, and at all times will remain, free and clear of any and all Liens, except for Permitted Liens. Agent now has, and will at all times continue to have, a Requisite Priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and each Loan Party Obligor will at all times defend Agent and the Collateral against all claims of others. None of the Collateral which is Equipment is, or will at any time, be affixed to any real property in such a manner, or with such intent, as to become a fixture. Except for leases or subleases as to which Borrowers have delivered to Agent a landlord’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion), no Loan Party Obligor is or will be a lessee or sublessee under any real property lease or sublease. Except for warehouses as to which Borrowers have delivered to Agent a warehouseman’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion), no Loan Party Obligor is or will at any time be a bailor of any Goods at any warehouse or otherwise. Prior to causing or permitting any Collateral to at any time be located upon premises in which any third party (including any landlord, warehouseman, or otherwise) has an interest, Borrower Representative shall notify Agent and the applicable Loan Party Obligor shall cause each such third party to execute and deliver to Agent, in form and substance reasonably acceptable to Agent, such waivers, collateral access agreements, and subordinations as Agent shall specify, so as to, among other things, ensure that Agent’s rights in the Collateral are, and will at all times continue to be, superior to the rights of any such third party and that Agent has access to such Collateral. Each applicable Loan Party Obligor will keep at all times in full force and effect, and will comply at all times with all the terms of, any lease of real property where any of the Collateral now or in the future may be located.

 

7.4. Accounts and Chattel Paper. All Accounts owned by any Loan Party Obligor, and all Chattel Paper owned by any Loan Party Obligor, are genuine and in all respects what they purport to be, arise out of a completed, bona fide and unconditional and non-contingent sale and delivery of goods or rendition of services by a Borrower in the Ordinary Course of Business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto, each Account Debtor thereunder had the capacity to contract at the time any contract or other document giving rise to such Accounts and Chattel Paper were executed, and the transactions giving rise to such Accounts and Chattel Paper comply with all applicable laws and governmental rules and regulations.

 

7.5. Electronic Chattel Paper. To the extent that any Loan Party Obligor obtains or maintains any Electronic Chattel Paper, such Loan Party Obligor shall at all times create, store and assign the record or records comprising the Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies Agent as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Agent or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Agent, (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

 

7.6. Capitalization; Investment Property.

 

(a) No Loan Party, directly or indirectly, owns, or shall at any time own, any capital stock or other equity interests of any other Person except as set forth in Sections 1(f) and 1(g) of the Perfection Certificate, which Sections list all Investment Property owned by each Loan Party Obligor.

 

(b) None of the Pledged Equity has been issued or otherwise transferred in violation of the Securities Act, or other applicable laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity pledged by each Loan Party Obligor hereunder constitutes all of the issued and outstanding equity interests of each Issuer owned by such Loan Party Obligor.

 

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(c) All of the Pledged Equity has been duly and validly issued and is fully paid and non-assessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. There are no outstanding options, warrants or similar agreements, documents, or instruments with respect to any of the Pledged Equity.

 

(d) Each Loan Party Obligor has caused each Issuer to amend or otherwise modify its Governing Documents, books, records, and related agreements, documents and instruments, as applicable, to reflect the rights and interests of Agent hereunder, and to the extent required to enable and empower Agent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Equity and other Investment Property.

 

(e) Each Loan Party Obligor will take any and all actions required or requested by Agent, from time to time, to (i) cause Agent to obtain control of any Investment Property in a manner reasonably acceptable to Agent and (ii) obtain from any Issuers and such other Persons as Agent shall specify, for the benefit of Agent, written confirmation of Agent’s control over such Investment Property and take such other actions as Agent may request to perfect Agent’s security interest in any Investment Property. For purposes of this Section 7.6, Agent shall have control of Investment Property if (A) pursuant to Section 5.2, such Investment Property consists of certificated securities and the applicable Loan Party Obligor delivers such certificated securities to Agent (with all appropriate endorsements), (B) such Investment Property consists of uncertificated securities and either (x) the applicable Loan Party Obligor delivers such uncertificated securities to Agent or (y) the Issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with instructions originated by Agent without further consent by the applicable Loan Party Obligor and (C) such Investment Property consists of security entitlements and either (x) Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with entitlement orders originated by Agent without further consent by the applicable Loan Party Obligor. Each Loan Party Obligor that is a limited liability company or a partnership hereby represents and warrants that it has not, and at no time will, elect pursuant to the provisions of Section 8-103 of the UCC to provide that its equity interests are securities governed by Article 8 of the UCC. The requirements of this Section 7.6(e) are subject to Section 5.5.

 

(f) No Loan Party owns, or has any present intention of acquiring, any margin security or any margin stock within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called margin security and margin stock). None of the proceeds of the Loans or the Warrants will be used, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any margin security or margin stock or for any other purpose which might constitute the transactions contemplated hereby a purpose credit within the meaning of said Regulations T, U or X, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Exchange Act, or any rules or regulations promulgated under such statutes.

 

(g) No Loan Party Obligor shall vote to enable, or take any other action to cause or to permit, any Issuer to issue any equity interests of any nature, or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any equity interests of any nature of any Issuer.

 

(h) No Loan Party Obligor shall take, or fail to take, any action that would in any manner impair the value or the enforceability of Agent’s Lien on any of the Investment Property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document with respect to any of the Investment Property.

 

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(i) In the case of any Loan Party Obligor which is an Issuer, such Issuer agrees that the terms of Section 11.3(g)(iii) shall apply to such Loan Party Obligor with respect to all actions that may be required of it pursuant to such Section 11.3(g)(iii) regarding the Investment Property issued by it.

 

(j) Each Loan Party Obligor has made all capital contributions heretofore required to be made to the respective Issuer in respect of any Investment Property constituting limited liability company interests and no additional capital contributions are required to be made in respect of the respective limited liability company interests.

 

7.7. Commercial Tort Claims. No Loan Party Obligor has any Commercial Tort Claims pending other than those listed in Section 2 of the Perfection Certificate, and each Loan Party Obligor shall promptly (but in any case, no later than five (5) Business Days thereafter) notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party. Such notice shall constitute such Loan Party Obligor’s authorization to amend such Section 2 to add such Commercial Tort Claim and shall automatically be deemed to amend such Section 2 to include such Commercial Tort Claim.

 

7.8. Jurisdiction of Organization; Location of Collateral. Sections 1(c) and 1(d) of the Perfection Certificate set forth (a) each place of business of each Loan Party Obligor (including its chief executive office), (b) all locations where all Inventory, Equipment, and other Collateral owned by each Loan Party Obligor is kept and (c) whether each such Collateral location and place of business (including each Loan Party Obligor’s chief executive office) is owned by a Loan Party or leased (and if leased, specifies the complete name and notice address of each lessor). No Collateral is located outside the United States or in the possession of any lessor, bailee, warehouseman or consignee, except as expressly indicated in Sections 1(c) and 1(d) of the Perfection Certificate. Each Loan Party Obligor will give Agent at least thirty (30) days’ prior written notice before changing its jurisdiction of organization, opening any additional place of business, changing its chief executive office or the location of its books and records, or moving any of the Collateral to a location other than one of the locations set forth in Sections 1(c) and 1(d) of the Perfection Certificate, and will execute and deliver all Financing Statements, landlord waivers, collateral access agreements, mortgages, and all other agreements, instruments and documents which Agent shall require in connection therewith prior to making such change, all in form and substance reasonably satisfactory to Agent. Without the prior written consent of Agent, no Loan Party Obligor will at any time (i) change its jurisdiction of organization or (ii) allow any Collateral to be located outside of the continental United States of America.

 

7.9. Financial Statements and Reports; Solvency.

 

(a) All financial statements delivered to Agent and Lenders by or on behalf of any Loan Party have been, and at all times will be, prepared in conformity with GAAP in all material respects (except to the extent that equity expenses are not reflected in interim financial statements) and completely and fairly reflect the financial condition of each Loan Party covered thereby, at the times and for the periods therein stated, in all material respects.

 

(b) As of the date hereof (after giving effect to the Loans to be made on the date hereof, and the consummation of the transactions contemplated hereby), and as of each other day that any Loan is made (after giving effect thereof), (i) the fair saleable value of all of the assets and properties of each Loan Party, individually, exceeds the aggregate liabilities and Indebtedness of each such Loan Party (including contingent liabilities), (ii) each Loan Party, individually, is solvent and able to pay its debts as they come due, (iii) each Loan Party, individually, has sufficient capital to carry on its business as now conducted and as proposed to be conducted, (iv) no Loan Party is contemplating either the liquidation of all or any substantial portion of its assets or property, or the filing of any petition under any state, federal, or other bankruptcy or insolvency law and (v) no Loan Party has knowledge of any Person contemplating the filing of any such petition against any Loan Party.

 

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7.10. Tax Returns and Payments; Pension Contributions. Each Loan Party has timely filed all tax returns and reports required by applicable law, has timely paid all applicable Taxes, assessments, deposits and contributions owing by such Loan Party and will timely pay all such items in the future as they became due and payable. Each Loan Party may, however, defer payment of any contested taxes; provided, that such Loan Party (a) in good faith contests its obligation to pay such Taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Agent in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to keep the contested taxes from becoming a Lien upon any of the Collateral and (d) maintains adequate reserves therefor in conformity with GAAP. No Loan Party is aware of any claims or adjustments proposed for any prior tax years that could result in additional taxes becoming due and payable by any Loan Party. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable laws. Each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of each Loan Party, nothing has occurred that would prevent or cause the loss of such tax-qualified status. There are no pending or, to the best knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000 of any Loan Party. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in liabilities individually or in the aggregate of any Loan Party in excess of $100,000. No ERISA Event has occurred, and no Loan Party is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, in each case that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000. Each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, in each case except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is sixty percent (60%) or higher and no Loan Party knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below sixty percent (60%) as of the most recent valuation date. No Loan Party or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Loan Party or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Pension Plan has been terminated by the plan administrator thereof or by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000.

 

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7.11. Compliance with Laws; Intellectual Property; Licenses.

 

(a) Each Loan Party has complied, and will continue at all times to comply, in all material respects with all provisions of all applicable laws and regulations, including those relating to the ownership of real or personal property, the conduct and licensing of each Loan Party’s business, the payment and withholding of Taxes, ERISA and other employee matters, and safety and environmental matters.

 

(b) No Loan Party has received written notice of default or violation, or is in default or violation, with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, local, municipal or other Governmental Authority relating to any aspect of any Loan Party’s business, affairs, properties or assets. No Loan Party has received written notice of or been charged with, or is, to the knowledge of any Loan Party, under investigation with respect to, any violation in any material respect of any provision of any applicable law.

 

(c) No Loan Party Obligor owns any Intellectual Property, except as set forth in Section 4 of the Perfection Certificate. Except as set forth in Section 4 of the Perfection Certificate, none of the Intellectual Property owned by any Loan Party Obligor is the subject of any licensing or franchise agreement pursuant to which such Loan Party Obligor is the licensor or franchisor. Each Loan Party Obligor shall promptly (but in any event within thirty (30) days thereafter) notify Agent in writing of any additional Intellectual Property rights acquired or arising after the Closing Date and shall submit to Agent a supplement to Section 4 of the Perfection Certificate to reflect such additional rights; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party Obligor shall execute a separate security agreement granting Agent a security interest in such Intellectual Property (whether owned on the Closing Date or thereafter), in form and substance reasonably acceptable to Agent and suitable for registering such security interest in such Intellectual Property with the United States Patent and Trademark Office and/or United States Copyright Office, as applicable; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party owns or has, and will at all times continue to own or have, the valid right to use all material patents, trademarks, copyrights, software, computer programs, equipment designs, network designs, equipment configurations, technology and other Intellectual Property used, marketed and sold in such Loan Party’s business, and each Loan Party is in compliance, and will continue at all times to comply, in all material respects with all licenses, user agreements and other such agreements regarding the use of Intellectual Property. No Loan Party has any knowledge that, or has received any notice claiming that, any of such Intellectual Property infringes upon or violates the rights of any other Person.

 

(d) Each Loan Party has and will continue at all times to have, all federal, state, local and other licenses and permits required to be maintained in connection with such Loan Party’s business operations, and all such licenses and permits are valid and in full force and effect. Each Loan Party has, and will continue at all times to have, complied with the requirements of such licenses and permits in all material respects, and has received no written notice of any pending or threatened proceedings for the suspension, termination, revocation or limitation thereof. No Loan Party is aware of any facts or conditions that could reasonably be expected to cause or permit any of such licenses or permits to be voided, revoked or withdrawn.

 

7.12. Litigation. Section 1(e) of the Perfection Certificate discloses all claims, proceedings, litigation or investigations pending or (to the best of each Loan Party Obligor’s knowledge) threatened against any Loan Party as of the Closing Date. There is no claim, suit, litigation, proceeding or investigation pending or (to the best of each Loan Party Obligor’s knowledge) threatened by or against or affecting any Loan Party in any court or before any Governmental Authority (or any basis therefor known to any Loan Party Obligor) which may result, either separately or in the aggregate, in liability in excess of $100,000 for the Loan Parties, in any Material Adverse Effect, or in any material impairment in the ability of any Loan Party to carry on its business in substantially the same manner as it is now being conducted.

 

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7.13. Use of Proceeds. All proceeds of all Loans shall be used by Borrowers solely (a) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby, and (b) for Borrowers’ working capital purposes. All proceeds of all Loans and Warrants will be used solely for lawful business purposes.

 

7.14. Insurance.

 

(a) Each Loan Party will at all times carry property, liability and other insurance, with insurers reasonably acceptable to Agent, in such form and amounts, and with such deductibles and other provisions, as Agent shall reasonably require, but in any event, in such amounts and against such risks as is usually carried by companies engaged in similar business and owning similar properties in the same general areas in which such Loan Party operates, and each Borrower will provide Agent with evidence reasonably satisfactory to Agent that such insurance is, at all times, in full force and effect. A true and complete listing of such insurance as of the Closing Date, including issuers, coverages and deductibles, is set forth in Section 5 of the Perfection Certificate. Each property insurance policy shall name Agent as lender loss payee and shall contain a lender’s loss payable endorsement, each liability insurance policy shall name Agent as an additional insured, and each business interruption insurance policy shall be collaterally assigned to Agent, all in form and substance reasonably satisfactory to Agent. All policies of insurance shall provide that they may not be cancelled or changed without at least thirty (30) days’ (or, with respect to nonpayment of premiums, ten (10) days’) prior written notice to Agent, and shall otherwise be in form and substance reasonably satisfactory to Agent. Borrower Representative shall advise Agent promptly of any policy cancellation, non-renewal, reduction, or material amendment with respect to any insurance policies maintained by any Loan Party or any receipt by any Loan Party of any notice from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any of such policies, and Borrower Representative shall promptly deliver to Agent copies of all notices and related documentation received by any Loan Party in connection with the same.

 

(b) Borrower Representative shall deliver to Agent no later than fifteen (15) days prior to the expiration of any then current insurance policies, insurance certificates evidencing renewal of all such insurance policies required by this Section 7.14. Borrower Representative shall deliver to Agent, upon Agent’s request, certificates evidencing such insurance coverage in such form as Agent shall specify.

 

(c) IF ANY LOAN PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO AGENT) OR TO PAY ANY PREMIUM RELATING THERETO, THEN AGENT, WITHOUT WAIVING OR RELEASING ANY OBLIGATION OR DEFAULT BY ANY BORROWER HEREUNDER, MAY (BUT SHALL BE UNDER NO OBLIGATION TO) OBTAIN AND MAINTAIN SUCH POLICIES OF INSURANCE AND PAY SUCH PREMIUMS AND TAKE SUCH OTHER ACTIONS WITH RESPECT THERETO AS AGENT DEEMS ADVISABLE UPON NOTICE TO BORROWER REPRESENTATIVE. SUCH INSURANCE, IF OBTAINED BY AGENT, MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S INTERESTS OR PAY ANY CLAIM MADE BY OR AGAINST ANY LOAN PARTY WITH RESPECT TO THE COLLATERAL. SUCH INSURANCE MAY BE MORE EXPENSIVE THAN THE COST OF INSURANCE ANY LOAN PARTY MAY BE ABLE TO OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY UPON THE APPLICABLE LOAN PARTY PROVIDING EVIDENCE THAT IT HAS OBTAINED THE INSURANCE AS REQUIRED ABOVE. ALL SUMS DISBURSED BY AGENT IN CONNECTION WITH ANY SUCH ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGES RELATING THERETO AND REASONABLE INTERNAL AND EXTERNAL ATTORNEY COSTS, SHALL CONSTITUTE LOANS HEREUNDER, SHALL BE PAYABLE ON DEMAND BY BORROWERS TO AGENT AND, UNTIL PAID, SHALL BEAR INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO LOANS HEREUNDER.

 

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7.15. Financial, Collateral and Other Reporting / Notices. Each Loan Party has kept, and will at all times keep, adequate records and books of account with respect to its business activities and the Collateral in which proper entries are made in accordance with GAAP reflecting all its financial transactions (except for the amortization of liquidated damages which is presented in sales and marketing for internal purposes and to the extent that equity expenses are not reflected in interim financial statements). Each Loan Party Obligor will cause to be prepared and furnished to Agent, in each case in a form and in such detail as is acceptable to Agent the following items:

 

(a) Annual Financial Statements. Not later than one hundred twenty (120) days after the close of each Fiscal Year, unqualified, audited financial statements of each Loan Party as of the end of such Fiscal Year, including balance sheet, income statement, and statement of cash flow for such Fiscal Year, in each case on a consolidated and consolidating basis, certified by a firm of independent certified public accountants of recognized standing selected by Borrowers but acceptable to Agent, together with a copy of any management letter issued in connection therewith. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants and (ii) any Default or Event of Default is then in existence;

 

(b) Interim Financial Statements. Not later than thirty (30) days after the end of each month hereafter, including the last month of each Fiscal Year, unaudited interim financial statements, in Excel format or in the same or similar format provided to the Term Loan Agent under the Term Loan Agreement, if applicable, of each Loan Party for, and as of the end of, such month and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such month and the then elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year, in each case on a consolidated and consolidating basis, certified by the principal financial officer of Borrower Representative as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations (including management discussion and analysis of such results) of each Loan Party for such month and period subject only to changes from ordinary course year-end audit adjustments and except that such statements need not contain footnotes. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants, and (ii) any Default or Event of Default is then in existence;

 

(c) Collateral Reports / Insurance Certificates / Perfection Certificates / Other Items. The items described on Annex I hereto by the respective dates set forth therein.

 

(d) Projections, Etc. Not later than ten (10) days prior to the end of each Fiscal Year, monthly business projections for the following Fiscal Year for the Loan Parties on a consolidated and consolidating basis, which projections shall include for each such period ABL Borrowing Base and Term Loan Borrowing Base projections, profit and loss projections, balance sheet projections, income statement projections and cash flow projections;

 

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(e) Shareholder Reports, Etc. Promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which each Loan Party has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which any Loan Party files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or any national securities exchange;

 

(f) ERISA Reports. Copies of any annual report to be filed pursuant to the requirements of ERISA in connection with each Plan subject thereto promptly upon request by Agent and in addition, each Loan Party shall promptly notify Agent upon having knowledge of any ERISA Event; and

 

(g) Tax Returns. Each federal and state income tax return filed by any Loan Party or Other Obligor promptly (but in no event later than ten (10) days following the filing of such return), together with such supporting documentation as is supplied to the applicable tax authority with such return and proof of payment of any amounts owing with respect to such return.

 

(h) Notification of Certain Changes. Promptly (and in no case later than the earlier of (i) three (3) Business Days after the occurrence of any of the following and (ii) such other date that such information is required to be delivered pursuant to this Agreement or any other Loan Document) notification to Agent in writing of (A) the occurrence of any Default or Event of Default, (B) the occurrence of any event that has had, or may have, a Material Adverse Effect, (C) any change in any Loan Party’s officers or directors, (D) any investigation, action, suit, proceeding or claim (or any material development with respect to any existing investigation, action, suit, proceeding or claim) relating to any Loan Party, any officer or director of a Loan Party (in his or her capacity as an officer or director of a Loan Party), the Collateral or which may result in a Material Adverse Effect, (E) any material loss or damage to the Collateral, (F) any event or the existence of any circumstance that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, any Default, or any Event of Default, or which would make any representation or warranty previously made by any Loan Party to Agent untrue in any material respect or constitute a material breach if such representation or warranty was then being made, (G) any actual or alleged breaches of any Material Contract or termination or threat to terminate any Material Contract or any material amendment to or modification of a Material Contract, or the execution of any new Material Contract by any Loan Party and (H) any change in any Loan Party’s certified independent accountant. In the event of each such notice under this Section 7.15(h), Borrower Representative shall give notice to Agent of the action or actions that each Loan Party has taken, is taking, or proposes to take with respect to the event or events giving rise to such notice obligation.

 

(i) Amendments to ABL Loan Documents or Term Loan Documents. Promptly following the occurrence of such event, any amendment, waiver, supplement, or other modification of any ABL Loan Document or any Term Loan Document (in each case, accompanied by a true, correct and complete copy thereof).

 

(j) Other Information. Promptly upon request, such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or each Loan Party’s and each Other Obligor’s business or financial condition or results of operations;

 

(k) Notices Under Material Contracts. Promptly upon any delivery to Loan Party or any of their Subsidiaries of any material notices under any Material Contract (including any notice of default or termination or intent to terminate), a written statement describing such event, with copies of such amendments, notices or new contracts (if applicable), delivered to Agent, and a description of any actions being taken pursuant thereto;

 

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(l) Use of Proceeds. Annually, in conjunction with the delivery of the audited financial statements under Section 7.15(a), written statements sufficient to allow Agent and Lenders to (i) determine the continuing eligibility of the Loan Parties (within the meaning of the SBA Regulations) and (ii) verify the use of the proceeds of the Loans under this Agreement by the Borrowers. In addition to any other rights granted hereunder, the Loan Parties shall grant Agent the Lenders and the SBA access to their books and records for the purpose of verifying the use of such proceeds and verifying the certifications made by the Loan Parties in SBA Forms 480, 652 and 1031; and

 

(m) Economic Impact Information. Promptly after the end of each fiscal year, a written assessment of the economic impact of the Lenders’ investment in the Loan Parties, specifying the full-time equivalent jobs created or retained in connection with the Loans, the impact of the Lenders’ financing on the revenues and profits of the Loan Parties and on Taxes paid by Loan Parties and their employees.

 

7.16. Litigation Cooperation. Should any third-party suit, regulatory action, or any other judicial, administrative, or similar proceeding be instituted by or against Agent or any Lender with respect to any Collateral or in any manner relating to any Loan Party, this Agreement, any other Loan Document or the transactions contemplated hereby, each Loan Party Obligor shall, without expense to Agent or any Lender, make available each Loan Party, such Loan Party’s officers, employees and agents, and any Loan Party’s books and records, without charge, but only to the extent that Agent or such Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding, subject in all events to confidentiality obligations owed to third-parties and preservation of the lawyer-client privilege between a Loan Party and its attorneys.

 

7.17. Maintenance of Collateral, Etc. Each Loan Party Obligor will maintain all of the Collateral in good working condition, ordinary wear and tear excepted, and no Loan Party Obligor will use the Collateral for any unlawful purpose.

 

7.18. Material Contracts. Except as expressly disclosed in Section 1(h) of the Perfection Certificate as of the Closing Date, no Loan Party is (a) a party to any contract which has had or could reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (x) any contract to which it is a party or by which any of its assets or properties is bound, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in liabilities in excess of $100,000 or (y) any Material Contract. Except for the contracts and other agreements listed in Section 1(h) of the Perfection Certificate, no Loan Party is party, as of the Closing Date, to any (i) employment agreements covering the management of any Loan Party, (ii) collective bargaining agreements or other labor agreements covering any employees of any Loan Party, (iii) agreements for managerial, consulting or similar services to which any Loan Party is a party or by which it is bound, (iv) agreements regarding any Loan Party, its assets or operations or any investment therein to which any of its equity holders is a party, (v) patent licenses, trademark licenses, copyright licenses or other lease or license agreements to which any Loan Party is a party, either as lessor or lessee, or as licensor or licensee, (vi) distribution, marketing or supply agreements to which any Loan Party is a party, (vii) customer agreements to which any Loan Party is a party (in each case with respect to any contract of the type described in the preceding clauses (i), (iii), (iv), (v), (vi) and (vii) requiring payments by or to any Loan Party of more than $2,500,000 in the aggregate in any Fiscal Year), (viii) partnership agreements to which any Loan Party is a partner, limited liability company agreements to which any Loan Party is a member or manager, or joint venture agreements to which any Loan Party is a party, (ix) real estate leases, (x) [reserved] or (xi) any other contract to which any Loan Party is a party, in each case with respect to this clause (xi) the breach, nonperformance or cancellation of which, could reasonably be expected to have a Material Adverse Effect (each such contract and agreement, described in the preceding clauses (i) to (xi), a Material Contract). The Material Contracts listed in the Perfection Certificate are in full force and effect and there are no events of defaults thereunder or any event which with notice or passage of time, or both, would constitute an event of default thereunder.

 

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7.19. No Default. No Default or Event of Default has occurred and is continuing.

 

7.20. No Material Adverse Change. Since December 31, 2020 there has been no material adverse change in the condition (financial or otherwise), business, operations, or properties of any Loan Party or any Other Obligor.

 

7.21. Full Disclosure. Excluding projections and other forward-looking information, pro forma financial information and information of a general economic or industry nature, no report, notice, certificate, information or other statement delivered or made (including, in electronic form) by or on behalf of any Loan Party, any Other Obligor or any of their respective Affiliates to Agent or any Lender in connection with this Agreement or any other Loan Document contains or will at any time contain any untrue statement of a material fact, or omits or will at any time omit to state any material fact necessary to make any statements contained herein or therein not misleading. Except for matters of a general economic or political nature which do not affect any Loan Party or any Other Obligor uniquely, there is no fact presently known to any Loan Party Obligor which has not been disclosed to Agent, which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Any projections and other forward-looking information and pro forma financial information contained in such materials were prepared in good faith based upon assumptions that were believed by such Loan Party to be reasonable at the time prepared and at the time furnished in light of conditions and facts then known (it being recognized that such projections and other forward-looking information and pro forma financial information are not to be viewed as facts and that actual results during the period or periods covered by any such projections or information may differ from the projected results, and such differences may be material).

 

7.22. Sensitive Payments. No Loan Party (a) has made or will at any time make any contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the applicable laws of the United States or the jurisdiction in which made or any other applicable jurisdiction, (b) has established or maintained or will at any time establish or maintain any unrecorded fund or asset for any purpose or made any false or artificial entries on its books, (c) has made or will at any time make any payments to any Person with the intention that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment or (d) has engaged in or will at any time engage in any trading with the enemy or other transactions violating any rules or regulations of the Office of Foreign Assets Control or any similar applicable laws, rules or regulations.

 

7.23. Holdings. Holdings does not and shall not at any time (a) engage in any business activities other than serving as a passive holding company for each applicable Loan Party, (b) have any material assets other than the outstanding shares of equity interests issued by each applicable Loan Party, (c) have any Subsidiaries other than the other Loan Party Obligors or (d) have any material liabilities other than the Obligations, the ABL Obligations and the Term Loan Obligations.

 

7.24. Subordinated Debt.

 

(a) Borrower Representative has furnished Agent a true, correct and complete copy of each of the Subordinated Debt Documents. No statement or representation made in any of the Subordinated Debt Documents by any Borrower or any other Loan Party or, to any Borrower Representative’s knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect as of the time that such statement or representation is made. Each of the representations and warranties of the Loan Parties set forth in each of the Subordinated Debt Documents are true and correct in all material respects. No portion of the Subordinated Debt is, or at any time shall be, (i) secured by any assets of any of the Loan Parties or any other Person or any equity issued by any of the Loan Parties or any other Person or (ii) guarantied by any Person (except to the extent expressly permitted by the applicable Subordinated Debt Subordination Agreement).

 

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(b) The provisions of each Subordinated Debt Subordination Agreement are enforceable against each holder of the applicable Subordinated Debt. Each Borrower and each other Loan Party Obligor acknowledges that Agent is entering into this Agreement and extending credit and making the Loans in reliance upon this Section 7.24. All Obligations constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Subordinated Debt Documents.

 

7.25. Access to Collateral, Books and Records. At reasonable times, Agent and its representatives or agents shall have the right to inspect the Collateral and to examine and copy each Loan Party’s books and records. Each Loan Party Obligor agrees to give Agent access to any or all of such Loan Party Obligor’s, and each of its Subsidiaries’, premises to enable Agent to conduct such inspections and examinations. Such inspections and examinations shall be at Borrowers’ expense. Agent may, at Borrowers’ expense, use each Loan Party’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Agent, in its sole discretion, deems appropriate. Each Loan Party Obligor hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties; provided, however, that in no event shall this constitute or be construed as a waiver of attorney-client privilege.

 

7.26. Appraisals. Each Loan Party Obligor will permit Agent and each of its representatives or agents to conduct appraisals and valuations of the Collateral at such times and intervals as Agent may designate (including any appraisals that may be required to comply with FIRREA). Such appraisals and valuations shall be at Borrowers’ expense.

 

7.27. Lender Meetings. Upon the request of any Agent or the Required Lenders (which request, so long as no Event of Default shall have occurred and be continuing, shall not be made more than once during each fiscal quarter), participate in a telephonic meeting with the Agents and the Lenders at such time as may be agreed to by Borrower Representative and such Agent or the Required Lenders.

 

7.28. Interrelated Businesses. Loan Parties make up a related organization of various entities constituting a single economic and business enterprise so that Loan Parties share an identity of interests such that any benefit received by any one of them benefits the others. From time to time each of the Loan Parties may render services to or for the benefit of the other Loan Parties, purchase or sell and supply goods to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other Loan Parties (including inter alia, the payment by such Loan Parties of creditors of the other Loan Parties and guarantees by such Loan Parties of indebtedness of the other Loan Parties and provides administrative, marketing, payroll and management services to or for the benefit of the other Loan Parties). Loan Parties have the same centralized accounting and legal services, certain common officers and directors and generally do not provide stand-alone consolidating financial statements to creditors.

 

7.29. Post-Closing Matters. Loan Party Obligors shall complete each of the post-closing obligations and/or provide to Agent each of the documents, instruments, agreements and information listed on Annex III attached hereto, on or before the date set forth for each such item thereon, each of which shall be completed or provided in form and substance reasonably satisfactory to Agent.

 

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7.30. ABL Obligations and Term Loan Obligations.

 

(a) Borrowers have furnished Agent a true, correct and complete copy of each of the ABL Loan Documents. The Liens securing the ABL Obligations and the guarantees of the ABL Obligations shall, in each case, be subject to the terms of the Subordination Agreement.

 

(b) Borrowers have furnished Agent a true, correct and complete copy of each of the Term Loan Documents. The Liens securing the Term Loan Obligations and the guarantees of the Term Loan Obligations shall, in each case, be subject to the terms of the Subordination Agreement.

 

(c) Borrowers and each other Loan Party Obligor acknowledge that Agent and Lenders are entering into this Agreement and extending credit and making the Loans in reliance upon the Subordination Agreement and this Section 7.30.

 

7.31. Warrants.

 

(a) The Warrant Equity issuable upon exercise of the Warrants have been duly and validly reserved for issuance upon such exercise and, when issued and delivered against payment therefor as provided therein, will be duly authorized, validly issued, fully paid and non-assessable and not subject to any pre-emptive rights and not subject to further assessment or charge by Holdings and will be subject to no Liens in respect of the issuance thereof.

 

(b) Neither Holdings nor any representative thereof has, directly or indirectly, offered any of the Warrants or the Warrant Equity or any security similar to the Warrants or the Warrant Equity for sale to, or solicited any offers to buy any of the Warrants or the Warrant Equity or any security similar to the Warrants or the Warrant Equity from, or otherwise approached or negotiated with respect thereto with, any Persons other than the Lenders, and neither Holdings nor any representative thereof has taken or will take any action which would subject the issuance or sale of any of the Warrants or the Warrant Equity to the provisions of Section 5 of the Securities Act or violate the provisions of any securities or Blue Sky laws of any applicable jurisdiction. Neither Holdings nor any Person acting on its behalf has directly or indirectly offered or sold (or will directly or indirectly offer or sell) the Warrants or the Warrant Equity by any form of general solicitation or general advertising (including any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or any broadcast over television or radio or any seminar or meeting whose attendees have been invited by any form of general solicitation or general advertising).

 

8. NEGATIVE COVENANTS. No Loan Party Obligor shall, and no Loan Party Obligor shall permit any other Loan Party to:

 

(a) Merge with or into another Person, Divide, or consolidate with another Person, form any new Subsidiary including by any Division thereof, or acquire any interest in any Person other than a Permitted Acquisition;

 

(b) acquire all or a material portion of the assets or the business of any Person other than a Permitted Acquisition;

 

(c) acquire any assets except in the Ordinary Course of Business and as otherwise expressly permitted by this Agreement other than a Permitted Acquisition;

 

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(d) substantially change the nature of the business in which it is presently engaged or enter into any transaction outside the Ordinary Course of Business that is not expressly permitted by this Agreement;

 

(e) sell, lease, assign, transfer, return, liquidate, or dispose of any Collateral or other assets with an aggregate value in excess of $120,000 in any calendar month, except that each Loan Party may (i) sell finished goods Inventory in the Ordinary Course of Business and (ii) dispose of worn-out or surplus Equipment to the extent that such Equipment is exchanged for credit against the purchase price of similar replacement Equipment or the proceeds of such disposition are promptly applied to the purchase price of such replacement Equipment;

 

(f) make any loans to, or investments in, any Affiliate or other Person in the form of money or other assets; provided, that (i) Borrowers may make loans to and investments in its wholly-owned domestic Subsidiaries that are Loan Party Obligors and (ii) Holdings may make investments in Borrowers;

 

(g) incur any Indebtedness other than the Obligations and Permitted Indebtedness;

 

(h) create, incur, assume or suffer to exist any Lien or other encumbrance of any nature whatsoever or authorize under the UCC of any jurisdiction a Financing Statement naming the Loan Party as debtor, or execute any security agreement authorizing any secured party thereunder to file such Financing Statement, other than in favor of Agent to secure the Obligations, on any of its assets whether now or hereafter owned, other than Permitted Liens;

 

(i) authorize, enter into, or execute any agreement giving a Secured Party control of a Deposit Account as contemplated by Section 9-104 of the UCC other than (i) in favor of Agent to secure the Obligations, (ii) in favor of ABL Agent to secure the ABL Obligations, subject to the terms of the Subordination Agreement, and (iii) in favor of Term Loan Agent to secure the Term Loan Obligations, subject to the terms of the Subordination Agreement;

 

(j) enter into any covenant or other agreement that restricts or is intended to restrict it from pledging or granting a security interest in, mortgaging, assigning, encumbering or otherwise creating a Lien on any of its property, whether, real or personal, tangible or intangible, existing or hereafter acquired, in favor of Agent;

 

(k) guaranty or otherwise become liable with respect to the obligations (other than (i) the Obligations, (ii) the ABL Obligations, subject to the terms of the Subordination Agreement, and (iii) the Term Loan Obligations, subject to the terms of the Subordination Agreement) of another Person;

 

(l) pay or distribute any dividends or other distributions on any Loan Party’s stock or other equity interest (except for dividends payable solely in capital stock or other equity interests of such Loan Party and dividends and distributions to Borrowers from a Loan Party Obligor); provided, that notwithstanding the foregoing, Borrowers may declare and accrue any distribution or dividend for members or shareholders; provided further that so long as no Default or Event of Default exists or would result therefrom, to the extent Holdings is treated as a flow-through entity for federal income tax purposes, the Loan Parties may make Permitted Tax Distributions;

 

(m) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Loan Party’s capital stock or other equity interests, except for redemptions of (i) “Incentive Units” (as defined in Holdings’ Governing Documents) in an aggregate amount, for all such redemptions after the Closing Date, not to exceed $300,000, or (ii) any other “Units” (as defined in Holdings’ Governing Documents) so long as no Default or Event of Default exists or would result therefrom and solely to the extent such redemptions are financed with the proceeds of equity interests of Holdings or Subordinated Debt permitted under clause (e) of the definition of Permitted Indebtedness;

 

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(n) [Reserved];

 

(o) dissolve or elect to dissolve;

 

(p) engage, directly or indirectly, in a business other than the business which is being conducted on the date hereof, wind up its business operations or cease substantially all, or any material portion, of its normal business operations, or suffer any material disruption, interruption or discontinuance of a material portion of its normal business operations;

 

(q) pay any principal or other amount on any Indebtedness, the payment of which is contractually subordinated to the Obligations in violation of the applicable subordination or intercreditor agreement;

 

(r) enter into any transaction with an Affiliate other than on arms-length terms disclosed to Agent in writing;

 

(s) change its jurisdiction of organization or enter into any transaction which has the effect of changing its jurisdiction of organization except as provided for in Section 7.8;

 

(t) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Loan Party’s Governing Documents, except for such amendments or other modifications required by applicable law or that are not materially adverse to Agent and Lenders, and then, only to the extent such amendments or other modifications are fully disclosed in writing to Agent no less than five (5) Business Days prior to being effectuated;

 

(u) enter into or assume any agreement prohibiting the creation or assumption of any Lien to secure the Obligations upon its properties or assets, whether now owned or hereafter acquired, except in connection with any document or instrument governing Liens permitted pursuant to clause (a) of the definition of Permitted Liens provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien;

 

(v) create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any such Person (i) to pay or make any dividends or distributions to any Borrower (other than pursuant to any Loan Documents, ABL Loan Documents or Term Loan Documents), (ii) to pay any of the Obligations, or (iii) to make loans or advances or to transfer any of its property or assets to any Borrower (other than pursuant to any Loan Documents, ABL Loan Documents or Term Loan Documents);

 

(w) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Subordinated Debt Document in violation of the applicable Subordinated Debt Subordination Agreement;

 

(x) commit, or allow any Subsidiary or Affiliate to commit, a Regulatory Violation (as defined below). Upon the occurrence of a Regulatory Violation or in the event that Agent or any Lender determines that a Regulatory Violation has occurred, in addition to any other rights and remedies to which it is entitled (whether under this Agreement or any other agreement, or otherwise), Agent and each Lender shall have the right, to the extent required under SBA Regulations, to demand in writing that the Borrowers cure such Regulatory Violation, and if such Regulatory Violation cannot be cured in a timely manner, demand the immediate repayment of the outstanding principal balance of the Loans, together with any accrued and unpaid interest, and any other amounts due and payable hereunder, by delivering written notice of such demand to the Borrowers. The Borrowers shall pay such sum by a cashier’s or certified check or by wire transfer of immediately available funds to the Agent within thirty (30) days after Borrowers’ receipt of the demand notice. For purposes of this Agreement, “Regulatory Violation” means a change in the principal business activity of the Borrowers to an ineligible business activity (within the meaning of the SBA Regulations), if such change occurs within one year after the Closing Date; or

 

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(y) issue securities to any Small Business Investment Company subsequent to the Closing Date if such issuance would cause any Lender to be deemed a member of an Investor Group in Control of Borrower, as those terms are defined in Title 13, Code of Federal Regulations §107.865, for a period of seven years from the date Control was initially acquired.

 

9. FINANCIAL COVENANT. The Loan Parties shall not make any Capital Expenditures if, after giving effect to such Capital Expenditures, the aggregate cost of all Capital Expenditures of the Loan Parties would exceed $18,000,000 during any Fiscal Year.

 

10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY.

 

10.1. Release. Each Borrower and each other Loan Party Obligor on behalf of itself and its successors, assigns, heirs and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender and any and all Participants and Affiliates, and their respective successors and assigns, and their respective directors, members, managers, officers, employees, attorneys and agents, including without limitation each Agent-Related Person, and any other Person affiliated with or representing Agent or any Lender (collectively, the Released Parties) of and from any and all liability, including all actual or potential claims, demands or causes of action of any kind, nature or description whatsoever, whether arising in law or equity or under contract or tort or under any state or federal law or otherwise, which any Borrower or any Loan Party or any of their successors, assigns or other legal representatives has had, now has or has made claim to have against any of the Released Parties for or by reason of any act, omission, matter, cause or thing whatsoever, including any liability arising from acts or omissions pertaining to the transactions contemplated by this Agreement and the other Loan Documents, whether based on errors of judgment or mistake of law or fact, from the beginning of time to and including the Closing Date, whether such claims, demands and causes of action are matured or known or unknown. Notwithstanding any provision in this Agreement to the contrary, this Section 10.1 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans. Such release is made on the date hereof and remade upon each request for a Loan by any Borrower.

 

10.2. Limitation of Liability. In no circumstance will any of the Released Parties be liable for lost profits or other special, punitive, or consequential damages. Notwithstanding any provision in this Agreement to the contrary, this Section 10.2 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

10.3. Indemnity.

 

(a) Each Loan Party Obligor hereby agrees to indemnify the Released Parties and hold them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including internal and external attorneys’ fees), of every nature, character and description, which the Released Parties may sustain or incur based upon or arising out of any of the transactions contemplated by this Agreement or any other Loan Documents or any of the Obligations, any Collateral relating thereto, any drafts thereunder and any errors or omissions relating thereto, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Agent or any Lender relating to any Loan Party or the Obligations (except any such amounts sustained or incurred solely as the result of the gross negligence or willful misconduct of such Released Parties, as finally determined by a court of competent jurisdiction). Notwithstanding any provision in this Agreement to the contrary, this Section 10.3 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

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(b) To the extent that any Loan Party Obligor fails to pay any amount required to be paid by it to Agent (or any Released Party of Agent) under paragraph (a) above, each Lender severally agrees to pay to Agent (or such Released Party), such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that any such payment by the Lenders shall not relieve any Loan Party of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred by or asserted against Agent in its capacity as such.

 

11. EVENTS OF DEFAULT AND REMEDIES.

 

11.1. Events of Default. The occurrence of any of the following events shall constitute an Event of Default:

 

(a) Payment. If any Loan Party Obligor or any Other Obligor fails to pay to Agent, when due, any principal or interest payment or any other monetary Obligation required under this Agreement or any other Loan Document;

 

(b) Breaches of Representations and Warranties. If any warranty, representation, statement, report or certificate made or delivered to Agent or any Lender by or on behalf of any Loan Party or any Other Obligor is untrue or misleading in any material respect (except where such warranty or representation is already qualified by Material Adverse Effect, materiality, dollar thresholds or similar qualifications, in which case such warranty or representation shall be accurate in all respects);

 

(c) Breaches of Covenants.

 

(i) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in Section 5.2, 6.1, 6.6, 6.7, 7.2 (limited to the last sentence of Section 7.2), 7.3, 7.7, 7.8, 7.11(c), 7.13, 7.14, 7.15, 7.24, 7.25, 7.29, 8 or 9; or

 

(ii) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in any provision of this Agreement or any other Loan Document and not addressed in clauses Sections 11.1(a), (b) or (c)(i), and the continuance of such default unremedied for a period of ten (10) Business Days; provided, that such ten (10) Business Day grace period shall not be available for any default that is not reasonably capable of being cured within such period or for any intentional default;

 

(d) Judgment. If one or more judgments aggregating in excess of $120,000 is obtained against any Loan Party or any Other Obligor which remains unstayed for more than thirty (30) days or is enforced;

 

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(e) Cross-Acceleration and Cross-Default. If either (x) any default occurs with respect to the ABL Obligations or the Term Loan Obligations and, as a result thereof, the holder of such ABL Obligations or Term Loan Obligations accelerates the maturity of any such Indebtedness or otherwise cause such Indebtedness to become due prior to the stated maturity thereof, or (y) any default occurs with respect to any Indebtedness (other than the ABL Obligations, the Term Loan Obligations, the Obligations or any Subordinated Debt) of any Loan Party or any Other Obligor if (i) such default shall consist of the failure to pay such Indebtedness when due (beyond any grace period), whether by acceleration or otherwise or (ii) the effect of such default is to permit the holder, with or without notice or lapse of time or both, to accelerate the maturity of any such Indebtedness or to cause such Indebtedness to become due prior to the stated maturity thereof (without regard to the existence of any subordination or intercreditor agreements);

 

(f) Death or Dissolution. The dissolution, death, termination of existence, insolvency or business failure or suspension or cessation of business as usual of any Loan Party or any Other Obligor (or of any general partner of any Loan Party or any Other Obligor if it is a partnership);

 

(g) Voluntary Bankruptcy or Similar Proceedings. If any Loan Party or any Other Obligor shall apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, admit in writing its inability to pay its debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt or insolvent or be the subject of an order for relief under the Bankruptcy Code or under any bankruptcy or insolvency law of a foreign jurisdiction, or file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;

 

(h) Involuntary Bankruptcy or Similar Proceedings. The commencement of an involuntary case or other proceeding against any Loan Party or any Other Obligor seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or if an order for relief is entered against any Loan Party or any Other Obligor under any bankruptcy, insolvency or other similar applicable law as now or hereafter in effect; provided, that if such commencement of proceedings is involuntary, such action shall not constitute an Event of Default unless such proceedings are not dismissed within forty-five (45) days after the commencement of such proceedings, though Agent and Lenders shall have no obligation to make Loans during such forty-five (45) day period or, if earlier, until such proceedings are dismissed;

 

(i) Revocation or Termination of Guaranty or Security Documents. The actual or attempted revocation or termination of, or limitation or denial of liability under, any guaranty of any of the Obligations, or any security document securing any of the Obligations, by any Loan Party or Other Obligor;

 

(j) Subordinated Debt.

 

(i) A Default or Event of Default (as such terms are defined in the Subordinated Debt Documents) with respect to the Subordinated Debt or the occurrence of any condition or event that results in the Subordinated Debt becoming due prior to its scheduled maturity as of the Closing Date or permits any holder or holders of the Subordinated Debt or any trustee or agent on its or their behalf to cause the Subordinated Debt to become due, or require the prepayment, repurchase, redemption of defeasance thereof, prior to its scheduled maturity as of the Closing Date; or

 

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(ii) If any Loan Party or Other Obligor makes any payment on account of any Indebtedness or obligation, the payment of which has been contractually subordinated to the Obligations other than payments which are not prohibited by the applicable subordination provisions pertaining thereto, or if any Person who has subordinated such Indebtedness or obligations attempts to limit or terminate any applicable subordination provisions pertaining thereto;

 

(k) Criminal Indictment or Proceedings. If there is any indictment of any Loan Party, any Loan Party’s officers, any Other Obligor or any Other Obligor’s officers under any criminal statute or commencement of criminal proceedings against any such Person;

 

(l) Change of Control. If (i) current equity owners as of the Closing Date collectively cease to, directly or indirectly, own and control at least 51% of the aggregate Voting Power represented by the issued and outstanding equity interests of Holdings on a fully diluted basis, (ii) such current equity owners as of the Closing Date collectively cease to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Holdings and to direct the management policies and decisions of Holdings, (iii) Holdings ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of Rubicon, CleanCo, Charter or International or (iv) Charter ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of RiverRoad (any event referred to in this clause (l), a “Change of Control”);

 

(m) Change of Management. If (i) Nate Morris ceases to be employed as, and actively perform the duties of, the chief executive officer of Holdings, or (ii) Christopher Spooner ceases to be employed as, and actively perform the duties of, the vice president of finance of Holdings, in each case unless a successor is appointed within ninety (90) days after the termination of such individual’s employment and such successor is reasonably satisfactory to Agent;

 

(n) Invalid Liens. If any Lien purported to be created by any Loan Document shall cease to be a valid perfected Requisite Priority Lien (subject only to any priority accorded by law to Permitted Liens) on any material portion of the Collateral, or any Loan Party or any Other Obligor shall assert in writing that any Lien purported to be created by any Loan Document is not a valid perfected Requisite Priority Lien (subject only to any priority accorded by law to Permitted Liens) on the assets or properties purported to be covered thereby; except to the extent arising from or related to a failure to file continuation statements in connection with any UCC Financing Statement;

 

(o) Termination of Loan Documents. If any of the Loan Documents shall cease to be in full force and effect (other than as a result of the discharge thereof in accordance with the terms thereof or by written agreement of all parties thereto);

 

(p) Liquidation Sales. The determination by any Loan Party to employ an agent or other third party or otherwise engage any Person or solicit proposals for the engagement of any Person (i) in connection with the proposed liquidation all or a material portion of its assets, or (ii) to conduct any so-called liquidation or “Going-Out-Of-Business” sales;

 

(q) Loss of Collateral. The (i) uninsured loss, theft, damage or destruction of any of the Collateral, (ii) the insured loss, theft, damage or destruction of any of the Collateral in an amount in excess of $120,000 in the aggregate for all such events during any Fiscal Year, or (iii) except as permitted hereby, the sale, lease or furnishing under a contract of service of, any of the Collateral.

 

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(r) Plans. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or any Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $120,000, (ii) the existence of any Lien under Section 430(k) or Section 6321 of the Code or Section 303(k) or Section 4068 of ERISA on any assets of a Loan Party, or (iii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $120,000.

 

11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc. Upon the occurrence and during the continuation of an Event of Default, Agent may (in its sole discretion), or at the direction of Required Lenders, shall, (a) terminate all or any portion of its commitment to lend to or extend credit to Borrowers under this Agreement and/or any other Loan Document, without prior notice to any Loan Party and/or (b) demand payment in full of all or any portion of the Obligations (whether or not payable on demand prior to such Event of Default), together with the Prepayment Premium and/or (c) take any and all other and further actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity. Notwithstanding the foregoing sentence, upon the occurrence of any Event of Default described in Section 11.1(g) or Section 11.1(h), without notice, demand or other action by Agent all of the Obligations (including the Prepayment Premium) shall immediately become due and payable whether or not payable on demand prior to such Event of Default.

 

11.3. Remedies with Respect to Collateral. Without limiting any rights or remedies Agent or any Lender may have pursuant to this Agreement, the other Loan Documents, under applicable law or otherwise, upon the occurrence and during the continuation of an Event of Default:

 

(a) Any and All Remedies. Agent may take any and all actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity, and the rights and remedies herein and therein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law or otherwise.

 

(b) Collections; Modifications of Terms. Agent may, but shall be under no obligation to: (i) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to, or is subject to a security interest in favor of, Agent; (ii) demand, sue for, collect and give receipts for and take all necessary or desirable steps to collect any Collateral or Proceeds in its or any Loan Party Obligor’s name, and apply any such collections against the Obligations as Agent may elect; (iii) take control of any Collateral and any cash and non-cash Proceeds of any Collateral; (iv) enforce, compromise, extend, renew settle or discharge any rights or benefits of each Loan Party Obligor with respect to or in and to any Collateral, or deal with the Collateral as Agent may deem advisable; and (v) make any compromises, exchanges, substitutions or surrenders of Collateral Agent deems necessary or proper in its reasonable discretion, including extending the time of payment, permitting payment in installments, or otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected without notice to, consent of, or any other action of any Loan Party and without otherwise discharging or affecting the Obligations, the Collateral or the security interests granted to Agent under this Agreement or any other Loan Document.

 

(c) Insurance. Agent may file proofs of loss and claim with respect to any of the Collateral with the appropriate insurer, and may endorse in its own and each Loan Party Obligor’s name any checks or drafts constituting Proceeds of insurance. Any Proceeds of insurance received by Agent may be applied by Agent against payment of all or any portion of the Obligations as Agent may elect in its reasonable discretion.

 

(d) Possession and Assembly of Collateral. Agent may take possession of the Collateral and/or, without removal, render each Loan Party Obligor’s Equipment unusable. Upon Agent’s request, each Loan Party Obligor shall assemble the Collateral and make it available to Agent at one or more places designated by Agent.

 

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(e) Set-off. Agent may and, without any notice to, consent of or any other action by any Loan Party (such notice, consent or other action being expressly waived), set-off or apply (i) any and all deposits (general or special, time or demand, provisional or final) at any time held by or for the account of Agent or any Affiliate of Agent and (ii) any Indebtedness at any time owing by Agent or any Affiliate of Agent or any Participant in the Loans to or for the credit or the account of any Loan Party Obligor to the repayment of the Obligations, irrespective of whether any demand for payment of the Obligations has been made.

 

(f) Disposition of Collateral.

 

(i) Sale, Lease, etc. of Collateral. Agent may, without demand, advertising or notice, all of which each Loan Party Obligor hereby waives (except as the same may be required by the UCC or other applicable law and is not waivable under the UCC or such other applicable law), at any time or times in one or more public or private sales or other dispositions, for cash, on credit or otherwise, at such prices and upon such terms as determined by Agent (provided such price and terms are commercially reasonable within the meaning of the UCC to the extent such sale or other disposition is subject to the UCC requirements that such sale or other disposition must be commercially reasonable), (A) sell, lease, license or otherwise dispose of any and all Collateral and/or (B) deliver and grant options to a third party to purchase, lease, license or otherwise dispose of any and all Collateral. Agent may sell, lease, license or otherwise dispose of any Collateral in its then-present condition or following any preparation or processing deemed necessary by Agent in its reasonable discretion. Agent may be the purchaser at any such public or private sale or other disposition of Collateral, and in such case Agent may make payment of all or any portion of the purchase price therefor by the application of all or any portion of the Obligations due to Agent to the purchase price payable in connection with such sale or disposition. Agent may, if it deems it reasonable, postpone or adjourn any sale or other disposition of any Collateral from time to time by an announcement at the time and place of the sale or disposition to be so postponed or adjourned without being required to give a new notice of sale or disposition; provided, that Agent shall provide the applicable Loan Party Obligor with written notice of the time and place of such postponed or adjourned sale or disposition. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s compliance with any requirements of applicable law in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any sale, lease, license or other disposition of such Collateral.

 

(ii) Deficiency. Each Loan Party Obligor shall remain liable for all amounts of the Obligations remaining unpaid as a result of any deficiency of the Proceeds of the sale, lease, license or other disposition of Collateral after such Proceeds are applied to the Obligations as provided in this Agreement.

 

(iii) Warranties; Sales on Credit. Agent may sell, lease, license or otherwise dispose of the Collateral without giving any warranties and may specifically disclaim any and all warranties, including but not limited to warranties of title, possession, merchantability and fitness. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s disclaimer of any and all warranties in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any such disposition of the Collateral. If Agent sells, leases, licenses or otherwise disposes of any of the Collateral on credit, Borrowers will be credited only with payments actually made in cash by the recipient of such Collateral and received by Agent and applied to the Obligations. If any Person fails to pay for Collateral acquired pursuant this Section 11.3(f) on credit, Agent may re-offer the Collateral for sale, lease, license or other disposition.

 

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(g) Investment Property; Voting and Other Rights; Irrevocable Proxy.

 

(i) All rights of each Loan Party Obligor to exercise any of the voting and other consensual rights which it would otherwise be entitled to exercise in accordance with the terms hereof with respect to any Investment Property, and to receive any dividends, payments, and other distributions which it would otherwise be authorized to receive and retain in accordance with the terms hereof with respect to any Investment Property, shall immediately, at the election of Agent (without requiring any notice) cease, and all such rights shall thereupon become vested solely in Agent, and Agent (personally or through an agent) shall thereupon be solely authorized and empowered, without notice, to (A) transfer and register in its name, or in the name of its nominee, the whole or any part of the Investment Property, it being acknowledged by each Loan Party Obligor that any such transfer and registration may be effected by Agent through its irrevocable appointment as attorney-in-fact pursuant to Section 11.3(g)(ii) and Section 6.4, (B) exchange certificates or instruments representing or evidencing Investment Property for certificates or instruments of smaller or larger denominations, (C) exercise the voting and all other rights as a holder with respect to all or any portion of the Investment Property (including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member or as a shareholder (as applicable) of the Issuer), (D) collect and receive all dividends and other payments and distributions made thereon, (E) notify the parties obligated on any Investment Property to make payment to Agent of any amounts due or to become due thereunder, (F) endorse instruments in the name of each Loan Party Obligor to allow collection of any Investment Property, (G) enforce collection of any of the Investment Property by suit or otherwise, and surrender, release, or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any liabilities of any nature of any Person with respect thereto, (H) consummate any sales of Investment Property or exercise any other rights as set forth in Section 11.3(f), (I) otherwise act with respect to the Investment Property as though Agent was the outright owner thereof and (J) exercise any other rights or remedies Agent may have under the UCC, other applicable law or otherwise.

 

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(ii) EACH LOAN PARTY OBLIGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS ITS PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY OBLIGOR WITH RESPECT TO ALL OF EACH SUCH LOAN PARTY OBLIGOR’S INVESTMENT PROPERTY WITH THE RIGHT, DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO TAKE ANY OF THE FOLLOWING ACTIONS: (A) TRANSFER AND REGISTER IN AGENT’S NAME, OR IN THE NAME OF ITS NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTE THE PLEDGED EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND COLLECT ANY DIVIDEND OR ANY OTHER PAYMENT OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR, THE INVESTMENT PROPERTY OR ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO INDORSE ANY INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY OBLIGOR FOR THE SAME, (D) EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL ECONOMIC RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS OF EACH LOAN PARTY OBLIGOR AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF THE ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT WHICH AGENT MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND IRREVOCABLE UNTIL (x) ALL OF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND (y) AGENT AND LENDERS HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (IT BEING UNDERSTOOD AND AGREED THAT SUCH OBLIGATIONS WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME PAYMENT, IN WHOLE OR IN PART, OF ANY OF THE OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY LENDER FOR ANY REASON WHATSOEVER, INCLUDING AS A PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE UNDER ANY BANKRUPTCY, INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT HAD NOT BEEN MADE; IT BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR RETURNED, ALL REASONABLE OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING ALL REASONABLE INTERNAL AND EXTERNAL ATTORNEYS’ FEES AND DISBURSEMENTS) INCURRED BY AGENT AND LENDERS IN DEFENDING AND ENFORCING SUCH REINSTATEMENT SHALL HEREBY BE DEEMED TO BE INCLUDED AS A PART OF THE OBLIGATIONS). SUCH APPOINTMENT OF AGENT AS PROXY AND AS ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN ANY GOVERNING DOCUMENTS OF ANY LOAN PARTY OBLIGOR, ANY ISSUER, OR OTHERWISE.

 

(iii) In order to further effect the foregoing transfer of rights in favor of Agent, during the continuance of an Event of Default, each Loan Party Obligor hereby authorizes and instructs each Issuer of Investment Property pledged by such Loan Party Obligor to comply with any instruction received by such Issuer from Agent without any other or further instruction from such Loan Party Obligor, and each Loan Party Obligor acknowledges and agrees that each Issuer shall be fully protected in so complying, and to pay any dividends, distributions, or other payments with respect to any of the Investment Property directly to Agent.

 

(iv) Upon exercise of the proxy set forth herein, all prior proxies given by any Loan Party Obligor with respect to any of the Pledged Equity or other Investment Property, other than to Agent, are hereby revoked, and no subsequent proxies, other than to Agent will be given with respect to any of the Pledged Equity or any of the other Investment Property unless Agent otherwise subsequently agrees in writing. Agent, as proxy, will be empowered and may exercise the irrevocable proxy to vote the Pledged Equity and the other Investment Property at any and all times during the existence of an Event of Default, including, at any meeting of shareholders or members, as the case may be, however called, and at any adjournment thereof, or in any action by written consent, and may waive any notice otherwise required in connection therewith. To the fullest extent permitted by applicable law, Agent shall have no agency, fiduciary or other implied duties to any Loan Party Obligor, any Issuer, any Loan Party or any other Person when acting in its capacity as such proxy or attorney-in-fact. Each Loan Party Obligor hereby waives and releases any claims that it may otherwise have against Agent with respect to any breach, or alleged breach, of any such agency, fiduciary or other duty.

 

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(v) Any transfer to Agent or its nominee, or registration in the name of Agent or its nominee, of the whole or any part of the Investment Property shall be made solely for purposes of effectuating voting or other consensual rights with respect to the Investment Property in accordance with the terms of this Agreement and is not intended to effectuate any transfer of ownership of any of the Investment Property. Notwithstanding the delivery by Agent of any instruction to any Issuer or any exercise by Agent of an irrevocable proxy or otherwise, Agent shall not be deemed the owner of, or assume any obligations or any liabilities whatsoever of the owner or holder of, any Investment Property unless and until Agent expressly accepts such obligations in a duly authorized and executed writing and agrees in writing to become bound by the applicable Governing Documents or otherwise becomes the owner thereof under applicable law (including through a sale as described in Section 11.3(f)). The execution and delivery of this Agreement shall not subject Agent to, or transfer or pass to Agent, or in any way affect or modify, the liability of any Loan Party Obligor under the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise. In no event shall the execution and delivery of this Agreement by Agent, or the exercise by Agent of any rights hereunder or assigned hereby, constitute an assumption of any liability or obligation whatsoever of any Loan Party Obligor to, under, or in connection with any of the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise.

 

(vi) Compliance with the Securities Act as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, as well as any applicable “Blue Sky” or other state securities laws, if applicable to the Collateral or the portion thereof being sold, may require strict limitations as to the manner in which the Agent or any subsequent transferee may dispose of the Collateral. With respect to any disposition as to which the Securities Act or analogous state securities laws is applicable, each Loan Party Obligor hereby waives any objection to sale in a compliant manner, and agrees that the Agent has no obligation to obtain the maximum possible price for the Collateral so long as the Agent proceeds in a commercially reasonable manner. Without limiting the generality of the foregoing, each Loan Party Obligor agrees that in conducting a disposition of the Collateral as to which the Securities Act or analogous state securities laws applies, Agent may seek to sell the Collateral by private placement, and may restrict bidders and prospective purchasers to those who are willing to represent that they are purchasing for investment only and not for distribution and who otherwise satisfy qualifications designed to ensure compliance with the Securities Act and analogous state securities laws and those that may be established in the Issuer’s Governing Documents. Each Loan Party Obligor acknowledges that in order to protect Agent’s interest, it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, including, without limitation, a public offering under the Securities Act. In order to address these potential compliance requirements, Agent may solicit offers to purchase the Collateral from a limited number of bidders reasonably believed by Agent to be institutional investors or accredited investors. If Agent solicits offers in a commercially reasonable manner, then acceptance by Agent of one or more of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral and Agent will not be responsible or liable for selling all or any portion of the Collateral at a price that Agent deems in good faith to be reasonable. Agent is under no obligation to delay a disposition of any portion of the Collateral that are securities under the Securities Act or applicable “Blue Sky” or other state securities law for the period of time necessary to permit any Loan Party Obligor or the Issuer to register the securities for public sale under the Securities Act or under applicable “Blue Sky” or other state securities laws, even if a Loan Party Obligor or the Issuer agrees to do so. In addition, to the extent not prohibited by applicable law, each Loan Party Obligor waives any right to prior notice (except to the extent expressly provided in this Agreement) or judicial hearing in connection with the taking possession or the disposition of any of the Collateral, including any right which Loan Party Obligor otherwise would have.

 

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(vii) To the extent permitted under applicable law, Agent is not required to conduct any foreclosure sale of the Investment Property or any portion thereof.

 

(viii) Agent, at its option, may obtain the appointment of a receiver to take possession of the Investment Property and, at the option of Agent, a receiver may be empowered (i) to collect, receive and enforce all distributions, (ii) to exercise the rights of Agent as provided in this Agreement, (iii) to collect all other amounts owed to any Loan Party Obligor in respect of the Investment Property as and when due to any Loan Party Obligor, (iv) to otherwise collect, sell or dispose of the Investment Property, (v) to exercise all rights in and under the Investment Property; and (vi) to turn over all net proceeds to Agent. Each Loan Party Obligor irrevocably and unconditionally agrees that a receiver may be appointed by a court to take the actions listed above without regard to the adequacy of the security for the Obligations, and the actions of the receiver may be taken in the name of the receiver, any Loan Party Obligor or Agent.

 

(ix) Agent may elect to conduct a sale of an economic interest in any Investment Property constituting limited liability company interests that does not result in the purchaser being admitted as a substitute limited liability company member in the Issuer, and that any sale or dispositions made in good faith will be considered commercially reasonable, notwithstanding the possibility that a substantially higher price might be realized if the purchaser were able to be admitted as a substitute limited liability company member rather than the holder of only an economic interest in the Issuer.

 

(x) Agent may disclose to prospective purchasers all of the information relating to the Investment Property (and the applicable Issuer) that is in the Agent’s possession or otherwise available to the Agent.

 

(xi) Each Loan Party Obligor hereby authorizes and instructs their respective Issuer to comply with any instruction received by it from Agent in writing that (i) states that an Event of Default has occurred and is continuing and (ii) is otherwise in accordance with the terms of the provisions of this Agreement as to Investment Property, without any other or further instructions from the respective Loan Party Obligor, and such Loan Party Obligor agrees that Issuer be fully protected in so complying.

 

(h) Election of Remedies. Agent shall have the right in Agent’s sole discretion to determine which rights, security, Liens or remedies Agent may at any time pursue, foreclose upon, relinquish, subordinate, modify or take any other action with respect to, without in any way impairing, modifying or affecting any of Agent’s other rights, security, Liens or remedies with respect to any Collateral or any of Agent’s rights or remedies under this Agreement or any other Loan Document.

 

(i) Agent’s Obligations. Each Loan Party Obligor agrees that Agent shall not have any obligation to preserve rights to any Collateral against prior parties or to marshal any Collateral of any kind for the benefit of any other creditor of any Loan Party Obligor or any other Person. Agent shall not be responsible to any Loan Party Obligor or any other Person for loss or damage resulting from Agent’s failure to enforce its Liens or collect any Collateral or Proceeds or any monies due or to become due under the Obligations or any other liability or obligation of any Loan Party Obligor to Agent.

 

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(j) Waiver of Rights by Loan Party Obligors. Except as otherwise expressly provided for in this Agreement or by non-waivable applicable law, each Loan Party waives (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent on which any Loan Party Obligor may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this regard, (ii) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent to exercise any of its remedies and (iii) the benefit of all valuation, appraisal, marshaling and exemption laws. If any notice of a proposed sale or other disposition of any part of the Collateral is required under applicable law, each Loan Party Obligor agrees that ten (10) calendar days prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made is commercially reasonable.

 

12. LOAN GUARANTY.

 

12.1. Guaranty. Each Loan Party Obligor hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guaranties to Agent, for the ratable benefit of the Lenders, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, all of the Obligations and all reasonable costs and expenses, including all court costs and reasonable attorneys’ and paralegals’ fees (including internal and external counsel and paralegals) and expenses of Agent or any Lender in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, any Borrower, any Loan Party Obligor or any Other Obligor of all or any part of the Obligations (and such costs and expenses paid or incurred shall be deemed to be included in the Obligations). Each Loan Party Obligor further agrees that the Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guaranty notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf of any branch or Affiliate of Agent that extended any portion of the Obligations.

 

12.2. Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of collection. Each Loan Party Obligor waives any right to require Agent to sue or otherwise take action against any Borrower, any other Loan Party Obligor, any Other Obligor, or any other Person obligated for all or any part of the Obligations, or otherwise to enforce its payment against any Collateral securing all or any part of the Obligations.

 

12.3. No Discharge or Diminishment of Loan Guaranty.

 

(a) Except as otherwise expressly provided for herein, the obligations of each Loan Party Obligor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of all of the Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of any Borrower or any Obligor; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or any Obligor or their respective assets or any resulting release or discharge of any obligation of any Borrower or any Obligor; or (iv) the existence of any claim, setoff or other rights which any Loan Party Obligor may have at any time against any Borrower, any Obligor, Agent, or any other Person, whether in connection herewith or in any unrelated transactions.

 

(b) The obligations of each Loan Party Obligor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Borrower or any Obligor of the Obligations or any part thereof.

 

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(c) Further, the obligations of any Loan Party Obligor hereunder shall not be discharged or impaired or otherwise affected by: (i) the failure of Agent to assert any claim or demand or to enforce any remedy with respect to all or any part of the Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Obligations; (iii) any release, non-perfection or invalidity of any indirect or direct security for all or any part of the Obligations or all or any part of any obligations of any Obligor; (iv) any action or failure to act by Agent with respect to any Collateral; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Loan Party Obligor or that would otherwise operate as a discharge of any Loan Party Obligor as a matter of law or equity (other than the indefeasible payment in full in cash of all of the Obligations).

 

12.4. Defenses Waived. To the fullest extent permitted by applicable law, each Loan Party Obligor hereby waives any defense based on or arising out of any defense of any Loan Party Obligor or the unenforceability of all or any part of the Obligations from any cause, or the cessation from any cause of the liability of any Loan Party Obligor, other than the indefeasible payment in full in cash of all of the Obligations. Without limiting the generality of the foregoing, each Loan Party Obligor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower, any Obligor, or any other Person. Each Loan Party Obligor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder. Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any Collateral, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any Obligor or exercise any other right or remedy available to it against any Borrower or any Obligor, without affecting or impairing in any way the liability of any Loan Party Obligor under this Loan Guaranty except to the extent the Obligations have been fully and indefeasibly paid in cash. To the fullest extent permitted by applicable law, each Loan Party Obligor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan Party Obligor against any Borrower or any Obligor or any security.

 

12.5. Rights of Subrogation. No Loan Party Obligor will assert any right, claim or cause of action, including a claim of subrogation, contribution or indemnification that it has against any Borrower or any Obligor, or any Collateral, until the Termination Date.

 

12.6. Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or any other Person, or otherwise, each Loan Party Obligor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not Agent is in possession of this Loan Guaranty. If acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Obligations shall nonetheless be payable by the Loan Party Obligors forthwith on demand by Agent. This Section 12.6 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

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12.7. Information. Each Loan Party Obligor assumes all responsibility for being and keeping itself informed of each Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that each Loan Party Obligor assumes and incurs under this Loan Guaranty, and agrees that Agent shall not have any duty to advise any Loan Party Obligor of information known to it regarding those circumstances or risks.

 

12.8. Termination. To the maximum extent permitted by law, each Loan Party Obligor hereby waives any right to revoke this Loan Guaranty as to future Obligations. If such a revocation is effective notwithstanding the foregoing waiver, each Loan Party Obligor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agent, (b) no such revocation shall apply to any Obligations in existence on the date of receipt by Agent of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms or other terms and conditions thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Agent, (d) no payment by any Borrower, any other Loan Party Obligor, or from any other source, prior to the date of Agent’s receipt of written notice of such revocation shall reduce the maximum obligation of any Loan Party Obligor hereunder and (e) any payment, by any Borrower or from any source other than a Loan Party Obligor which has made such a revocation, made subsequent to the date of such revocation, shall first be applied to that portion of the Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of any Loan Party Obligor hereunder.

 

12.9. Maximum Liability. The provisions of this Loan Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Loan Party Obligor under this Loan Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Loan Party Obligor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the amount of such liability shall, without any further action by the Loan Party Obligors, Agent or any Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Loan Party Obligor’s Maximum Liability). This Section 12.9 with respect to the Maximum Liability of each Loan Party Obligor is intended solely to preserve the rights of Agent and the Lenders to the maximum extent not subject to avoidance under applicable law, and no Loan Party Obligor or any other Person shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Loan Party Obligor hereunder shall not be rendered voidable under applicable law. Each Loan Party Obligor agrees that the Obligations may at any time and from time to time exceed the Maximum Liability of each Loan Party Obligor without impairing this Loan Guaranty or affecting the rights and remedies of Agent hereunder; provided, that nothing in this sentence shall be construed to increase any Loan Party Obligor’s obligations hereunder beyond its Maximum Liability.

 

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12.10. Contribution. In the event any Loan Party Obligor shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Loan Guaranty (such Loan Party Obligor a Paying Guarantor), each other Loan Party Obligor (each a Non-Paying Guarantor) shall contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s Applicable Payment Percentageof such payment or payments made, or losses suffered, by such Paying Guarantor. For purposes of this Section 12.10, each Non-Paying Guarantor’s Applicable Payment Percentage with respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was made by reference to the ratio of (x) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from any Borrower after the date hereof (whether by loan, capital infusion or by other means) to (y) the aggregate Maximum Liability of all Loan Party Obligors hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Loan Party Obligor, the aggregate amount of all monies received by such Loan Party Obligors from any Borrower after the date hereof (whether by loan, capital infusion or by other means). Nothing in this provision shall affect any Loan Party Obligor’s several liability for the entire amount of the Obligations (up to such Loan Party Obligor’s Maximum Liability). Each of the Loan Party Obligors covenants and agrees that its right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of all of the Obligations. This provision is for the benefit of Agent and the Lenders and the Loan Party Obligors and may be enforced by any one, or more, or all of them, in accordance with the terms hereof.

 

12.11. Liability Cumulative. The liability of each Loan Party Obligor under this Section 12 is in addition to and shall be cumulative with all liabilities of each Loan Party Obligor to Agent and the Lenders under this Agreement and the other Loan Documents to which such Loan Party Obligor is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES.

 

(a) Any and all payments by or on account of any obligation of the Loan Party Obligors hereunder or under any other Loan Document shall to the extent permitted by applicable laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable laws require the Loan Party Obligors to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such laws as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(b) If any Loan Party Obligor shall be required by applicable law to withhold or deduct any Taxes from any payment, then (i) such Loan Party Obligor shall withhold or make such deductions as are required based upon the information and documentation it has received pursuant to subsection (e) below, (ii) such Loan Party Obligor shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the applicable law and (iii) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Loan Party Obligors shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made. As soon as practicable after any payment of Taxes by any Loan Party Obligor to a Governmental Authority pursuant to this Section, Borrower Representative shall deliver to Agent (or, upon request, such other Recipient), the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment of Taxes, a copy of any return required by applicable law to report such payment or other evidence of such payment reasonably satisfactory to Agent (or such other Recipient).

 

(c) Without limiting the provisions of subsections (a) and (b) above, the Loan Party Obligors shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.

 

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(d) Without limiting the provisions of subsections (a) through (c) above, each Loan Party Obligor shall, and does hereby, on a joint and several basis, indemnify Agent, each Lender and each other Recipient (and their respective directors, officers, employees, affiliates and agents) and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes and Other Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid or incurred by Agent, any Lender or any other Recipient on account of, or in connection with any Loan Document or a breach by a Loan Party Obligor thereof, and any penalties, interest and related expenses and losses arising therefrom or with respect thereto (including the fees, charges and disbursements of any internal or external counsel or other tax advisor for Agent, any Lender or any other Recipient (or their respective directors, officers, employees, affiliates, and agents)), whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of any such payment or liability delivered to Borrower Representative shall be conclusive absent manifest error. Notwithstanding any provision in this Agreement to the contrary, this Section 13 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

(e) Each Lender shall deliver to Borrower Representative and each Lender and each Participant shall deliver to Agent, at the time or times prescribed by applicable laws or as reasonably requested by Agent, such properly completed and executed documentation prescribed by applicable laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit Borrower Representative or Agent, as the case may be, to determine (x) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (y) if applicable, the required rate of withholding or deduction and (z) such Lender’s or Participant’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Recipient by the Loan Party Obligors pursuant to this Agreement or otherwise to establish such Recipient’s status for withholding tax purposes in the applicable jurisdiction; provided, that each Recipient shall only be required to deliver such documentation as it may legally provide. Without limiting the generality of the foregoing, if a Borrower is resident for tax purposes in the United States:

 

(i) each Lender (or Participant) that is a United States person within the meaning of Section 7701(a)(30) of the Code shall deliver to Borrower Representative and Agent (or any Lender granting a participation as applicable) an executed original of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable law or reasonably requested by Borrower Representative or Agent (or Lender granting a participation) as will enable Borrower Representative or Agent (or Lender granting a participation) as the case may be, to determine whether or not such Lender (or Participant) is subject to backup withholding or information reporting requirements under the Code;

 

(ii) each Lender (or Participant) that is not a United States person within the meaning of Section 7701(a)(30) of the Code (a Non-U.S. Recipient) shall deliver to Borrower Representative and Agent (or any Lender granting a participation in case the Non-U.S. Recipient is a Participant) on or prior to the date on which such Non-U.S. Person becomes a party to this Agreement or a Participant (and from time to time thereafter upon the reasonable request of Borrower Representative or Agent but only if such Non-U.S. Recipient is legally entitled to do so), whichever of the following is applicable: (A) executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (B) executed originals of Internal Revenue Service Form W-8ECI; (C) executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation; (D) each Non-U.S. Recipient claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, shall provide (x) a certificate to the effect that such Non-U.S. Recipient is not (1) a bankwithin the meaning of section 881(c)(3)(A) of the Code, (2) a 10 percent shareholder of Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (3) a controlled foreign corporation described in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN; and/or (E) executed originals of any other form prescribed by applicable law (including FATCA) as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable law to permit Borrower Representative or Agent to determine the withholding or deduction required to be made. Each Non-U.S. Recipient shall promptly notify Borrower Representative and Agent (or any Lender granting a participation if the Non-U.S. Recipient is a Participant) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

 

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(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower Representative and Agent at the time or times prescribed by applicable laws and at such time or times reasonably requested by Borrower Representative or Agent such documentation prescribed by applicable laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower Representative or Agent as may be necessary for Borrower Representative and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this subsection (f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

14. AGENT

 

14.1. Appointment. Each of the Lenders hereby irrevocably appoints Agent as its agent and authorizes Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent, each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) make Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein and execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents; (e) manage, supervise or otherwise deal with Collateral; (f) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (g) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents, (h) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, applicable law or otherwise, and all other determinations and decisions relating to ordinary course administration of the credit facilities contemplated hereunder; and (i) incur and pay such expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents, whether or not any Loan Party is obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Documents or otherwise. The provisions of this Article are solely for the benefit of Agent and the Lenders, and the Loan Parties shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” as used herein or in any other Loan Documents (or any similar term) with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

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14.2. Rights as a Lender. The Person serving as Agent hereunder, if it is a Lender, shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Loan Party or any Subsidiary or any Affiliate thereof as if it were not Agent hereunder without notice to or consent of the other Lenders.

 

14.3. Duties and Obligations. Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders, and, (c) except as expressly set forth in the Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any Subsidiary that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity. Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct as determined by a final nonappealable judgment of a court of competent jurisdiction. Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to Agent by a Borrower or a Lender, and Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to Agent. Agent shall be under no obligation to any Lender 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 to inspect the books and records or properties of any Loan Party.

 

14.4. Reliance. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional (who may be counsel for any Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document, unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable 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. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

 

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14.5. Actions through Sub-Agents. Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by Agent. Agent may also perform its duties through employees and other Agent-Related Persons. Agent shall not be responsible for the negligence or misconduct of any sub-agent, employee or Agent Professional that it selects as long as such selection was made without gross negligence or willful misconduct. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Affiliates and other related parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the related parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

 

14.6. Resignation. Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, Agent may resign at any time by notifying the Lenders and Borrower Representative. Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower Representative, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of its appointment as Agent hereunder by its successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The fees payable by Borrowers to a successor Agent shall be the same as those payable to its predecessor, unless otherwise agreed by Borrower Representative and such successor. Notwithstanding the foregoing, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectiveness of its resignation to the Lenders and Borrower Representative, whereupon, on the date of effectiveness of such resignation stated in such notice, (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents, provided that, solely for purposes of maintaining any security interest granted to the Agent under any Loan Document for the benefit of the Lenders, the retiring Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Lenders and, in the case of any Collateral in the possession of Agent, shall continue to hold such Collateral, in each case until such time as a successor Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreed that the retiring Agent shall have no duly or obligation to take any further action under any Loan Document, including any action required to maintain the perfection of any such security interest), and (b) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, provided that (i) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of any Person other than Agent shall be made directly to such Person and (ii) all notices and other communications required or contemplated to be given or made to Agent shall also directly be given or made to each Lender. Following the effectiveness of the Agent’s resignation from its capacity as such, the provisions of this Article, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective related parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent and in respect of the matters referred to in the proviso under clause (a) above.

 

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14.7. Non-Reliance.

 

(a) Each Lender acknowledges and agrees that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender further acknowledges the extensions of credit made hereunder are commercial loans and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document, and all applicable laws relating to the transactions contemplated hereby, and made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender shall, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning any Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own credit analysis and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document and in deciding whether or to the extent to which it will continue as a Lender or assign or otherwise transfer its rights, interests and obligations hereunder. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. Each Lender acknowledges that Agent does not have any duty or responsibility, either initially or on a continuing to provide such Lender with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement.

 

(b) Each Lender hereby agrees that (i) it has requested a copy of each appraisal, audit or field examination report prepared by or on behalf of Agent; (ii) Agent (A) makes no representation or warranty, express or implied, as to the completeness or accuracy of any such report or any of the information contained therein or any inaccuracy or omission contained in or relating to any such report and (B) shall not be liable for any information contained in any such report; (iii) such reports are not comprehensive audits or examinations, and that any Person performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ officer certificates and Loan Documents provided hereunder and that Agent undertakes no obligation to update, correct or supplement such reports; (iv) it will keep all such reports confidential and strictly for its internal use, not share any such report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (v) without limiting the generality of any other indemnification provision contained in this Agreement, (A) it will hold Agent and any such other Person preparing any such report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any such report in connection with any extension of credit that the indemnifying Lender has made or may make to any Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (B) it will pay and protect, and indemnify, defend, and hold Agent and any such other Person preparing any such report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonable attorneys’ fees of both internal and external counsel) of Agent or any such other Person as the direct or indirect result of any third parties who might obtain all or part of any such report through the indemnifying Lender.

 

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14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties.

 

(a) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of Agent) authorized to act for, any other Lender. Agent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement.

 

(b) In its capacity, Agent is a “representative” of the Lenders within the meaning of the term “secured party” as defined in the UCC. Each Lender authorizes Agent to enter into each of the Loan Documents to which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Lender (other than Agent) shall have the right individually to seek to realize upon the security granted by any Loan Document, it being understood and agreed that such rights and remedies may be exercised solely by Agent for the benefit of the Lenders upon the terms of the Loan Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Obligations, Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Lenders any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of Agent on behalf of the Lenders.

 

(c) Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the UCC can be perfected by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions. Agent shall have no obligation whatsoever to any of the Lenders (i) to verify or assure that the Collateral exists or is owned by any Borrower or its Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement or eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein,

 

14.9. Credit Bidding. The Loan Parties and the Lenders hereby irrevocably authorize Agent, during the continuance of an Event of Default and in exercise of remedies permitted under Section 12 of this Agreement or applicable law, based upon the instruction of the Required Lenders, to Credit Bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (and the Loan Parties shall approve Agent as a qualified bidder and such Credit Bid as qualified bid) at any sale thereof conducted by Agent, based upon the instruction of the Required Lenders, under any provisions of the UCC, as part of any sale or investor solicitation process conducted by any Loan Party, any interim receiver, receiver, receiver and manager, administrative receiver, trustee, agent or other Person pursuant or under any insolvency laws; provided, however, that (i) the Required Lenders may not direct Agent in any manner that does not treat each of the Lenders equally, without preference or discrimination, in respect of consideration received as a result of the Credit Bid, (ii) the acquisition documents shall be commercially reasonable and contain customary protections for minority holders such as among other things, anti-dilution and tag-along rights, (iii) the exchanged debt or equity securities must be freely transferable, without restriction (subject to applicable securities laws) and (iv) reasonable efforts shall be made to structure the acquisition in a manner that causes the governance documents pertaining thereto to not impose any obligations or liabilities upon the Lenders individually (such as indemnification obligations). Agent, based upon the instruction of the Required Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such Credit Bid or purchase and in connection therewith Agent may reduce the Obligations owed to the Lenders (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration. For purposes of the preceding sentence, the term “Credit Bid” shall mean, an offer submitted by Agent (on behalf of the Lender group), based upon the instruction of the Required Lenders, to acquire the property of any Loan Party or any portion thereof in exchange for and in full and final satisfaction of all or a portion (as determined by Agent, based upon the instruction of the Required Lenders) of the claims and Obligations under this Agreement and other Loan Documents.

 

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14.10. Certain Collateral Matters. The Lenders irrevocably authorize Agent, at its option and in its discretion, (a) to release any Lien granted to or held by Agent under any Loan Document (i) upon payment in full of all Loans and all other obligations of Borrowers hereunder; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder (including the release of any guarantor); (iii) subject to Section 15.5 if approved, authorized or ratified in writing by the Required Lenders; or (iv) to the extent required under the terms of the Subordination Agreement; (b) to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is permitted by clause (a) of the definition of Permitted Liens (it being understood that Agent may conclusively rely on a certificate from Borrower Representative in determining whether the Indebtedness secured by any such Lien is permitted hereunder); and (c) enter into and perform, or take any other actions in connection with, the Subordination Agreement and any Subordinated Debt Subordination Agreement. Each Lender hereby agrees, solely for the benefit of Agent, that it will be bound by and will take no actions contrary to the provisions of the Subordination Agreement or any Subordinated Debt Subordination Agreement. Upon request by Agent at any time, the Lenders will confirm in writing Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 14.10. Agent may, and at the direction of Required Lenders shall, give blockage notices in connection with any Subordinated Debt and each Lender hereby authorizes Agent to give such notices. Each Lender further agrees that it will not act unilaterally to deliver such notices.

 

14.11. Restriction on Actions by Lenders. Each Lender agrees that it shall not, without the express written consent of Agent, and shall, upon the written request of Agent (to the extent it is lawfully entitled to do so), set off against the Obligations, any amounts owing by such Lender to a Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken, any action, including the commencement of any legal or equitable proceedings to foreclose any loan or otherwise enforce any security interest in any of the Collateral or to enforce all or any part of this Agreement or the other Loan Documents. All Enforcement Actions under this Agreement and the other Loan Documents against the Loan Parties or any third party with respect to the Obligations or the Collateral may only be taken by Agent (at the direction of the Required Lenders or as otherwise permitted in this Agreement) or by its agents at the direction of Agent.

 

14.12. Expenses. Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Agent to reimburse Agent for such reasonable out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses by a Loan Party, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable share thereof. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any such costs or out of pocket expenses (including reasonable Agent Professional fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

 

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14.13. Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent will promptly notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with this Agreement; provided, that unless and until Agent has received any such request, 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.

 

14.14. Liability of Agent. None of the Agent-Related Persons shall (a) be liable to any Lender for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any of their respective Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower, or any of their respective Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lenders 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 to inspect the books and records or properties of any Borrower or their respective Subsidiaries.

 

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15. GENERAL PROVISIONS.

 

15.1. Notices.

 

(a) Notice by Approved Electronic Communications. Agent and each of its Affiliates is authorized to transmit, post or otherwise make or communicate, in its sole discretion (but shall not be required to do so), by Approved Electronic Communications in connection with this Agreement or any other Loan Document and the transactions contemplated therein. All uses of Approved Electronic Communications shall be governed by and subject to, in addition to the terms of this Agreement, the separate terms, conditions and privacy policy posted or referenced in such system (or such terms, conditions and privacy policy as may be updated from time to time, including on such system) and any related contractual obligations executed by Agent and Loan Parties in connection with the use of such system. Each of the Loan Parties, the Lenders and Agent hereby acknowledges and agrees that the use of Approved Electronic Communications is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing Agent and each of its Affiliates to transmit Approved Electronic Communications. All Approved Electronic Communications shall be provided as is and as available. None of Agent or any of its Affiliates or related persons warrants the accuracy, adequacy or completeness of any electronic platform or electronic transmission and disclaims all liability for errors or omissions therein. No warranty of any kind is made by Agent or any of its Affiliates or related persons in connection with any electronic platform or electronic transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects. Each Borrower and each other Loan Party executing this Agreement agrees that Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Approved Electronic Communication or otherwise required for any Approved Electronic Communication. No Approved Electronic Communications shall be denied legal effect merely because it is made electronically. Approved Electronic Communications that are not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Approved Electronic Communication, an E-Signature, upon which Agent and the Loan Parties may rely and assume the authenticity thereof. Each Approved Electronic Communication containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each E-Signature shall be deemed sufficient to satisfy any requirement for a signatureand each Approved Electronic Communication shall be deemed sufficient to satisfy any requirement for a writing, in each case including pursuant to this Agreement, any other Loan Document, the UCC, the Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each party or beneficiary hereto agrees not to contest the validity or enforceability of an Approved Electronic Communication or E-Signature under the provisions of any applicable law requiring certain documents to be in writing or signed; provided, that nothing herein shall limit such party’s or beneficiary’s right to contest whether an Approved Electronic Communication or E-Signature has been altered after transmission.

 

(b) All Other Notices. All notices, requests, demands and other communications under or in respect of this Agreement or any transactions hereunder, other than those approved for or required to be delivered by Approved Electronic Communications, shall be in writing and shall be personally delivered or mailed (by prepaid registered or certified mail, return receipt requested), sent by prepaid recognized overnight courier service, or by email to the applicable party at its address or email address indicated below,

 

If to Agent:

 

Mizzen Capital, LP
488 Madison Avenue, 18th Floor
New York, New York 10022

 

with a copy to (which shall not constitute notice to Agent):

 

Greenberg Traurig, LLP

One Vanderbilt Avenue

New York, NY 10017

Attention: Todd E. Bowen

E-Mail: bowent@gtlaw.com

 

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If to Borrower Representative, any Borrower or any other Loan Party:

 

Rubicon Global, LLC
950 East Paces Ferry Rd NE

Suite 1900

Atlanta, Georgia 30326
Attention: Michael Heller and Bill Meyer
Email: Michael.Heller@rubiconglobal.com and

Bill.Meyer@rubiconglobal.com

 

with a mandatory copy to:

 

Chamberlain Hrdlicka White Williams & Aughtry, P.C.

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303
Attention: Scott A. Augustine
Email: scott.augustine@chamberlainlaw.com

 

or, as to each party, at such other address as shall be designated by such party in a written notice to the other party delivered as aforesaid. All such notices, requests, demands and other communications shall be deemed given (i) when personally delivered, (ii) three (3) Business Days after being deposited in the mails with postage prepaid (by registered or certified mail, return receipt requested), (iii) one (1) Business Day after being delivered to the overnight courier service, if prepaid and sent overnight delivery, addressed as aforesaid and with all charges prepaid or billed to the account of the sender or (iv) when sent by email transmission to an email address designated by such addressee and the sender receives a confirmation of transmission.

 

15.2. Severability. If any provision of this Agreement or any other Loan Document is held invalid or unenforceable, either in its entirety or by virtue of its scope or application to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or not applicable to given circumstances, or excised from this Agreement or such other Loan Document, as the situation may require, and this Agreement and the other Loan Documents shall be construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included herein or therein, as the case may be.

 

15.3. Integration. This Agreement and the other Loan Documents represent the final, entire and complete agreement between each Loan Party party hereto and thereto and Agent and supersede all prior and contemporaneous negotiations, oral representations and agreements, all of which are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

15.4. Waivers. The failure of Agent and the Lenders at any time or times to require any Loan Party to strictly comply with any of the provisions of this Agreement or any other Loan Documents shall not waive or diminish any right of Agent later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of Agent or its agents or employees, but only by a specific written waiver signed by an authorized officer of Agent and any necessary Lenders and delivered to Borrowers. Once an Event of Default shall have occurred, it shall be deemed to continue to exist and not be cured or waived unless specifically waived in writing by an authorized officer of Agent and Required Lenders and delivered to Borrowers. Each Loan Party Obligor waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, Instrument, Account, General Intangible, Document, Chattel Paper, Investment Property or guaranty at any time held by Agent on which such Loan Party Obligor is or may in any way be liable, and notice of any action taken by Agent, unless expressly required by this Agreement, and notice of acceptance hereof.

 

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15.5. Amendments.

 

(a) No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that, except to the extent set forth in Section 14.9 hereof, no amendment, modification, waiver or consent shall (i) extend or increase the Term Loan Commitment of any Lender without the written consent of such Lender, (ii) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby; or (iv) release any guarantor from its obligations under any Guaranty, other than as part of or in connection with any disposition permitted hereunder, or release or subordinate its liens on all or any substantial part of the Collateral granted under any of the other Loan Documents (except as permitted by Section 14.10), change the definition of Required Lenders, any provision of Section 6.2, any provision of this Section 15.4, the provisions of Section 14.9 or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case set forth in this clause (v), the written consent of all Lenders. No provision of Section 14 or other provision of this Agreement affecting Agent in its capacity as such shall be amended, modified or waived without the consent of Agent. No provision of this Agreement affecting any Loan Party shall be amended or modified without the prior written consent of Borrower Representative.

 

(b) If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of all Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then, so long as Agent is not a Non-Consenting Lender, Agent and/or a Person or Persons reasonably acceptable to Agent shall have the right to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent and/or such Person or Persons, all of the Loans of such Non-Consenting Lenders for an amount equal to the principal balance of all such Loans held by such Non-Consenting Lenders and all accrued interest, fees, expenses and other amounts then due with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Assumption.

 

15.6. Time of Essence. Time is of the essence in the performance by each Loan Party Obligor of each and every obligation under this Agreement and the other Loan Documents.

 

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15.7. Expenses, Fee and Costs Reimbursement. Each Borrower hereby agrees to promptly pay (a) all reasonable out of pocket costs and expenses of Agent (including the out of pocket fees, costs and expenses of internal and external legal counsel to, and appraisers, accountants, consultants and other professionals and advisors retained by or on behalf of, Agent) in connection with (i) all loan proposals and commitments pertaining to the transactions contemplated hereby (whether or not such transactions are consummated), (ii) the examination, review, due diligence investigation, documentation, negotiation, and closing of the transactions contemplated by the Loan Documents (whether or not such transactions are consummated), (iii) the creation, perfection and maintenance of Liens pursuant to the Loan Documents, (iv) the performance or enforcement by Agent of its rights and remedies under the Loan Documents (or determining whether or how to perform or enforce such rights and remedies), (v) the administration of the Loans (including usual and customary fees for wire transfers and other transfers or payments received by Agent on account of any of the Obligations) and Loan Documents, (vi) any amendments, modifications, consents and waivers to and/or under any and all Loan Documents (whether or not such amendments, modifications, consents or waivers are consummated), (vii) any periodic public record searches conducted by or at the request of Agent (including, title investigations and public records searches), pending litigation and tax lien searches and searches of applicable corporate, limited liability company, partnership and related records concerning the continued existence, organization and good standing of certain Persons), (viii) protecting, storing, insuring, handling, maintaining, auditing, examining, valuing or selling any Collateral, (ix) any litigation, dispute, suit or proceeding relating to any Loan Document and (x) any workout, collection, bankruptcy, insolvency and other enforcement proceedings under any and all of the Loan Documents (it being agreed that (A) such costs and expenses may include the costs and expenses of workout consultants, investment bankers, financial consultants, appraisers, valuation firms and other professionals and advisors retained by or on behalf of Agent (B) each Lender shall also be entitled to reimbursement for all reasonable out of pocket costs and expense of the type described in this clause (x), provided that, to the extent of an actual or reasonably perceived conflict of interest, such reimbursement shall be limited to one additional counsel for the Lenders as a whole), and (b) without limiting the preceding clause (a), all reasonable out of pocket costs and expenses of Agent in connection with Agent’s reservation of funds in anticipation of the funding of the initial Loans to be made hereunder. Any fees, costs and expenses owing by any Borrower or other Loan Party Obligor hereunder shall be due and payable within three (3) days after written demand therefor.

 

15.8. Benefit of Agreement; Assignability. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender; provided, that neither each Borrower nor any other Loan Party Obligor may assign or transfer any of its rights under this Agreement without the prior written consent of Agent and each Lender, and any prohibited assignment shall be void. No consent by Agent or any Lender to any assignment shall release any Loan Party Obligor from its liability for any of the Obligations. Each Lender shall have the right to assign all or any of its rights and obligations under the Loan Documents to one or more other Persons in accordance with Section 15.9. Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, a Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement and the other Loan Documents to secure any obligations of such Lender, including any pledge or grant to secure obligations to a Federal Reserve Bank.

 

15.9. Assignments.

 

(a) Any Lender may at any time assign to one or more Persons (any such Person, an “Assignee”) all or any portion of such Lender’s Loans, with the prior written consent of Agent and, so long as no Event of Default exists, Borrower Representative (which consents shall not be unreasonably withheld or delayed and shall not be required for an assignment by a Lender to a Lender (other than a Defaulting Lender) or an Affiliate of a Lender (other than an Affiliate of a Defaulting Lender) or an Approved Fund (other than an Approved Fund of a Defaulting Lender)). Except as Agent may otherwise agree, any such assignment shall be in a minimum aggregate amount equal to $1,000,000 or, if less, the remaining Loans held by the assigning Lender (provided, that an assignment to a Lender, an Affiliate of a Lender or an Approved Fund shall not be subject to the foregoing minimum assignment limitations). The Loan Parties and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an Assignee until Agent shall have received and accepted an effective Assignment and Assumption executed, delivered and fully completed by the applicable parties thereto and a processing fee of $3,500. Notwithstanding anything herein to the contrary, no assignment may be made to any equity holder of a Loan Party, any Affiliate of any equity holder of a Loan Party, any Loan Party, any holder of Subordinated Debt of a Loan Party, any holder of any Debt that is secured by liens or security interests that have been contractually subordinated to the liens and security interests securing the Obligations, or any Affiliate of any of the foregoing Persons without the prior written consent of Agent, which consent may be withheld in Agent’s sole discretion and, in any event, if granted, may be conditioned on such terms and conditions as Agent shall require in its sole discretion, including, without limitation, a limitation on the aggregate amount of Loans which may be held by such Person and/or its Affiliates and/or limitations on such Person’s and/or its Affiliates’ voting and consent rights and/or rights to attend Lender meetings or obtain information provided to other Lenders. Any attempted assignment not made in accordance with this Section 15.9 shall be null and void. Each Borrower shall be deemed to have granted its consent to any assignment requiring its consent hereunder unless Borrower Representative has expressly objected to such assignment within five (5) Business Days after receipt of written notice thereof.

 

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(b) From and after the date on which the conditions described in Section 15.9(a) above have been met, (i) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned to such Assignee pursuant to the applicable Assignment and Assumption, shall have the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to the applicable Assignment and Assumption, shall be released from its rights (other than its indemnification rights) and obligations hereunder. Upon the request of the Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment and Assumption, Borrowers shall execute and deliver to Agent for delivery to the Assignee (and, as applicable, the assigning Lender) a promissory note in the principal amount of the Assignee’s Term Loan (and, as applicable, a promissory note in the principal amount of the Term Loan retained by the assigning Lender). Upon receipt by Agent of such promissory note(s), the assigning Lender shall return to Borrowers any prior promissory note held by it.

 

(c) Agent shall, as a non-fiduciary agent of Borrowers, maintain a copy of each Assignment and Assumption delivered and accepted by it and register (the “Register”) for the recordation of names and addresses of the Lenders and principal and stated interest of each Loan owing to each Lender from time to time and whether such Lender is the original Lender or the Assignee. No assignment shall be effective unless and until the Assignment and Assumption is accepted and registered in the Register. All records of transfer of a Lender’s interest in the Register shall be conclusive, absent manifest error, as to the ownership of the interests in the Loans. Agent shall not incur any liability of any kind with respect to any Lender with respect to the maintenance of the Register. Each Lender granting a participation shall, as a non-fiduciary agent of the Borrowers, maintain a register containing information similar to that of the Register in a manner such that the loans hereunder are in “registered form” for the purposes of the Code. This Section shall be construed so that the Loans are at all times maintained in “registered form” for the purpose of the Code and any related regulations (and any successor provisions).

 

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15.10. Participations. Anything in this Agreement or any other Loan Document to the contrary notwithstanding, any Lender may, at any time and from time to time, without in any manner affecting or impairing the validity of any Obligations, sell to one or more Persons participating interests in its Loans or other interests hereunder or under any other Loan Document (any such Person, a Participant). In the event of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder and under the other Loan Documents shall remain unchanged for all purposes, (b) Borrowers and such Lender shall continue to deal solely and directly with each other in connection with such Lender’s rights and obligations hereunder and under the other Loan Documents and (c) all amounts payable by Borrowers shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender; provided, that a Participant shall be entitled to the benefits of Section 13 as if it were a Lender if Borrower Representative is notified of the Participation and the Participant complies with Section 13. Each Borrower agrees that if amounts outstanding under this Agreement or any other Loan Document are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and the other Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided, that such right of set-off shall not be exercised without the prior written consent of such Lender and shall be subject to the obligation of each Participant to share with such Lender its share thereof. Each Borrower also agrees that each Participant shall be entitled to the benefits of Section 15.9 as if it were a Lender. Notwithstanding the granting of any such participating interests, (i) Borrowers shall look solely to the applicable Lender for all purposes of this Agreement, the Loan Documents and the transactions contemplated hereby, (ii) Borrowers shall at all times have the right to rely upon any amendments, waivers or consents signed by the applicable Lender as being binding upon all of the Participants and (iii) all communications in respect of this Agreement and such transactions shall remain solely between Borrowers and the applicable Lender (exclusive of Participants) hereunder. If a Lender grants a participation hereunder, such Lender shall maintain, as a non-fiduciary agent of Borrowers, a register as to the participations granted and transferred under this Section containing the same information specified in Section 15.9 on the Register as if each Participant were a Lender to the extent required to cause the Loans to be in registered form for the purposes of Sections 163(F), 165(J), 871, 881, and 4701 of the Code.

 

15.11. Headings; Construction. Section and subsection headings are used in this Agreement only for convenience and do not affect the meanings of the provisions that they precede.

 

15.12. USA PATRIOT Act Notification. Agent hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it may be required to obtain, verify and record certain information and documentation that identifies such Person, which information may include the name and address of each such Person and such other information that will allow Agent to identify such Persons in accordance with the USA PATRIOT Act.

 

15.13. Counterparts; Fax/Email Signatures. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same agreement. This Agreement may be executed by signatures delivered by facsimile or electronic mail, each of which shall be fully binding on the signing party.

 

15.14. GOVERNING LAW. THIS AGREEMENT, ALONG WITH ALL OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE IN SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS AGREEMENT AND ALL SUCH OTHER LOAN DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

 

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15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS IN THE COUNTY OF COOK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR IN ANY OTHER COURT (IN ANY JURISDICTION) SELECTED BY THE AGENT IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR BASED ON 28 U.S.C. § 1404, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, AMENDMENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER’S’ NOTICE ADDRESS (ON BEHALF OF BORROWERS OR SUCH LOAN PARTY OBLIGOR) SET FORTH IN SECTION 15.1 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAIL, OR, AT THE AGENT’S OPTION, BY SERVICE UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR IN ANY OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS.

 

15.16. Publication. Each Borrower and each other Loan Party Obligor consents to the publication by Agent of a tombstone, press releases or similar advertising material relating to the financing transactions contemplated by this Agreement, and Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 

15.17. Confidentiality. Agent and each Lender agree to use commercially reasonable efforts not to disclose Confidential Information to any Person without the prior consent of Borrower Representative; provided, that nothing herein contained shall limit any disclosure of the tax structure of the transactions contemplated hereby, or the disclosure of any information (a) to the extent required by applicable law, statute, rule, regulation or judicial process or in connection with the exercise of any right or remedy under any Loan Document, or as may be required in connection with the examination, audit or similar investigation of Agent or any of its Affiliates, (b) to examiners, auditors, accountants or any regulatory authority, (c) to the officers, partners, managers, directors, employees, agents and advisors (including independent auditors, lawyers and counsel) of Agent and each Lender or any of their respective Affiliates, (d) in connection with any litigation or dispute which relates to this Agreement or any other Loan Document to which Agent or any Lender is a party or is otherwise subject, (e) to a subsidiary or Affiliate of Agent or any Lender, (f) to any Assignee or Participant (or prospective Assignee or Participant) which agrees to be bound by this Section 15.17 and (g) to any lender or other funding source of Agent or any Lender (each reference to Agent and Lender in the foregoing clauses shall be deemed to include (i) the actual and prospective Assignees and Participants referred to in clause (f) and the lenders and other funding sources referred to in clause (g), as applicable for purposes of this Section 15.17), and further provided, that in no event shall Agent or any Lender be obligated or required to return any materials furnished by or on behalf of any Borrower or any other Loan Party or Obligor. The obligations of Agent and Lenders under this Section 15.17 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter or provision in respect of this financing or any other financing previously signed and delivered by Agent or any Lender to any Borrower or any of its Affiliates.

 

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IN WITNESS WHEREOF, each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender have signed this Agreement as of the date first set forth above.

 

  Agent:
     
  MIZZEN CAPITAL, LP
     
  By: MIZZEN CAPITAL GP, LLC,
    its General Partner

 

  By: /s/ Marilyn S. Adler
  Name: Marilyn S. Adler
  Its: Managing Partner

 

  Lenders:
     
  MIZZEN CAPITAL, LP
     
  By: MIZZEN CAPITAL GP, LLC,
    its General Partner

 

  By: /s/ Marilyn S. Adler
  Name: Marilyn S. Adler
  Its: Managing Partner

 

  STAR STRONG CAPITAL LLC
     
  By: /s/ Spring Hollis
  Name: Spring Hollis
  Its: CEO

 

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  Loan Party Obligors:
     
  RUBICON GLOBAL, LLC, as a Borrower and a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chief Executive Officer
     
  RIVERROAD WASTE SOLUTIONS, INC., as a Borrower and a Loan Party Obligor
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Its: Chief Executive Officer
     
  RUBICON TECHNOLOGIES, LLC, as a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chief Executive Officer
     
  CLEANCO LLC, as a Loan Party Obligor
     
  By: /s/ Nathaniel R. Morris
  Name: Nathaniel R. Morris
  Its: Chief Executive Officer
     
  CHARTER WASTE MANAGEMENT, INC., as a Loan Party Obligor
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Its: Chief Executive Officer
     
  RUBICON TECHNOLOGIES INTERNATIONAL, INC., as a Loan Party Obligor
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Its: Chief Executive Officer

 

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SUBORDINATION AND INTERCREDITOR AGREEMENT

 

This SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) is entered into as of dated as of December 22, 2021, by and among (a) ECLIPSE BUSINESS CAPITAL LLC (f/k/a Encina Business Credit, LLC), a Delaware limited liability company, in its capacity as administrative agent (in such capacity, the “Revolving Agent”) for the Revolving Creditors referred to below, (b) PATHLIGHT CAPITAL LP, a Delaware limited partnership, in its capacity as administrative agent (in such capacity, the “Term Agent” and, together with the Revolving Agent, collectively, the “Senior Agents” and each, individually, a “Senior Agent”) for the Term Creditors referred to below, (c) MIZZEN CAPITAL, LP, a Delaware limited partnership, in its capacity as administrative agent (in such capacity, the “Subordinated Agent”) for the Subordinated Creditors referred to below, and (d) (i) RUBICON TECHNOLOGIES, LLC, a Delaware limited liability company (“Holdings”), (ii) RUBICON GLOBAL, LLC, a Delaware limited liability company (the “Company”) and (iii) each of Holdings’ other subsidiaries which are or may become signatories to this Agreement as Loan Parties (as hereinafter defined).

 

R E C I T A L S

 

A. Pursuant to that certain Loan and Security Agreement, dated as of December 14, 2018 (as amended, amended and restated, supplemented, replaced, renewed, refinanced, and otherwise in effect from time to time in accordance with the terms hereof, the “Revolving Loan Agreement”), among Holdings, the Company, and the other subsidiaries of Holdings from time to time party thereto as “Loan Party Obligors” (collectively, the “Revolving Debt Loan Parties”), the lenders from time to time party thereto (collectively, the “Revolving Lenders” and, together with the Revolving Agent and each other holder of Revolving Debt (as hereinafter defined), collectively, the “Revolving Creditors”) and the Revolving Agent, (a) the Revolving Lenders agreed to make loans and otherwise to extend credit to the Revolving Obligors and (b) the Revolving Obligors agreed to (i) guarantee the payment and performance of the Revolving Debt and (ii) grant to the Revolving Agent, for the benefit of the Revolving Creditors, Liens (as hereinafter defined) on substantially all of the assets of the Revolving Loan Parties to secure the Revolving Debt.

 

B. Pursuant to that certain Loan and Security Agreement, dated as of March 29, 2019 (as amended, amended and restated, supplemented, replaced, renewed, refinanced, and otherwise in effect from time to time in accordance with the terms hereof, the “Term Loan Agreement”), among Holdings, the Company, and the other subsidiaries of Holdings from time to time party thereto as “Loan Party Obligors” (collectively, the “Term Debt Loan Parties”), the lenders from time to time party thereto (collectively, the “Term Lenders”, and together with the Term Agent and each other holder of Term Debt (as hereinafter defined), collectively, the “Term Creditors” and, together with the Revolving Creditors, collectively, the “Senior Creditors”) and the Term Agent, (a) the Term Lenders agreed to make loans and otherwise to extend credit to the Term Debt Loan Parties and (b) the Term Debt Loan Parties agreed to (i) guarantee the payment and performance of the Term Debt and (ii) grant to the Term Agent, for the benefit of the Term Creditors, Liens on substantially all of the assets of the Term Debt Loan Parties to secure the Term Debt.

 

C. Pursuant to that certain Subordinated Loan and Security Agreement, dated as of December 22, 2021 (as amended, amended and restated, supplemented, replaced, renewed, refinanced, and otherwise in effect from time to time in accordance with the terms hereof, the “Subordinated Loan Agreement”), among Holdings, the Company, and the other subsidiaries of Holdings from time to time party thereto as “Loan Party Obligors” (collectively, the “Subordinated Debt Loan Parties”), the lenders from time to time party thereto (collectively, the “Subordinated Lenders”, and together with the Subordinated Agent and each other holder of Subordinated Debt (as hereinafter defined), collectively, the “Subordinated Creditors”) and the Subordinated Agent, (a) the Subordinated Lenders agreed to make loans and otherwise to extend credit to the Subordinated Loan Parties and (b) the Subordinated Loan Parties agreed to (i) guarantee the payment and performance of the Subordinated Debt and (ii) grant to the Subordinated Agent, for the benefit of the Subordinated Creditors, Liens on substantially all of the assets of the Subordinated Loan Parties to secure the Subordinated Debt.

 

 

 

 

D. As an inducement to and as one of the conditions precedent to the agreement of the Senior Agents and the other Senior Creditors to continue to make loans to and provide other financial accommodations for the account of the Loan Parties pursuant to the Revolving Loan Agreement and the Term Loan Agreement, as applicable, the Senior Agents and the Senior Creditors have required the execution and delivery of this Agreement, by the Loan Parties and by the Subordinated Agent (on behalf of the Subordinated Creditors), in order to set forth the agreement of the Senior Agents and the other Senior Creditors, on the one hand, and the Subordinated Agent and the other Subordinated Creditors, on the other hand, in respect of the relative priority in right payment of the Senior Debt and the Subordinated Debt and relative priority of Liens on the Collateral (as hereinafter defined) securing the Senior Debt and the Subordinated Debt, and certain other rights, priorities and interests as provided herein.

 

NOW, THEREFORE, in order to induce the Senior Agents and the other Senior Creditors to continue to make loans to and provide other financial accommodations for the account of the Loan Parties pursuant to the Revolving Loan Agreement and the Term Loan Agreement, as applicable, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

 

1. Definitions. Capitalized terms used in this Agreement (including in the preamble and recitals hereto) and not otherwise defined in this Agreement shall have the meanings give to such terms in the Revolving Loan Agreement, as in effect on the date hereof. In addition, the following terms shall have the following meanings in this Agreement:

 

Bankruptcy Code” shall mean Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder.

 

Carve Out” shall mean, in connection with any Insolvency Proceeding, any carve out amount granted with respect to professional fees and expenses, court costs, filing fees, fees and costs of the Office of the United States Trustee, and other administrative claims, in each case, as granted by the court.

 

Collateral” shall mean all assets, whether real, personal or mixed, or tangible or intangible now owned or hereafter acquired by any Loan Party in or upon which a Lien is granted or purported to be granted to (a) the Revolving Agent or the Term Agent, together with all rents, issues, profits, products and proceeds thereof, under any of the Revolving Debt Documents or the Term Debt Documents, as applicable and (b) the Subordinated Agent, together with all rents, issues, profits, products and proceeds thereof, under any of the Subordinated Debt Documents.

 

Debtor Relief Laws” shall mean the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

DIP Financing” shall have the meaning set forth in Section 2.2(c) hereof.

 

2

 

 

Distribution” shall mean, with respect to any indebtedness, obligation or security, (a) any voluntary or involuntary payment or distribution by any Person of cash, securities or other property, by set-off or otherwise, on account of such indebtedness, obligation or security, (b) any redemption, purchase or other acquisition of such indebtedness, obligation or security by any Person or (c) the granting of any Lien or security interest to or for the benefit of the holders of such indebtedness, obligation or security in or upon any property of any Person.

 

EBITDA” means, with respect to Holdings and its consolidated Subsidiaries for any period, determined on a consolidated basis in accordance with GAAP, (a) the consolidated net income of Holdings and its consolidated Subsidiaries for such period determined in accordance with GAAP, plus (b) solely to the extent deducted in the calculation of consolidated net income of Holdings and its consolidated Subsidiaries for such period, the sum of, without duplication:

 

(i) the consolidated interest expense of Holdings and its consolidated Subsidiaries for such period;

 

(ii) the consolidated tax expense of Holdings and its consolidated Subsidiaries for such period; and

 

(iii) the consolidated depreciation and amortization expense of Holdings and its consolidated Subsidiaries for such period.

 

Enforcement Action” shall mean, except as otherwise provided in the final sentence of this definition, (a) to take from or for the account of any of the Loan Parties, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by the Loan Parties with respect to the Subordinated Debt, (b) to sue for payment of, or to initiate or participate with others in any suit, action or proceeding against any Loan Party to (i) enforce payment of or to collect the whole or any part of the Subordinated Debt or (ii) commence judicial enforcement of any of the rights and remedies under the Subordinated Debt Documents or applicable law with respect to the Subordinated Debt, (c) to exercise any put option or to cause any Loan Party to honor any redemption or mandatory prepayment obligation under any Subordinated Debt Document, (d) to notify account debtors or directly collect accounts receivable or other payment rights of any Loan Party or (e) to take any action under the provisions of any state or federal law, including, without limitation, the UCC, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any Collateral. For the avoidance of doubt, none of the following shall be deemed to constitute an Enforcement Action: (i) acceleration of the maturity of the Subordinated Debt, or (ii) the filing of a proof of claim in any Insolvency Proceeding or, to the extent permitted hereunder, seeking adequate protection in any Insolvency Proceeding. It is understood and agreed that the making and acceptance of any payment permitted to be made hereunder by the Loan Parties in respect of the Subordinated Debt shall not be deemed an Enforcement Action.

 

Enforcement Expenses” shall mean, with respect to any Senior Debt, all reasonable and documented out-of-pocket costs and expenses at any time incurred by the Senior Agents and/or the other Senior Creditors in connection with its/their enforcement of rights or exercise of remedies under any of the Senior Debt Documents or applicable law to collect any of any Senior Debt, enforce any Liens of any Senior Agent and/or any of the other Senior Creditors securing any Senior Debt, or otherwise enforce any provisions of any of the Senior Debt Documents, or protect or preserve any of the Collateral or defend any Senior Agent’s and/or any other Senior Creditor’s Liens therein against the claims of third parties, including reasonable and documented legal fees of outside counsel, accounting fees, consulting fees, investment banking fees and any costs incurred in connection with the repossession, sorting, maintenance, preservation, protection, insurance, collection, preparation for sale, advertising for sale, selling, liquidation, or foreclosure upon all or any part of the Collateral and any amounts advanced for the payment of rent, taxes, or insurance or to satisfy any encumbrances upon any of the Collateral or to pay payroll, appraisal fees, auctioneer’s fees and commissions, and other similar costs of expenses.

 

3

 

 

Insolvency Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person, in each case under any Debtor Relief Laws. Unless otherwise specified herein, any reference herein to an Insolvency Proceeding shall mean an Insolvency Proceeding of a Loan Party.

 

Lien” shall mean, with respect to any asset, any mortgage, deed of trust, security interest, charge, pledge, hypothecation, assignment, attachment, deposit arrangement, encumbrance, lien (statutory, judgment or otherwise), or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale) or other title retention agreement, any capitalized lease, any synthetic lease, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of the foregoing.

 

Liquidity” shall mean, at any time of determination, the result of (a) Excess Availability at such time, plus (b) the amount of Unrestricted Cash at such time, minus (c) the Minimum Excess Availability Amount at such time; provided, that, in the event that Holdings or any of its Subsidiaries shall receive cash proceeds from either (x) the issuance and sale of any equity interests of Holdings or any of its Subsidiaries or (y) the incurrence by Holdings or any of its Subsidiaries of any Subordinated Debt (any such proceeds are herein referred to as “Capital Raise Proceeds”), such Capital Raise Proceeds shall not constitute “Liquidity” hereunder to the extent that, substantially contemporaneously with the receipt of any such Capital Raise Proceeds, Holdings or any of its Subsidiaries shall apply such Capital Raise Proceeds to pay the purchase price payable in connection with a Permitted Acquisition.

 

Loan Parties” shall mean the Senior Debt Loan Parties and the Subordinated Debt Loan Parties.

 

Minimum Excess Availability Amount” shall mean the amount of Excess Availability required to be maintained by the Loan Parties pursuant to Section 9.2 of the Term Loan Agreement as in effect on the date hereof.

 

Monthly Cash Burn Amount” means, with respect to any calendar month, an amount equal, without duplication, to (i) the EBITDA of Holdings and its consolidated Subsidiaries for such month, plus (ii) the consolidated corporate bonus accrual (discretionary and non-cash intrayear) of Holdings and its consolidated Subsidiaries for such month, plus (iii) the consolidated stock-based compensation expense of Holdings and its consolidated Subsidiaries for such month, plus (iv) the consolidated liquidated damages accrual of Holdings and its consolidated Subsidiaries for such month, minus (v) the aggregate amount of property and equipment purchases of Holdings and its consolidated Subsidiaries for such month, minus (vi) the aggregate amount of regularly scheduled cash principal and interest payments made in respect of any Indebtedness of Holdings and its consolidated Subsidiaries during such month; provided, that, (A) any aggregate cash consideration paid by the Loan Parties in respect of any Permitted Acquisition during such month shall be excluded from the calculation of Monthly Cash Burn Amount for such month and (B) in the event that the Monthly Cash Burn Amount with respect to any calendar month, as determined in accordance with the foregoing, shall be greater than zero, then, notwithstanding anything to the contrary set forth herein, the “Monthly Cash Burn Amount” for such calendar month shall be deemed to be equal to zero.

 

4

 

 

Payment in Full” or “Paid in Full” shall mean, with respect to the Revolving Debt or the Term Debt, as applicable, (a) the full and indefeasible payment thereof in cash and in immediately available funds (and not by any other Distribution, including Reorganization Securities or any other “indubitable equivalent”), including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed or allowable in such Insolvency Proceeding), other than unasserted contingent obligations, and the termination of all commitments to extend credit to the Loan Parties under the Revolving Debt Documents or the Term Debt Documents, as applicable, and (b) if such Revolving Debt or Term Debt, as applicable, is inchoate or contingent in nature (other than unasserted contingent obligations), the cash collateralization thereof (or delivery of a standby letter of credit acceptable to the applicable Senior Agent in its discretion, in the amount of required cash collateral).

 

Person” shall mean any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

 

Refinancing Revolving Debt Documents” shall mean any financing documentation which replaces the Revolving Debt Documents and pursuant to which the Revolving Debt under the Revolving Debt Documents is refinanced, as such financing documentation may be amended, restated, supplemented or otherwise modified and in effect from time to time.

 

Refinancing Term Debt Documents” shall mean any financing documentation which replaces the Term Debt Documents and pursuant to which the Term Debt under the Term Debt Documents is refinanced, as such financing documentation may be amended, restated, supplemented or otherwise modified and in effect from time to time.

 

Reorganization Securities” shall mean and include (a) shares of common stock (or other equity securities) of Loan Parties and (b) debt securities of Loan Parties, the payment of which is subordinated to the Payment in Full of all Senior Debt at the time outstanding and to the Payment in Full of all debt securities issued in exchange for Senior Debt to any Senior Creditors to the same extent as the Subordinated Debt is subordinated to all Senior Debt pursuant to the terms of this Agreement, which shares or other equity or debt securities have been provided for by a plan of reorganization that has been approved by final order of a court and that has been accepted by the Senior Creditors in their discretion.

 

Revolving Debt” shall mean all obligations, liabilities and indebtedness of every nature of the Loan Parties (including Enforcement Expenses) from time to time owed to the Revolving Agent and/or the other Revolving Creditors under the Revolving Debt Documents, including, without limitation, all “Obligations” under and as defined in the Revolving Loan Agreement, in each case, whether now existing or hereafter incurred or arising and whether incurred or arising before or after the filing of an Insolvency Proceeding with respect to any Loan Party, together with (a) any amendments, modifications, renewals, or extensions thereof, and (b) any interest, costs, fees and expenses accruing thereon after the commencement of an Insolvency Proceeding with respect to any Loan Party, without regard to whether or not such interest, costs, fees and expenses comprises part of an allowed or allowable claim. The Revolving Debt shall be considered to be outstanding until the Payment in Full thereof.

 

Revolving Debt Documents” shall mean, collectively, (a) the Revolving Loan Agreement, (b) each other “Loan Document” under and as defined in the Revolving Loan Agreement, and (c) after any refinancing of the Revolving Debt under the then-existing Revolving Debt Documents, the applicable Refinancing Revolving Debt Documents.

 

Revolving Debt Loan Parties” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Revolving Loan Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Senior Agent” or “Senior Agents” shall have the meanings assigned to such terms in the preamble to this Agreement.

 

5

 

 

Senior Creditors” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Senior Debt” shall mean, collectively (a) all Revolving Debt and (b) all Term Debt.

 

Senior Debt Documents” shall mean, collectively, (a) the Revolving Debt Documents and (b) the Term Debt Documents.

 

Senior Debt Intercreditor Agreement” shall mean that certain Amended and Restated Intercreditor Agreement, dated as of the February 27, 2020, as amended by that certain Consent and First Amendment to Intercreditor Agreement, dated as of March 24, 2021, by and between the Revolving Agent and the Term Agent and acknowledged by the Loan Parties, and shall also include any replacement intercreditor agreement entered into in accordance with the terms thereof.

 

Senior Debt Loan Parties” shall mean, collectively, the Revolving Debt Loan Parties and the Term Loan Debt Parties.

 

Senior Default” shall mean any “Default” or “Event of Default” under and as defined in any of the Revolving Loan Agreement or the Term Loan Agreement.

 

Senior Liens” shall mean all Liens on Collateral securing any Senior Debt.

 

Specified Event of Default” shall mean the occurrence of an Event of Default described in (a) Section 11.1(a) (payment defaults); Section 11.1(c)(i) solely with respect to breaches of Section 6.1 (cash management) or Section 7.15(c)(with respect to borrowing base certificates), or Article 9 (financial covenants); Section 11.(f) (dissolution); Section 11.1(g)(voluntary bankruptcy); or Section 11.1(h) (involuntary bankruptcy) of the Revolving Loan Agreement; or (b) Section 11.1(a) (payment defaults); Section 11.1(c)(i) solely with respect to breaches of Section 6.1 (cash management), Section 7.15(c)(with respect to borrowing base certificates, Section 7.30 (term push down reserve) or Article 9 (financial covenants); Section 11.(f) (dissolution); Section 11.1(g)(voluntary bankruptcy); or Section 11.1(h) (involuntary bankruptcy) of the Term Loan Agreement.

 

Six Month Cash Burn Amount” means, the product of (i) the aggregate Monthly Cash Burn Amount for the most recently completed three full calendar month period ended on or prior to the date of such payment, times (ii) two (2).

 

Subordinated Agent” shall have the meaning assigned to such term in the preamble to this Agreement.

 

Subordinated Creditors” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Subordinated Debt” shall mean all obligations, liabilities and indebtedness of every nature of the Loan Parties from time to time owed to the Subordinated Agent and/or the other Subordinated Creditors under the Subordinated Debt Documents, including, without limitation, the “Obligations” under and as defined in the Subordinated Loan Agreement, in each case, whether now existing or hereafter incurred or arising and whether incurred or arising before or after the filing of an Insolvency Proceeding with respect to any Loan Party, together with (a) any amendments, modifications, renewals, or extensions thereof, and (b) any interest, costs, fees and expenses accruing thereon after the commencement of an Insolvency Proceeding with respect to any Loan Party.

 

6

 

 

Subordinated Debt Payment Conditions” shall mean, with respect to any applicable payment of Subordinated Debt, the requirements that either (a) solely in the event that the “Maturity Date” (as defined in the Subordinated Loan Agreement, as in effect on the date hereof) shall have occurred as a result of the occurrence of an IPO (as defined in the Subordinated Loan Agreement, as in effect on the date hereof): (i) the net cash proceeds of such IPO are greater than $110,000,000; and (ii) such payment of Subordinated Debt is made contemporaneously with the closing of the IPO; or (b) except in the case of any payment of Subordinated Debt referred to in the foregoing clause (a): (i) no Specified Event of Default has occurred and is continuing or would exist after the making of any such payment, (ii) as of the date of any such payment, on a pro forma basis, and after giving effect to such payment, Liquidity on the date of any such payment shall be in each case not less than the greater of (x) $30,000,000 and (y) the sum of (1) $30,000,000, minus (2) the Six Month Cash Burn Amount as of such date, and (iii) at least three (3) Business Days prior to any such payment, the Senior Agents shall have received a certificate of a senior financial officer of Holdings or the Company, in form and substance reasonably satisfactory to the Senior Agent, certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) any calculations required thereby.

 

Subordinated Debt Documents” shall mean, collectively, (a) the Subordinated Loan Agreement, and (b) each other “Loan Document” under and as defined in the Subordinated Loan Agreement.

 

Subordinated Debt Loan Parties” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Subordinated Lenders” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Subordinated Liens” shall mean all Liens on Collateral securing any Subordinated Debt.

 

Subordinated Loan Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Term Debt” shall mean all obligations, liabilities and indebtedness of every nature of the Loan Parties (including Enforcement Expenses) from time to time owed to the Term Agent and/or the other Term Creditors under the Term Debt Documents, including, without limitation, all “Obligations” under and as defined in the Term Loan Agreement, in each case, whether now existing or hereafter incurred or arising and whether incurred or arising before or after the filing of an Insolvency Proceeding with respect to any Loan Party, together with (a) any amendments, modifications, renewals, or extensions thereof, and (b) any interest, costs, fees and expenses accruing thereon after the commencement of an Insolvency Proceeding with respect to any Loan Party, without regard to whether or not such interest, costs, fees and expenses comprises part of an allowed or allowable claim. The Term Debt shall be considered to be outstanding until the Payment in Full thereof.

 

Term Debt Documents” shall mean, collectively, (a) the Term Loan Agreement, (b) each other “Loan Document” under and as defined in the Term Loan Agreement, and (c) after any refinancing of the Term Loan Debt under the then-existing Term Debt Documents, the applicable Refinancing Term Debt Documents.

 

Term Debt Loan Parties” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Term Loan Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.

 

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UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection or the priority of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or priority or availability of such remedy, as the case may be.

 

Unrestricted Cash” means, as of any date of determination, cash of Holdings and its Subsidiaries that would not appear as “Restricted” for purposes of GAAP on the consolidated balance sheet of Holdings and its Subsidiaries (unless such cash is “Restricted” in favor of the holders of (or otherwise on account of) (a) Liens granted to the Revolving Agent securing the Revolving Debt, (b) Liens granted to the Term Agent securing the Term Debt, (c) Liens granted to the Subordinated Agent securing Subordinated Debt, or (d) Liens (i) arising by operation of law in favor of the applicable depository bank where such Unrestricted Cash is held or (ii) under the applicable depositary or similar agreement with such depository bank; provided, that, Unrestricted Cash shall not include any cash of Holdings or its Subsidiaries denominated in a currency other than U.S. Dollars or held in any non-U.S. jurisdiction.

 

2. Subordination of Subordinated Debt and Liens Securing Subordinated Debt.

 

2.1 Subordination of Subordinated Debt to Senior Debt; Other Debt Matters.

 

(a) Notwithstanding the terms of the Subordinated Debt Documents, and except as expressly provided herein, the Loan Parties hereby agree, and the Subordinated Agent, for itself and on behalf of the Subordinated Creditors, hereby agrees that the payment of any and all of the Subordinated Debt is and shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the prior Payment in Full of all Senior Debt, and that no Subordinated Creditor will accept any Distribution with respect to the Subordinated Debt, except as expressly permitted hereunder. Notwithstanding the foregoing, the Loan Parties may make, and the Subordinated Creditors may receive, (i) regularly scheduled payments of interest payable in cash (in lieu of any such payment of interest in kind) on the Subordinated Debt as and when due and payable on a non-accelerated basis in accordance with the terms of (including the interest rates specified in, but excluding any interest at the default rate) the Subordinated Debt Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreement so long as no Specified Event of Default has occurred and is continuing or would exist after the making of any such payment; (ii) payments of interest and other amounts in kind in respect of the Subordinated Debt, in accordance with the terms of the Subordinated Debt Documents as in effect on the date hereof or as modified to the extent permitted under the terms of this Agreement, whether or not a Senior Default has occurred and is continuing or would exist after the making of any such payment; (iii) payments in respect of reasonable and documented out-of-pocket costs and expenses, in an amount not to exceed $100,000 in any period of 12 consecutive months, incurred by the Subordinated Creditors under the Subordinated Debt Documents, whether or not a Senior Default has occurred and is continuing or would exist after the making of any such payment; (iv) other payments in respect of the Subordinated Debt (including payment of the Subordinated Debt on the stated maturity date with respect thereto) so long as, in each case, the Subordinated Debt Payment Conditions are satisfied on a pro forma basis after giving effect to such payment.

 

(b) The Subordinated Agent, on behalf the Subordinated Creditors, agrees that it and they shall not, and hereby waives any right to initiate, prosecute or participate in any claim, or support any other Person in contesting, initiating, prosecuting or participating in any claim or in any proceeding (including in any Insolvency Proceeding by or against a Loan Party), in each case, contesting or challenging the enforceability, validity, perfection, priority or amount of any Senior Debt or any Senior Lien. Each Senior Agent, on behalf of the applicable Senior Creditors, agrees that it and they shall not, and hereby waives any right to initiate, prosecute or participate in any claim, or support any other Person in contesting, initiating, prosecuting or participating in any claim or in any proceeding (including in any Insolvency Proceeding by or against a Loan Party), in each case, contesting or challenging the enforceability, validity, perfection, priority (except with respect to the priorities set forth herein) or amount of any Subordinated Debt or any Subordinated Lien.

 

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(c) If, at any time prior to the commencement of an Insolvency Proceeding with respect to any of the Loan Parties, any Senior Agent, on behalf of the applicable Senior Creditors, shall subordinate, in whole or in part, its Lien upon any of the Collateral to or in favor of any other Person in a transaction expressly consented to (or requested) by the Loan Parties, the priority of such Lien(s) in the Collateral vis-a-vis Subordinated Creditors shall not be affected thereby, and such Lien(s) shall continue to be superior to the Subordinated Agent’s Lien upon the Collateral.

 

2.2 Bankruptcy, Etc. In the event of any Insolvency Proceeding in respect of any Loan Party:

 

(a) Any Distribution, whether in cash, securities, or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Agents, for the benefit of the Senior Creditors, until all Senior Debt shall have been Paid in Full. The Subordinated Agent, on behalf of the Subordinated Creditors, (x) irrevocably authorizes, empowers, and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator, or other Person having authority, to pay or otherwise deliver all such Distributions to the Senior Agents, for the benefit of the Senior Creditors, and (y) irrevocably authorizes and empowers the Senior Agents, for the benefit of the Senior Creditors, in the name of each applicable Subordinated Creditor, to demand, sue for, collect, and receive any and all such Distributions.

 

(b) Notwithstanding anything to the contrary in this Agreement (including this Section 2.2), the Subordinated Creditors shall be entitled to receive and retain any Reorganization Securities.

 

(c) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that the Senior Agents and the other Senior Creditors may (i)(A) consent to the use of cash collateral by the Loan Parties or (B) provide (or consent to any third party providing) financing to the Loan Parties on such terms and conditions and in such amounts as the Senior Agents or the other applicable Senior Creditors, in their respective sole and exclusive discretion, may decide (any such use of cash collateral or financing, a “DIP Financing”), and (ii) permit, in their respective sole and exclusive discretion, use of any such DIP Financing by the Loan Parties to pay pre-petition claims and unsecured or administrative claims that do not have priority over any Senior Debt or the Subordinated Debt. In connection therewith, the Loan Parties may grant to each Senior Agent, for the benefit of the applicable Senior Creditors, Liens on all or any portion of the assets of the Loan Parties (including, all or any portion of the Collateral (including assets that, but for the application of Section 552 of the Bankruptcy Code would be Collateral)), which Liens (i) shall secure payment of all applicable Senior Debt (whether such Senior Debt arose prior to the commencement of any Insolvency Proceeding or at any time thereafter) and all other financing provided by the applicable Senior Creditors during the Insolvency Proceeding and (ii) shall be superior in priority to the Liens, if any, in favor of Subordinated Agent and the Subordinated Creditors on all or any portion of the assets of the Loan Parties (including the Collateral) in accordance with the terms of this Agreement. All Liens granted to the Subordinated Agent (on behalf of the Subordinated Creditors) or any Senior Agent (on behalf of the applicable Senior Creditors) in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended to be and shall be deemed to be subject to the lien priority and the other terms and conditions of this Agreement. In connection with any such DIP Financing in such Insolvency Proceeding, the Subordinated Agent, on behalf of the Subordinated Creditors, agrees that (x) no objection will be raised by, or supported by, any Subordinated Creditor to such DIP Financing on the ground of failure to provide adequate protection for their inferior Lien position in any Collateral or on any other grounds, and (y) the Subordinated Creditors shall consent (or shall be deemed to consent) to such DIP Financing and/or the Liens on Collateral securing any such DIP Financing and all obligations relating thereto. Notwithstanding anything to the contrary herein, if each Senior Agent, on behalf of the applicable Senior Creditors, is granted adequate protection in the form of Liens on additional collateral and/or replacement Liens on the Collateral (all such liens on additional property or replacement Liens on the Collateral, “Specified Adequate Protection Liens”) in connection with any DIP Financing, then the Subordinated Agent, on behalf of the Subordinated Creditors, may seek or request adequate protection in the form of Specified Adequate Protection Liens on the same property subject to the Specified Adequate Protection Liens of the Senior Agents, which Specified Adequate Protection Liens granted to the Subordinated Agent will be subordinated to the Specified Adequate Protection Liens granted to the Senior Agents, the Liens securing the Senior Debt, and any Liens securing such DIP Financing, any Carve Out, and any other adequate protection Liens provided to any Senior Agent (for the benefit of the applicable Senior Creditors). Each Senior Agent, on behalf of the applicable Senior Creditors, agrees that no Senior Creditor shall object (or support any other Person in objecting) to any request of the Subordinated Agent for Specified Adequate Protection Liens in accordance with the requirements for the preceding sentence. Absent the prior written consent of each Senior Agent (with may be granted or withheld by the Senior Agent in the respect sole and exclusive discretion), no Subordinated Creditor shall provide or participate in (whether as co-lender, participant, or guarantor or other accommodation party) any DIP Financing to any Loan Party in any Insolvency Proceeding.

 

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(d) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that, if any Senior Agent consents to the sale or disposition of any of the Collateral during any Insolvency Proceeding, whether pursuant to Section 363(f) or Section 1129 of the Bankruptcy Code (or any comparable provision of any Debtor Relief Law) or otherwise, then the Subordinated Agent and each other Subordinated Creditor shall be deemed to have consented to any such sale or disposition so long as proceeds of such sale or disposition shall be applied in accordance with this Agreement. If requested to do so by any Senior Agent in connection with any such sale or disposition, the Subordinated Agent shall affirmatively consent to such sale or disposition and/or promptly execute and deliver to the requesting Senior Agent and/or Senior Creditors, as applicable, a release of Subordinated Agent’s or any other Subordinated Creditor’s Liens with respect to the Collateral to be sold.

 

(e) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that, prior to the Payment in Full of all Senior Debt, no Subordinated Creditor shall assert any right any such Subordinated Creditor may have to “adequate protection” of the Subordinated Creditors’ interest in any Collateral in any Insolvency Proceeding incidental to any DIP Financing in any Insolvency Proceeding, or incidental to any sale or other disposition of any property securing all or any part of any Senior Debt (except to the extent in compliance with Section 2.2(h)).

 

(f) The Subordinated Agent, on behalf of the Subordinated Creditors, waives any claim any Subordinated Creditor may now or hereafter have arising out of any Senior Creditor’s election, in any Insolvency Proceeding, of the application of Section 1111(b)(2) of the Bankruptcy Code.

 

(g) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees to execute, verify, deliver, and file any proofs of claim in respect of the Subordinated Debt requested by any Senior Agent in connection with any such Insolvency Proceeding and hereby irrevocably authorizes, empowers, and appoints each Senior Agent as its agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of Subordinated Agent to do so prior to the date that is five (5) days before the expiration of the time to file any such proof of claim and (ii) vote such claim in any such Insolvency Proceeding upon the failure of Subordinated Agent to do so prior to two (2) days before the expiration of the time to vote any such claim; provided that (A) Subordinated Agent shall not vote its claim in a manner inconsistent with the terms and conditions of this Agreement, and (B) no Senior Creditor shall have any obligation to execute, verify, deliver, file, and/or vote any such proof of claim. In the event that any Senior Agent, on behalf of the applicable Senior Creditors, votes any claim in accordance with the authority granted hereby, the affected Subordinated Creditor shall not be entitled to change or withdraw such vote.

 

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(h) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that, prior to the Payment in Full of all Senior Debt, no Subordinated Creditor shall object (or support the objection of any other Person) in any Insolvency Proceeding to (i) any motion or other request by any Senior Agent or any other Senior Creditor for “adequate protection” or (ii) any objection by any Senior Agent or any other Senior Creditor to any motion, relief, action or proceeding based on such Senior Agent or such Senior Creditor claiming a lack of adequate protection with respect to such Senior Agent’s Liens in the Collateral. The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that, prior to the Payment in Full of all Senior Debt, no Subordinated Creditor shall seek or request (1) adequate protection of the Subordinated Agent’s Liens in the Collateral, unless (x) such request for adequate protection consists solely of a request for Specified Adequate Protection Liens, and (y) the Senior Agent has been granted a Lien on post-petition assets as set forth in the next sentence of this Section, or (2) a superpriority claim, unless such request for a superpriority claim is subordinate in right of payment to any superpriority claim in respect of any Senior Debt granted to any Senior Creditor, any DIP Financing, any Carve Out, and any other superpriority claims provided to any Senior Agent (for the benefit of the applicable Senior Creditors). In the event any Subordinated Creditor seeks or requests adequate protection in respect of the Subordinated Agent’s Liens upon any of the Collateral in the form of Specified Adequate Protection Liens and such Specified Adequate Protection Liens are granted to the Subordinated Agent, then the Subordinated Agent, on behalf of the Subordinated Creditors, agrees that each Senior Agent shall also be granted a Lien on the applicable property as security for the applicable Senior Debt and that any Lien on such property in favor of the Subordinated Agent shall be subordinated to the Lien on such property in favor of each Senior Agent, to any other Liens granted to the Senior Agents as adequate protection on the same basis as the other Liens on Collateral in favor of the Subordinated Agent are so subordinated to the Liens in favor of the Senior Agents under this Agreement.

 

(i) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that, prior to the Payment in Full of all Senior Debt, (i) no Subordinated Creditor shall seek (or support any other Person seeking) relief from the automatic stay (or other stay in any Insolvency Proceeding) with respect to any Collateral without the prior written consent of each Senior Agent; provided, however, that if any Senior Creditor is granted relief from the automatic stay (or other stay in any Insolvency Proceeding) in respect of any portion of the Collateral, the Subordinated Creditors may seek relief from the automatic stay (or other stay in any Insolvency Proceeding) which is identical in scope, but subject in all respect to the terms of this Agreement, and (ii) no Subordinated Creditor shall oppose (or support any other Person in opposing) any motion or request for relief from the automatic stay (or other stay in any Insolvency Proceeding) sought by any Senior Creditor in respect of any of the Collateral.

 

(j) All Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of the Senior Creditors, on the one hand, and the Subordinated Creditors, on the other hand, even if all or part of any Senior Debt or the security interests securing any Senior Debt are subordinated, set aside, avoided, invalidated, or disallowed in connection with any such Insolvency Proceeding, and this Agreement shall be reinstated if at any time any payment of any Senior Debt is rescinded, disgorged, or must otherwise be returned by any Senior Creditor or any representative of such Senior Creditor.

 

(k) This Agreement, which the parties hereto expressly acknowledge, is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, shall be effective before, during and after the commencement of an Insolvency Proceeding with respect to any Loan Party. All references herein to each Loan Party shall be deemed to apply to a trustee for the estate of such Person and to such Person as a debtor-in-possession.

 

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2.3 Subordinated Debt Standstill Provisions. Until all Senior Debt has been Paid in Full, no Subordinated Creditor shall, without the prior written consent of the Senior Agents, which consent may be granted or withheld by the Senior Agents in their respective sole and exclusive discretion, take any Enforcement Action with respect to the Subordinated Debt. Notwithstanding the foregoing, the Subordinated Agent may:

 

(a) file a proof of claim or statement of interest, vote on a plan of reorganization (including a vote to accept or reject a plan of partial or complete liquidation, reorganization, arrangement, composition or extension), and make other filings, arguments and motions, with respect to the Subordinated Debt and the Collateral in any Insolvency Proceeding commenced by or against any Loan Party, in each case to the extent not in contravention of the terms of this Agreement;

 

(b) take action to create, perfect, preserve or protect its Lien on the Collateral, so long as such actions are not adverse to the priority status of the Liens on the Collateral securing any Senior Debt or any Senior Agent’s or any other Senior Creditor’s right to exercise remedies;

 

(c) file necessary pleadings in opposition to a claim objecting to or otherwise seeking the disallowance of the Subordinated Debt or a Lien securing the Subordinated Debt;

 

(d) join (but not exercise control over) a judicial foreclosure or Lien enforcement proceeding with respect to the Collateral initiated by any Senior Agent or any other Senior Creditor, to the extent that such action could not reasonably be expected to interfere materially with the exercise of any secured creditor remedies by such Senior Agent of such other Senior Creditor, but no Subordinated Creditor may receive any proceeds thereof unless expressly permitted by this Agreement;

 

(e) collect any payment permitted to be paid by the Loan Parties pursuant to Section 2.1(a) hereof;

 

(f) commence any legal action for the purpose of tolling the running of any applicable statute of limitations; and/or

 

(g) make any demand upon any Loan Party or accelerate the maturity of the Subordinated Debt.

 

Any Distributions or other proceeds of any Enforcement Action obtained by any Subordinated Creditor in violation of the foregoing prohibition shall in any event be held in trust by it for the benefit of the Senior Creditors and promptly paid or delivered to the Senior Agents, for the benefit of the applicable Senior Creditors, in the form received until all Senior Debt has been Paid in Full.

 

In addition, the Subordinated Agent, on behalf of each Subordinated Creditor, agrees that no Subordinated Creditor shall, without each Senior Agent’s prior written consent, file (or join with others in filing), commence or join (unless each Senior Agent shall also join) any involuntary Insolvency Proceeding against any Loan Party.

 

2.4 Payments Over. If any Distribution on account of the Subordinated Debt not permitted to be made by the Loan Parties or accepted by any Subordinated Creditor under this Agreement (including pursuant to Section 2.1(a) hereof) is made and received by any Subordinated Creditor, such Distribution shall not be commingled with any of the assets of such Subordinated Creditor, shall be held in trust by such Subordinated Creditor for the benefit of the Senior Creditors, and shall be promptly paid over to the Senior Agent, for the benefit of the Senior Creditors, for application to the payment of all Senior Debt in accordance with the terms of the Senior Debt Documents and the Senior Debt Intercreditor Agreement until all Senior Debt has been Paid in Full.

 

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2.5 Subordination of Liens; Other Collateral Matters.

 

(a) Notwithstanding the date, manner or order of grant, attachment or perfection of any Senior Lien or any Subordinated Lien and notwithstanding any provision of the UCC, any applicable law or any of the Senior Debt Documents or Subordinated Debt Documents, each of the Senior Agents, on behalf of the applicable Senior Creditors, and the Subordinated Agent, on behalf of the Subordinated Creditors, hereby agree that (i) the Senior Liens, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be and shall remain senior and prior to any and all Subordinated Liens, and (ii) any Subordinated Liens, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to the Senior Liens. The foregoing shall apply regardless of the order of filing of any such Liens (or the exercise of control over or possession of any Collateral) or perfection of any such security interests (or failure to make any such filing or perfect any such security interest), or the avoidance of any such security interest. The lien priorities provided for herein shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of any Senior Debt or any Subordinated Debt, by the release of any Collateral or of any guarantees for any Senior Debt or Subordinated Debt or by any action that any Senior Creditor or any Subordinated Creditor may take or fail to take in respect of any Collateral. Except as provided in Section 2.1(c) hereof, the subordination of Liens by the Subordinated Agent and the other Subordinated Creditors in favor of the Senior Agents and the other Senior Creditors as set forth herein shall not be deemed to subordinate the Subordinated Agent’s (or any other Subordinated Creditor’s) Liens in the Collateral to the Liens of any other Person nor be affected by the subordination of such Liens to any other Lien.

 

(b) Subject to the other provisions of this Section 2.5, each Loan Party agrees not to grant any Lien on any of its assets, or permit any of its Subsidiaries, Affiliates or other Person to grant a Lien on any of its assets, in favor of any Subordinated Creditor unless, prior to or contemporaneously therewith, such Loan Party, Subsidiary, Affiliate or other Person has granted a similar and senior Lien on such assets in favor of each Senior Agent. To the extent that the foregoing provisions are not complied with for any reason, the Subordinated Agent, on behalf of the Subordinated Creditors, agrees that (i) any Distributions or any other amounts received by or distributed to the Subordinated Agent or any other Subordinated Creditor pursuant to or as a result of Liens granted in contravention of this Section 2.5(b) shall be subject to this Agreement such that proceeds thereof will be treated as proceeds of Collateral subject to Section 2.4 hereof and (ii) the Subordinated Agent (or the relevant Subordinated Creditor) shall hold any such Collateral as agent or as bailee, as the case may be, for each Senior Agent for the purpose of perfecting the Lien of each Senior Agent thereon.

 

(c) Each Loan Party hereby agrees that, if, pursuant to the provisions of either the Senior Debt Documents or the Subordinated Debt Documents, a Loan Party shall be required to cause any Subsidiary that is not a Loan Party to become a Loan Party, or if for any reason a Loan Party desires any such Subsidiary to become a Loan Party, such Subsidiary shall execute and deliver to each Senior Agent and the Subordinated Agent an acknowledgment to this Agreement (in form and substance satisfactory to each Senior Agent and the Subordinated Agent) and shall thereafter for all purposes be bound by the terms hereof and have the same obligations as a Loan Party hereto on the date hereof.

 

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(d) The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that it and they shall not, and hereby waives any right to contest, or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding by or against a Loan Party), the priority, validity, perfection or enforceability of any Senior Liens. Each Senior Agent, on behalf of the applicable Senior Creditors, agrees that it and they shall not, and hereby waives any right to contest, or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding by or against a Loan Party), the priority, validity, perfection or enforceability of any Subordinated Liens. Nothing contained herein will (i) impair the rights of any Senior Agent, on behalf of the applicable Senior Creditors, to enforce this Agreement, including the priority of the Liens securing any Senior Debt or the provisions for exercise of remedies or (ii) obligate any party to take any action which would conflict with any order or decree of any court of competent jurisdiction or other Governmental Body or any applicable law.

 

(e) Without limiting any of the rights of any Senior Agent under the applicable Senior Debt Documents or applicable law, in the event that any Senior Agent releases or discharges any guarantees of any Senior Debt given by any Loan Party which has also guaranteed the Subordinated Debt or any Lien on Collateral securing the Senior Debt and also securing the Subordinated Debt, such Loan Party or (as the case may be) such Collateral shall thereupon be deemed to have been automatically and unconditionally released from all such guarantees or Liens in favor of the Subordinated Agent or any other Subordinated Creditor. The Subordinated Agent, on behalf of the Subordinated Creditors, hereby authorizes each Senior Agent to file any necessary UCC termination statements (with respect to any UCC financing statements filed by the Subordinated Agent or any other Subordinated Creditor) to reflect the termination or release of any Lien contemplated hereby and agrees that, promptly (and in any event within five (5) days) after any Senior Agent’s written request therefor, the Subordinated Agent will execute, deliver and, if applicable, file any and all terminations, releases and other agreements and instruments as such Senior Agent reasonably deems necessary or appropriate in order to give effect to the preceding sentence. In furtherance of the foregoing, the Subordinated Agent, on behalf of the Subordinated Creditors, hereby irrevocably appoints each Senior Agent as its attorney-in-fact, with full authority in the place and stead of such Subordinated Creditor and in the name of the Subordinated Agent, to execute, deliver and, if applicable, file any terminations, releases, agreements or instruments which the Subordinated Agent shall have failed to execute or deliver pursuant to this Section 2.5(e).

 

(f) Each Senior Agent agrees to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees) to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”) as collateral agent and bailee for the Subordinated Agent, for the benefit of the Subordinated Creditors (such bailment being intended, among other things, to satisfy the requirements of Sections 8-301(a)(2), 9-313(c), 9-104, 9-105, 9-106 and 9-107 of the UCC) and any assignee solely for the purpose of perfecting the security interest granted under the applicable Senior Debt Documents and the Subordinated Debt Documents, respectively, and subject in all events to the relative priorities established pursuant to this Agreement. The rights granted to the Senior Creditors in this Agreement are solely for their protection and nothing herein contained imposes on the Senior Creditors any duties with respect to any of the Collateral. The Senior Creditors have no duty to preserve rights against prior parties on any instrument or chattel paper received from any Loan Party or other Person as collateral security for any of any Senior Debt.

 

(g) Each of the parties hereto acknowledges and agrees that (i) the grants of Liens in respect of the Collateral pursuant to the Revolving Debt Documents, the Term Debt Documents and the Subordinated Debt Documents each constitute separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Collateral, the Revolving Debt, the Term Debt and the Subordinated Debt in respect of the Collateral are fundamentally different from each other, and each of the Revolving Debt, the Term Debt and the Subordinated Debt in respect of the Collateral must be separately classified in any Insolvency Proceeding by or against a Loan Party. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that, in respect of the Collateral, the Revolving Debt, the Term Debt and the Subordinated Debt constitute only one secured claim (rather than separate classes of secured claims), then all distributions from the Collateral shall be made as if there were separate classes of secured claims against the Loan Parties in respect of the Collateral (with the effect that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Subordinated Creditors), the Senior Creditors shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, fees, costs and expenses before any distribution is made from the Collateral in respect of the claims held by the Subordinated Creditors with respect to the Collateral, with the Subordinated Creditors hereby acknowledging and agreeing to turn over to the Senior Creditors amounts otherwise received or receivable by them from the Collateral to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Subordinated Creditors). The Subordinated Agent, on behalf of the Subordinated Creditors, agrees that the Subordinated Creditors will not seek in any Insolvency Proceeding by or against a Loan Party to be treated as part of the same class of creditors as any Senior Creditor and will not oppose or contest any pleading by any Senior Creditors seeking separate classification of their respective secured claims.

 

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2.6 Application of Proceeds from Sale or other Disposition of the Collateral. In the event of any sale, transfer, or other disposition (including a casualty loss or taking through eminent domain) of all or any portion of the Collateral, the proceeds resulting therefrom (including insurance proceeds) shall be applied to repay the Senior Debt in accordance with (and to the extent required by) the terms of the Senior Debt Documents and the Senior Debt Intercreditor Agreement until all Senior Debt has been Paid in Full, prior to any repayment of the Subordinated Debt in accordance with the terms of the Subordinated Debt Documents.

 

2.7 Sale, Transfer or other Disposition of Subordinated Debt. The subordination effected hereby shall survive any sale, assignment, pledge, disposition, or other transfer of all or any portion of the Subordinated Debt, and the terms of this Agreement shall be binding upon the successors and assigns of each Subordinated Creditor, as provided in Section 10 hereof. The Subordinated Agent shall (a) give each Senior Agent prior written notice of any sale, assignment, pledge, disposition, or other transfer of all or any portion of the Subordinated Debt, and (b) upon request by any Senior Agent, shall cause any Subordinated Creditor to whom such Subordinated Debt is sold, assigned, pledged or otherwise acquired to confirm in writing its agreement to be bound by the terms of this Agreement.

 

2.8 Legends. Until the termination of this Agreement in accordance with Section 16 hereof, the Subordinated Agent will cause to be clearly, conspicuously, and prominently inserted in the Subordinated Loan Agreement, as well as any renewals or replacements thereof, the following legend:

 

This Agreement and the rights and obligations evidenced hereby, including any liens granted pursuant thereto, are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement, dated as of December 22, 2021 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Subordination Agreement”) among (a) Eclipse Business Capital LLC, a Delaware limited liability company, in its capacity as administrative agent (in such capacity, the “Revolving Agent”) for the Revolving Creditors referred to therein, (b) Pathlight Capital LP, as Delaware limited partnership, in its capacity as administrative agent (in such capacity, the “Term Agent” and, together with the Revolving Agent, collectively, the “Senior Agents” and each, individually, a “Senior Agent”) for the Term Creditors referred to therein, (c) Mizzen Capital, LP, a Delaware limited partnership, in its capacity as administrative agent for the Subordinated Creditors referred to therein, and (d) (i) Rubicon Technologies, LLC, a Delaware limited liability company (“Holdings”), (ii) Rubicon Global, LLC, a Delaware limited liability company (the “Company”) and (iii) each of Holdings’ other subsidiaries which are or may become signatories to thereto, to (1) the Senior Debt (as defined therein) incurred from time to time pursuant to the Senior Debt Documents (as defined therein), and (ii) the liens granted to the Senior Agents to secure the Senior Debt.

 

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3. Modifications.

 

3.1 Modifications to Senior Debt Documents. The Senior Agent and the other Senior Creditors may at any time and from time to time without the consent of or notice to any Subordinated Creditor, without incurring liability to any Subordinated Creditor and without impairing or releasing the obligations of any Subordinated Creditor under this Agreement, increase the principal amount of the Senior Debt, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the Senior Debt, or amend in any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise relating to the Senior Debt.

 

3.2 Modifications to Subordinated Debt Documents. Notwithstanding anything contained in the Subordinated Debt Document or the Senior Debt Documents to the contrary, no Subordinated Creditor shall, nor shall any Loan Party, without the prior written consent of each Senior Agent, amend, restate, supplement, modify, waive, substitute, renew, refinance or replace any or all of the Subordinated Debt Documents.

 

4. Waiver of Certain Rights by Subordinated Creditors.

 

4.1 Marshaling. The Subordinated Agent, on behalf of the Subordinated Creditors, hereby waives any rights any Subordinated Creditor may have under applicable law to assert the doctrine of marshaling or to otherwise require any Senior Agent or any other Senior Creditor to marshal any property of any of the Loan Parties for the benefit of any Subordinated Creditor.

 

4.2 Rights Relating to Senior Creditors’ Actions with Respect to the Collateral. The Subordinated Agent, on behalf of the Subordinated Creditors, hereby waives, to the extent permitted by applicable law, any rights which any Subordinated Creditor may have to enjoin or otherwise obtain a judicial or administrative order preventing any Senior Agent or any other Senior Creditor from taking, or refraining from taking, any action with respect to all or any part of the Collateral. Without limitation of the foregoing, the Subordinated Agent, on behalf of the Subordinated Creditors, hereby agrees (a) that no Subordinated Creditor has any right to direct or object to the manner in which any Senior Agent or any other Senior Creditor applies the proceeds of the Collateral resulting from the exercise by any Senior Agent or any other Senior Creditor of rights and remedies under any Senior Debt Document to any Senior Debt and (b) except to the extent expressly set forth herein, the Senior Agents and/or the Senior Creditors have not assumed any obligation to act as the agent or bailee for any Subordinated Creditor with respect to the Collateral. The Senior Agents and the other Senior Creditors shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral until all Senior Debt has been Paid in Full. In exercising rights and remedies with respect to the Collateral, the Senior Agents and the other Senior Creditors may enforce the provisions of the Senior Debt Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their respective sole and exclusive discretion. Such exercise and enforcement shall include, without limitation, the rights to sell or otherwise dispose of Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the UCC. In conducting any public or private sale under the UCC, the Senior Agents shall give the Subordinated Agent such notice of such sale as may be required by the UCC; provided, however, that the Subordinated Agent irrevocably agrees that ten (10) days’ notice shall be deemed to be commercially reasonable notice.

 

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5. Representations and Warranties.

 

5.1 Subordinated Creditors. The Subordinated Agent hereby represents and warrants to each Senior Agent and each of the other Senior Creditors that as of the date hereof: (a) the Subordinated Agent (for itself and on behalf of the Subordinated Creditors) has the power and authority to enter into, execute, deliver, and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (b) the execution of this Agreement by the Subordinated Agent will not violate or conflict with the organizational documents of the Subordinated Agent; and (c) this Agreement is the legal, valid, and binding obligation of the Subordinated Agent (for itself and on behalf of the Subordinated Creditors), enforceable against the Subordinated Agent in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles.

 

5.2 Loan Parties. Each Loan Party and the Subordinated Agent hereby represents and warrants (severally and not jointly) as to itself only that as of the date hereof: (i) it has not relied nor will it rely on any representation or information of any nature made by or received from any Senior Agent or any other Senior Creditor relative to any Loan Party, any Loan Party’s financial condition, or the existence, value or extent of any Collateral, in deciding to execute this Agreement; (ii) no part of the Subordinated Debt is evidenced by any instrument or writing except the Subordinated Debt Documents and the other documents contemplated therein; (iii) the Subordinated Creditors are the lawful owners of the Subordinated Debt; (iv) no Subordinated Creditor has heretofore assigned or transferred any of the Subordinated Debt, any interest therein or any Collateral or security pertaining thereto; and (v) no Subordinated Creditor has heretofore given any subordination in respect of the Subordinated Debt.

 

5.3 Senior Creditors. Each Senior Agent hereby represents and warrants to the Subordinated Agent and other Subordinated Creditors that: (i) such Senior Agent (on behalf of the applicable Senior Creditors) has the power and authority to enter into, execute, deliver, and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; and (ii) this Agreement is the legal, valid, and binding obligation of such Senior Agent (on behalf of the applicable Senior Creditors), enforceable against such Senior Agent in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles.

 

6. Subrogation. Subject to the Payment in Full of all Senior Debt, the Subordinated Creditors shall be subrogated to the rights of the Senior Creditors to receive Distributions with respect to the Senior Debt until the Subordinated Debt has been Paid in Full. The Subordinated Agent, for itself and on behalf of the other Subordinated Creditors, agrees that in the event that all or any part of a payment made with respect to the Senior Debt is rescinded, disgorged, or must otherwise be returned by any holder of any Senior Debt in an Insolvency Proceeding or otherwise, any Distribution received by any Subordinated Creditor with respect to the Subordinated Debt at any time after the date of the payment that is so recovered, whether pursuant to the right of subrogation provided for in this Agreement or otherwise, shall be deemed to have been received by such Subordinated Creditor in trust as property of the Senior Creditors and such Subordinated Creditor shall forthwith deliver the same to the Senior Agents for application to the Senior Debt in accordance with the terms of the Senior Debt Documents and the Senior Debt Intercreditor Agreement until all Senior Debt has been Paid in Full. Any Distribution made pursuant to this Agreement to any Senior Agent or any other Senior Creditor, which otherwise would have been made to any Subordinated Creditor is not, as between the Loan Parties and the Subordinated Creditors, a payment by the Loan Parties to or on account of the Subordinated Debt.

 

7. Modification. Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by each Senior Agent, for itself and on behalf of the other applicable Senior Creditors, and the Subordinated Agent, for itself and on behalf of the other Subordinated Creditors, and then such modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

 

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8. Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.

 

9. Notices. Unless otherwise specifically provided herein, any notice delivered under this Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, sent via e-mail or other electronic transmission, sent by facsimile, or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered electronically or by facsimile, on the date of transmission if transmitted on a business day before 4:00 p.m. (prevailing eastern time) or, if not, on the next succeeding business day; (c) if delivered by overnight courier, one business day after delivery to such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed, as follows:

 

If to the Subordinated Agent:

 

Mizzen Capital, LP
488 Madison Avenue, 18th Floor

New York, New York 10022

 

with a copy to:

 

Greenberg Traurig, LLP

One Vanderbilt Avenue

New York, NY 10017

Attention: Todd E. Bowen

E-Mail: bowent@gtlaw.com

 

If to the Loan Parties:

 

Rubicon Global, LLC

950 East Paces Ferry Rd NE, Suite 1900

Atlanta, Georgia 30326

Attention: Michael Heller and Bill Meyer

Email: Michael.Heller@rubiconglobal.com and Bill.Meyer@rubiconglobal.com

 

with a copy to:

 

Chamberlain Hrdlicka White Williams & Aughtry, P.C.

191 Peachtree Street, NE, 46th Floor

Atlanta, Georgia 30303

Attention: Scott A. Augustine

E-Mail: scott.augustine@chamberlainlaw.com

 

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If to the Revolving Agent:

 

Eclipse Business Capital LLC

123 N. Wacker Drive, Suite 2400

Chicago, Illinois 60606

Attention: General Counsel

E-Mail: @eclipsebuscap.com

 

If to the Term Agent:

 

Pathlight Capital LLC
18 Shipyard Drive, Suite 2C

Hingham, Massachusetts 02043

Attention: Matthew Williams

E-Mail: mwilliams@pathlightcapital.com

 

with a copy to:

 

Choate Hall & Stewart LLP

Two International Place

Boston, Massachusetts 02110

Attention: Kevin Simard

Telecopy: 617.502.4086

E-mail: ksimard@choate.com

 

or in any case, such other address or addresses as any party hereto shall have designated by written notice to the other parties hereto, given in accordance with this Section 9.

 

10. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of (a) the Senior Agents and each other Senior Creditor, (b) the Subordinated Agent and each other Subordinated Creditor, and (c) the Loan Parties. To the extent permitted under the applicable Senior Debt Documents, any applicable Senior Creditor may, from time to time, without notice to any Subordinated Creditor, assign or transfer any or all of the Senior Debt or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes of this Agreement, and every permitted assignee or transferee of any of the Senior Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the Senior Debt, be entitled to rely upon and be the third party beneficiary of the subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto.

 

11. Relative Rights. This Agreement shall define the relative rights of the Senior Creditors and the Subordinated Creditors. Nothing in this Agreement shall (a) impair, as between the Loan Parties and the Senior Agents and other Senior Creditors, and as between the Loan Parties and the Subordinated Agent and the other Subordinated Creditors, the obligation of the Loan Parties with respect to the payment of any Senior Debt or the Subordinated Debt in accordance with their respective terms or (b) affect the relative rights of the Senior Creditors or the Subordinated Creditors with respect to any other creditors of the Loan Parties.

 

12. Conflict. In the event of any conflict between any term, covenant, or condition of this Agreement and any term, covenant or condition of any of the Subordinated Debt Documents, the provisions of this Agreement shall control and govern.

 

13. Captions. The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.

 

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14. Counterparts. This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other electronic transmission (including e-mail transmission of a PDF image) shall be deemed to be an original signature hereto.

 

15. Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under applicable laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

16. Continuation of Subordination; Termination of Agreement. This Agreement shall remain in full force and effect until the Payment in Full of all Senior Debt, after which this Agreement shall terminate without further action on the part of the parties hereto, subject to reinstatement as provided herein. In addition, to the extent that any Loan Party makes any payment on any Senior Debt that is subsequently invalidated, declared to be fraudulent or preferential or set aside or is required to be repaid to a trustee, receiver or any other party under any bankruptcy, insolvency or reorganization act, state or federal law, common law or equitable cause (such payment being hereinafter referred to as a “Voided Payment”), then to the extent of such Voided Payment, that portion of the Senior Debt that had been previously satisfied by such Voided Payment shall be revived and continue in full force and effect as if such Voided Payment had never been made.

 

17. Applicable Law. This Agreement, and all matters relating hereto or arising herefrom (whether arising under contract law, tort law or otherwise) shall be governed by and construed in accordance with the laws of the State of New York (excluding the laws applicable to conflicts or choice of law (other than the New York General Obligations Law §5-1401)).

 

18. Consent to Jurisdiction. EACH PARTY HERETO HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, THE CITY OF NEW YORK IN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS; PROVIDED THAT IN THE EVENT OF THE COMMENCEMENT OF AN INSOLVENCY PROCEEDING, ALL ACTIONS AND PROCEEDINGS SHALL BE BROUGHT IN THE APPLICABLE COURT PRESIDING OVER SUCH INSOLVENCY PROCEEDING. EACH PARTH HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY SENIOR CREDITOR OR ANY SUBORDINATED CREDITOR MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY SENIOR DEBT DOCUMENT, OR ANY SUBORDINATED DEBT DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

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19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT DOCUMENTS, OR ANY OF THE SENIOR DEBT DOCUMENTS, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT DOCUMENTS, OR ANY OF THE SENIOR DEBT DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY CONSENTS THAT ANY SUCH CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF SUCH PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

20. Specific Enforcement. If any Subordinated Creditor fails to comply with any provision of this Agreement that is applicable to it, each of the Senior Agents and the other Senior Creditors may demand specific performance of this Agreement and may exercise any other remedy available at law or equity. The Loan Parties and the Subordinated Agent, on behalf of the Subordinated Creditors, each hereby waives any defense based on the adequacy of a remedy at law which might be asserted as a bar to the remedy of specific performance of this Agreement in any action brought therefor by any Senior Agent or any other Senior Creditor.

 

21. Additional Credit Extensions. The Subordinated Agent, for itself and on behalf of the other Subordinated Creditors, acknowledges, understands and agrees that each Senior Agent and the other Senior Creditors may make loans to and provide other financial accommodations for the account of any Loan Party from time to time, pursuant to the Senior Debt Documents or otherwise, and all such loans and financial accommodations shall constitute part of the Senior Debt and shall be secured by all of the Collateral, and nothing herein shall restrict in any manner or in any way the right of any Loan Party to obtain additional credit from any Senior Agent and/or any other Senior Creditor or the right of any Senior Agent and/or any such other Senior Creditor to make available such additional credit to any Loan Party as such Senior Agent and/or any such other Senior Creditor in their sole discretion may elect.

 

22. No Additional Rights of Loan Parties Hereunder. Nothing herein shall be construed to confer additional rights upon any Loan Party. Without limiting the generality of the foregoing, if any party hereto shall enforce its rights or remedies in violation of this Agreement, no Loan Party shall be authorized to use such violation as a defense to any right or remedy exercised by such party, nor assert such violation as a counterclaim or basis of setoff or recoupment against such party, unless the other party hereto consents in writing and itself asserts that the exercise of right or remedy is in violation of this Agreement.

 

23. Reliance by Senior Creditors. Each Senior Creditor, whether such Senior Debt is now outstanding or hereafter created, incurred, assumed, or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the provisions contained in this Agreement.

 

24. Senior Debt Intercreditor Agreement. The provisions of this Agreement shall not be (or be construed to be) an amendment, modification or other change to the Senior Debt Intercreditor Agreement and the provisions of the Senior Debt Intercreditor Agreement shall remain in full force and effect in accordance with the terms thereof (as such provisions may be amended, modified or otherwise supplemented from time to time in accordance with the terms thereof). To the extent the terms of this Agreement conflict with the terms of the Senior Debt Intercreditor Agreement, the terms of the Senior Debt Intercreditor Credit Agreement shall control and provide for the respective rights of each Senior Agent, including, but not limited to, their respective lien priorities, obligations, rights, remedies and priority of distribution. Any Distribution received by the Senior Agents pursuant to the terms of this Agreement shall constitute Collateral (as defined in the Senior Debt Intercreditor Agreement) and Proceeds (as defined in the Senior Debt Intercreditor Agreement) of Collateral under the Senior Debt Intercreditor Agreement and shall be either ABL Priority Collateral (as defined in the Senior Debt Intercreditor Agreement) or Term Loan Priority Collateral (as defined in the Senior Debt Intercreditor Agreement) as determined by the Senior Debt Intercreditor Agreement. To the extent such Distribution consist of cash or cash equivalents such Distribution shall constitute ABL Priority Collateral (as defined in the Senior Debt Intercreditor Agreement) and ABL Priority Proceeds (as defined in the Senior Debt Intercreditor Agreement) under the Senior Debt Intercreditor Agreement unless such cash or cash equivalents is identifiable proceeds of Term Loan Priority Collateral (as defined in the Senior Debt Intercreditor Agreement), Term Priority Proceeds (as defined in the Senior Debt Intercreditor Agreement) or was received from any Term Loan Priority Accounts (as defined in the Senior Debt Intercreditor Agreement).

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

  ECLIPSE BUSINESS CREDIT LLC, in its capacity as the Revolving Agent and a Senior Agent
     
  By: /s/ Tracy Salyers
  Name: Tracy Salyers
  Title: Authorized Signatory

 

[Rubicon – Signature Page to Subordination Agreement]

 

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  PATHLIGHT CAPITAL LP, in its capacity as the Term Agent and a Senior Agent
   
  By: /s/ Matthew Williams
  Name: Matthew Williams
  Title: Managing Director

 

[Rubicon – Signature Page to Subordination Agreement]

 

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  MIZZEN CAPITAL, LP, in its capacity as the Subordinated Agent
   
  By: /s/ Marilyn S. Adler
  Name: Marilyn S. Adler
  Title: Managing Partner

 

[Rubicon – Signature Page to Subordination Agreement]

 

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  LOAN PARTIES:
     
  RUBICON GLOBAL, LLC
     
  By: /s/ Nate Morris
  Name: Nathaniel R. Morris
  Title: Chief Executive Officer
     
  RIVERROAD WASTE SOLUTIONS, INC.
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Title: Chief Executive Officer
     
  RUBICON TECHNOLOGIES, LLC
     
  By: /s/ Nate Morris
  Name: Nathaniel R. Morris
  Title: Chief Executive Officer
     
  CLEANCO LLC
     
  By: /s/ Nate Morris
  Name: Nathaniel R. Morris
  Title: Chief Executive Officer
     
  CHARTER WASTE MANAGEMENT, INC.
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Title: Chief Executive Officer
     
  RUBICON TECHNOLOGIES INTERNATIONAL, INC.
     
  By: /s/ Marc Spiegel
  Name: Marc Spiegel
  Title: Chief Executive Officer

 

[Rubicon – Signature Page to Subordination Agreement]

 

25

 

Exhibit 10.21

 

FIFTH AMENDMENT TO LOAN

AND SECURITY AGREEMENT

 

This FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), is dated as of April 26, 2022, by and among the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”), ECLIPSE BUSINESS CAPITAL LLC, a Delaware limited liability company, as administrative agent for the Lenders (f/k/a Encina Business Credit, LLC, in such capacity, together with its successors and assigns in such capacity, “Agent”), and RUBICON GLOBAL, LLC, a Delaware limited liability company (“Rubicon”) and RIVERROAD WASTE SOLUTIONS, INC., a New Jersey corporation (“RiverRoad”; together with Rubicon, each a “Borrower” and collectively the “Borrowers”), and Rubicon Technologies, LLC, a Delaware limited liability company (“Holdings”), CLEANCO LLC, a New Jersey limited liability company (“Cleanco”), and CHARTER WASTE MANAGEMENT, INC., a Delaware corporation (“Charter” together with Holdings and Cleanco, each a “Loan Party Obligor”).

 

WITNESSETH:

 

WHEREAS, Borrowers, Loan Party Obligors, Lenders and Agent are parties to that certain Loan and Security Agreement, dated as of December 14, 2018 (the “Original Loan Agreement”);

 

WHEREAS, the Original Loan Agreement was amended pursuant to that certain First Amendment to Loan and Security Agreement dated as of March 29, 2019 (the “First Amendment”) in connection with the Borrowers and Loan Party Obligors obtaining secured term loan financing agented by PATHLIGHT CAPITAL LP pursuant to that certain Loan and Security Agreement dated as of March 29, 2019 (the “Original Term Loan Agreement”); and

 

WHEREAS, the Original Loan Agreement as amended by the First Amendment was further amended pursuant to that certain Second Amendment to Loan and Security Agreement dated as of February 27, 2020 (the “Second Amendment”) which was further amended pursuant to that certain Third Amendment to Loan and Security Agreement dated as of March 24, 2021 (the “Third Amendment”) and which was further amended pursuant to that certain Fourth Amendment to Loan and Security Agreement dated as of October 15, 2021(“Fourth Amendment”) (the Original Loan Agreement as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, the “Existing Loan Agreement”); and

 

WHEREAS, the Original Term Loan dated as of February 27, 2020 amended pursuant to the First Amendment to Term Loan Agreement (“First Amendment to Term Loan Agreement”) which was further amended pursuant to that certain Second Amendment to the Term Loan Agreement (“Second Amendment to Term Loan Agreement”) and which was further amended pursuant to that Certain Third Amendment to the Term Loan and Security Agreement dated as of October 15, 2021(“Third Amendment to Term Loan Agreement”)(the Original Term Loan Agreement as amended by the First Amendment to Term Loan Agreement, Second Amendment to Term Loan Agreement and the Third Amendment to Term Loan Agreement, the “Existing Term Loan Agreement”);

 

 

 

 

WHEREAS, he Borrowers have requested that the Agent and the Lenders consent to the SPAC Merger in accordance with the terms and conditions of the Fifth Amendment;

 

WHEREAS, reference is made to that certain Agreement and Plan of Merger entered into as of December 15, 2021 by and among others (i) Founder SPAC, a Cayman Island except company, the “Acquirer”), (ii) Ravenclaw Merger Sub LLC, a Delaware limited liability company (“Merger Sub LLC”), (iii) Holdings (the “Merger Agreement”). Pursuant to the Merger Agreement, the Acquirer, Merger Sub LLC, Holdings and other parties thereto intend to effect a business combination transaction pursuant to which Merger Sub LLC will merge with and into Holdings (the “SPAC Merger”) with Holdings continuing as the surviving entity;

 

WHEREAS, the Lenders agree to amend the Existing Loan Agreement and consent to the SPAC Merger in accordance with the terms and conditions of the Fifth Amendment, in each case, subject to the terms and conditions set forth herein and in connection with the Fourth Amendment to the Existing Term Loan Agreement dated as of the date hereof (the “Fourth Amendment to Term Loan Agreement”);

 

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

 

SECTION 1. Defined Terms. Unless otherwise defined herein, all capitalized terms used herein have the meanings assigned to such terms in the Existing Loan Agreement, as amended hereby (the “Loan Agreement”).

 

SECTION 2. Amendments.

 

The Loan Agreement is hereby amended (a) to delete the red or green stricken text (indicated textually in the same manner as the following examples: stricken text and stricken text) and (b) to add the blue or green double-underlined text (indicated textually in the same manner as the following examples: double-underlined text and double-underlined text), in each case, as set forth in the marked copy of the Loan Agreement attached hereto as Exhibit A hereto and made a part hereof for all purposes.

 

SECTION 3. Representations, Warranties and Covenants of Each Borrower and each Loan Party Obligor. Each Borrower and each Loan Party Obligor represents and warrants to the Lenders and Agent and agrees that:

 

(a) the representations and warranties contained in the Loan Agreement (as amended hereby) and the other outstanding Loan Documents are true and correct in all material respects at and as of the date hereof as though made on and as of the date hereof, except (i) to the extent specifically made with regard to a particular date, and (ii) for such changes that are a result of any act or omission specifically permitted under the Loan Agreement (or under any Loan Document), or as otherwise specifically permitted by the Lenders;

 

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(b) on the Fifth Amendment Effective Date, after giving effect to this Amendment, no Default or Event of Default will have occurred and be continuing;

 

(c) the execution, delivery and performance of this Amendment have been duly authorized by all necessary action on the part of, and duly executed and delivered by each Borrower and each Loan Party Obligor, and this Amendment is a legal, valid and binding obligation of each Borrower and each Loan Party Obligor, enforceable against such Person in accordance with its terms, except as the enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law); and

 

(d) the execution, delivery and performance of this Amendment do not conflict with or result in a breach by any Borrower or any Loan Party Obligor of any term of any material contract, loan agreement, indenture or other agreement or instrument to which such Person is a party or is subject.

 

SECTION 4. Conditions Precedent to Effectiveness of Amendment. This Amendment shall become effective (the “Fifth Amendment Effective Date”) upon satisfaction of each of the following conditions:

 

(a) Each Borrower, the Loan Party Obligors, the Lenders and Agent shall have executed and delivered to the Agent this Amendment and such other documents as the Agent may reasonably request;

 

(b) Agent shall have received (i) evidence satisfactory to Agent in its Permitted Discretion that each of the conditions precedent set forth in Section 4 of the Loan Agreement has been satisfied, and (ii) updated UCC, tax lien, and pending suit and judgment lien searches, in each case, with respect to each of the Borrowers and the Loan Party Obligors;

 

(c) Agent shall have received a certificate from an authorized representative of each Borrower and each Loan Party Obligor, among other items: (i) attesting to the resolutions of such Person’s Board of Directors or similar governing body, authorizing the execution, delivery and performance by such Person of this Amendment and the other Loan Documents to which it is a party, and (ii) evidencing the existence of and good standing of each Borrower and the Loan Party Obligors from the Secretary of State of its jurisdiction of organization;

 

(d) Agent shall have received any and all fees due and payable to Agent as a result of the transactions contemplated by this Amendment (including, but not limited to, a $50,000 amendment fee which shall be net settled on the Fifth Amendment Effective Date and treated as creating original issue discount on the Loans under Treasury Reg. section 1.1273-2(g)(2) for US federal income tax purposes);

 

(e) All legal matters incident to the transactions contemplated hereby shall be reasonably satisfactory to counsel for the Agent; and

 

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(f) amendment to Term Loan Agreement. The Agent shall have received an amendment to the Term Loan Agreement, in form and substance satisfactory to the Agent, duly executed by the Term Agent and the Loan Party Obligors.

 

SECTION 5. Acknowledgment of Permitted Equity Transfer. Each Lender and the Agent hereby acknowledge and agree that the SPAC Merger, if consummated pursuant to and in accordance with the terms and conditions of the Merger Agreement as in effect as of the Fifth Amendment Effective Date, shall (i) constitute a Permitted Equity Transfer and (ii) satisfy clause (ii) of the definition of “Permitted SPAC Merger” in all respects.

 

SECTION 6. Costs and Expenses. Each Borrower and Loan Party Obligor hereby affirms its obligation under the Loan Agreement to reimburse the Agent for all fees and expenses paid or incurred by the Agent in connection with the preparation, negotiation, execution and delivery of this Amendment, including but not limited to the internal and external attorneys’ fees and expenses of attorneys for the Agent with respect thereto.

 

SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUCTED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF.

 

SECTION 8. Effect of Amendment; Reaffirmation of Loan Documents. (a) Nothing contained in this Amendment in any manner or respect limits or terminates any of the provisions of the Loan Agreement or the other outstanding Loan Documents other than as expressly set forth herein. The Loan Agreement (as amended hereby) and each of the other outstanding Loan Documents remain and continue in full force and effect and are hereby ratified and reaffirmed in all respects. Each Borrower and Loan Party Obligor hereby further ratifies and reaffirms the validity and enforceability of all of the Liens heretofore granted, pursuant to and in connection with the Loan Agreement or any other Loan Document to the Agent on behalf and for the benefit of the Lenders, as collateral security for the Obligations under the Loan Documents, in accordance with their respective terms, and acknowledges that all of such Liens, and all collateral heretofore pledged as security for such Obligations, continues to be and remain collateral for such obligations from and after the date hereof. Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby.

 

(b) Execution of this Amendment by the Lenders and Agent (i) shall not constitute a waiver of any Default or Event of Default that may currently exist or hereafter arise under the Loan Agreement, (ii) shall not impair, modify, restrict or limit any right, power, privilege or remedy of the Lenders or Agent with respect to any Default or Event of Default that may now exist or hereafter arise under the Loan Agreement or any of the other Loan Documents, and (iii) shall not constitute any custom, course of dealing or other basis for altering any obligation of any Borrower or any Loan Party Obligor or any right, power, privilege or remedy of the Lenders and Agent under the Loan Agreement or any of the other Loan Documents.

 

(c) The amendments, consents, modifications and other agreements set forth herein are limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall neither excuse any future non- compliance with the Loan Agreement or any other Loan Document, nor operate as a waiver of any Default or Event of Default.

 

4

 

 

(d) This Amendment is a Loan Document.

 

(d) To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement and the Loan Documents as modified or amended hereby.

 

SECTION 9. Headings. Section headings in this Amendment are included herein for convenience of any reference only and shall not constitute a part of this Amendment for any other purposes.

 

SECTION 10. Release. EACH BORROWER AND LOAN PARTY OBLIGOR HEREBY ACKNOWLEDGE THAT AS OF THE DATE HEREOF IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THEIR LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDERS, AGENT, OR THEIR RESPECTIVE AFFILIATES, PARTICIPANTS OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS, MANAGERS, MEMBERS, EMPLOYEES OR ATTORNEYS. EACH BORROWER AND LOAN PARTY OBLIGOR HEREBY VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE LENDERS, AGENT, THEIR RESPECTIVE AFFILIATES AND PARTICIPANTS, AND THEIR PREDECESSORS, AGENTS, MANAGERS, MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH ANY BORROWER OR LOAN PARTY OBLIGOR MAY NOW OR HEREAFTER HAVE AGAINST LENDERS, AGENT, OR THEIR RESPECTIVE PREDECESSORS, AGENTS, MANAGERS, MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM THE LIABILITIES, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT. EACH BORROWER AND LOAN PARTY OBLIGOR HEREBY COVENANTS AND AGREES NEVER TO INSTITUTE ANY ACTION OR SUIT AT LAW OR IN EQUITY, NOR INSTITUTE, PROSECUTE, OR IN ANY WAY AID IN THE INSTITUTION OR PROSECUTION OF ANY CLAIM, ACTION OR CAUSE OF ACTION, RIGHTS TO RECOVER DEBTS OR DEMANDS OF ANY NATURE AGAINST LENDERS, AGENT, THEIR RESPECTIVE AFFILIATES AND PARTICIPANTS, OR THEIR RESPECTIVE SUCCESSORS, AGENTS, MANAGERS, MEMBERS, ATTORNEYS, OFFICERS, DIRECTORS, EMPLOYEES, AND PERSONAL AND LEGAL REPRESENTATIVES ARISING ON OR BEFORE THE DATE HEREOF OUT OF OR RELATED TO LENDERS’ OR AGENT’S ACTIONS, OMISSIONS, STATEMENTS, REQUESTS OR DEMANDS IN ADMINISTERING, ENFORCING, MONITORING, COLLECTING OR ATTEMPTING TO COLLECT THE OBLIGATIONS OF ANY BORROWER OR ANY LOAN PARTY OBLIGOR TO LENDERS AND AGENT, WHICH OBLIGATIONS ARE EVIDENCED BY THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, EXCEPT FOR THOSE CLAIMS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR ANY LENDER.

 

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SECTION 11. Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 12. Entire Agreement. This Amendment, and terms and provisions hereof, the Loan Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written and is the final expression and agreement of the parties hereto with respect to the subject matter hereof

 

SECTION 13. Execution in Counterparts. This Amendment may be executed in counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this letter agreement shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

[Remainder of page intentionally left blank with signature pages immediately to follow]

 

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

 

LENDER: Eclipse Business Capital SPV, LLC, a
  Delaware limited liability company
     
  By: /s/ Tracy Salyers
  Name: Tracy Salyers
  Title: Authorized Signatory
     
AGENT: ECLIPSE BUSINESS CAPITAL LLC,
  a Delaware limited liability company
     
  By: /s/ Tracy Salyers
  Name: Tracy Salyers
  Title: Authorized Signatory

 

[Signature Pages Continue]

 

7

 

 

BORROWERS/LOAN PARTY OBLIGORS:  
     
RUBICON GLOBAL, LLC, as a Borrower and a Loan Party Obligor  
     
By: /s/ Nathaniel R. Morris  
Name: Nathaniel R. Morris
Its: Chief Executive Officer  
     
RIVERROAD WASTE SOLUTIONS, INC., as a Borrower and a Loan Party Obligor  
     
By: /s/ Marc Spiegel  
Name: Marc Spiegel
Its: President  
     
RUBICON TECHNOLOGIES, LLC, as a Loan Party Obligor  
     
By: /s/ Nathaniel R. Morris  
Name: Nathaniel R. Morris
Its: Chief Executive Officer  
     
CLEANCO LLC, as a Loan Party Obligor  
     
By: /s/ Nathaniel R. Morris  
Name: Nathaniel R. Morris
Its: Chief Executive Officer  
     
CHARTER WASTE MANAGEMENT, INC., as a Loan Party Obligor  
     
By: /s/ Marc Spiegel  
Name: Marc Spiegel
Its: Chief Executive Officer  

 

8

 

 

Exhibit A to Fourth Amendment to Loan and Security Agreement

 

 

 

 

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

Dated as of December 14, 2018

 

by and among

 

RUBICON GLOBAL, LLC and

RIVERROAD WASTE SOLUTIONS, INC.,

as Borrowers,

 

RUBICON TECHNOLOGIES, LLC, CLEANCO LLC and CHARTER WASTE MANAGEMENT, INC.,

as Loan Party Obligors

 

the Lenders from time to time party hereto,

 

and

 

ECLIPSE BUSINESS CAPITAL LLC,

as Agent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

        Page
1. DEFINITIONS   1
  1.1. Certain Defined Terms   1
  1.2. Accounting Terms and Determinations   27
  1.3. Rates   2428
  1.4. Other Definitional Provisions and References   29
         
2. LOANS.   2529
  2.1. Amount of Loans   2529
  2.2. Protective Advances; Overadvances   2630
  2.3. Notice of Borrowing; Manner of Revolving Loan Borrowing   2731
  2.4. Swingline Loans   32
  2.5. Repayments   2832
  2.6. Prepayments / Voluntary Termination / Application of Prepayments   33
  2.7. Obligations Unconditional   2933
  2.8. Reversal of Payments   3034
  2.9. Notes   3034
  2.10. Defaulting Lenders   3034
  2.11. Appointment of Borrower Representative.   3135
  2.12. Joint and Several Liability   36
         
3. INTEREST AND FEES; LOAN ACCOUNT   38
  3.1. Interest   38
  3.2. Fees   3438
  3.3. Computation of Interest and Fees   39
  3.4. Loan Account; Monthly Accountings   3539
  3.5. Further Obligations; Maximum Lawful Rate   3539
  3.6. Certain Provisions Regarding LIBORSOFR Loans; Replacement of Lenders   40
  3.7. Term SOFR Conforming Changes   43
         
4. CONDITIONS PRECEDENT   43
  4.1. Conditions to Initial Loans   43
  4.2. Conditions to all Loans   44
         
5. COLLATERAL   3944
  5.1. Grant of Security Interest   3944
  5.2. Possessory Collateral   45
  5.3. Further Assurances   45
  5.4. UCC Financing Statements   4045
         
6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS   4046
  6.1. Lock Boxes and Blocked Accounts   4046
  6.2. Application of Payments   4146
  6.3. Notification; Verification   47
  6.4. Power of Attorney   4247
  6.5. Disputes   4348
  6.6. Invoices   4348
  Reserved   48
         

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7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS   4348
  7.1. Existence and Authority   48
  7.2. Names; Trade Names and Styles   4449
  7.3. Title to Collateral; Third Party Locations; Permitted Liens   4449
  7.4. Accounts and Chattel Paper   49
  7.5. Electronic Chattel Paper   49
  7.6. Capitalization; Investment Property   4550
  7.7. Commercial Tort Claims   51
  7.8. Jurisdiction of Organization; Location of Collateral   51
  7.9. Financial Statements and Reports; Solvency   4751
  7.10. Tax Returns and Payments; Pension Contributions   4752
  7.11. Compliance with Laws; Intellectual Property; Licenses   4853
  7.12. Litigation   4954
  7.13. Use of Proceeds   4954
  7.14. Insurance   54
  7.15. Financial, Collateral and Other Reporting / Notices   5055
  7.16. Litigation Cooperation   5257
  7.17. Maintenance of Collateral, Etc   57
  7.18. Material Contracts   57
  7.19. No Default   5358
  7.20. No Material Adverse Change   5358
  7.21. Full Disclosure   5358
  7.22. Sensitive Payments   58
  7.23. Parent   58
  7.24. Subordinated Debt   59
  7.25. Access to Collateral, Books and Records   5459
  7.26. Appraisals   59
  7.27. Lender Meetings   59
  7.28. Interrelated Businesses.   60
  7.29. Post-Closing Matters   60
  7.30. Term Debt   5560
  7.31. Third Lien Obligations   5560
         
8. NEGATIVE COVENANTS   60
       
9. FINANCIAL COVENANTS   63
  9.1. Capital Expenditure Limitation   63
  9.2. Minimum Excess Availability   5863
         
10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY   5863
  10.1. Release   5863
  10.2. Limitation of Liability   63
  10.3. Indemnity   64
         
11. EVENTS OF DEFAULT AND REMEDIES   5964
  11.1. Events of Default   5964
  11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc   6267
  11.3. Remedies with Respect to Collateral   67
         
12. LOAN GUARANTY   6873
  12.1. Guaranty   6873

 

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  12.2. Guaranty of Payment   73
  12.3. No Discharge or Diminishment of Loan Guaranty   74
  12.4. Defenses Waived   6974
  12.5. Rights of Subrogation   75
  12.6. Reinstatement; Stay of Acceleration   75
  12.7. Information   75
  12.8. Termination   7075
  12.9. Maximum Liability   7075
  12.10. Contribution   76
  12.11. Liability Cumulative   7176
         
13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES   7176
       
14. AGENT   7379
  14.1. Appointment   7379
  14.2. Rights as a Lender   79
  14.3. Duties and Obligations   79
  14.4. Reliance   80
  14.5. Actions through Sub-Agents   80
  14.6. Resignation   7580
  14.7. Non-Reliance   81
  14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties   82
  14.9. Credit Bidding   83
  14.10. Certain Collateral Matters   83
  14.11. Restriction on Actions by Lenders   7884
  14.12. Expenses   84
  14.13. Notice of Default or Event of Default   84
  14.14. Liability of Agent   7984
         
15. GENERAL PROVISIONS   85
  15.1. Notices   85
  15.2. Severability   8186
  15.3. Integration   8186
  15.4. Waivers   87
  15.5. Amendments   87
  15.6. Time of Essence   88
  15.7. Expenses, Fee and Costs Reimbursement   88
  15.8. Benefit of Agreement; Assignability   8388
  15.9. Assignments   8389
  15.10. Participations   90
  15.11. Headings; Construction   8590
  15.12. USA PATRIOT Act Notification   8590
  15.13. Counterparts; Fax/Email Signatures   8590
  15.14. GOVERNING LAW   8591
  15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS   91
  15.16. Publication   8691
  15.17. Confidentiality   8692

 

-iii-

 

 

Perfection Certificate

Annex I Description of Certain Terms
Annex II Reporting
Annex III Commitment Schedule
Exhibit A Form of Notice of Borrowing
Exhibit B Closing Checklist
Exhibit C Client User Form
Exhibit D Authorized Accounts Form
Exhibit E  Form of Account Debtor Notification
Exhibit F Form of Compliance Certificate
Exhibit G Form of Assignment and Assumption Agreement

 

-iv-

 

 

Loan and Security Agreement

 

This Loan and Security Agreement (as it may be amended, restated or otherwise modified from time to time pursuant to the terms hereof, this “Agreement) is entered into on December 14, 2018, by and among RUBICON GLOBAL, LLC, a Delaware limited liability company (“Rubicon”) and RIVERROAD WASTE SOLUTIONS, INC., a New Jersey corporation (“RiverRoad”; together with Rubicon, each a “Borrower” and collectively the “Borrowers”), and Rubicon Technologies, LLC, a Delaware limited liability company (“Holdings’), CLEANCO LLC, a New Jersey limited liability company (“Cleanco”), and CHARTER WASTE MANAGEMENT, INC., a Delaware corporation (“Chartertogether with Holdings and Cleanco, each a “Loan Party Obligor), the Lenders party hereto from time to time and ECLIPSE BUSINESS Capital LLC, as agent for the Lenders (f/k/a Encina Business Credit, LLC, in such capacity, “Agent). The Schedules and Exhibits to this Agreement are an integral part of this Agreement and are incorporated herein by reference.

 

1. DEFINITIONS.

 

1.1. Certain Defined Terms.

 

Unless otherwise defined herein, the following terms are used herein as defined in the UCC: Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financing Statement, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper.

 

As used in this Agreement, the following terms have the following meanings:

 

ABLSoftmeans the electronic and/or internet-based system approved by Agent for the purpose of making notices, requests, deliveries, communications and for the other purposes contemplated in this Agreement or otherwise approved by Agent, whether such system is owned, operated or hosted by Agent, any of its Affiliates or any other Person.

 

Adjusted Term SOFRmeans, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided, that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.

 

Advance Ratesmeans, collectively, the Billed Accounts Advance Rate and the Unbilled Accounts Advance Rate.

 

Affiliatemeans, with respect to any Person, any other Person in control of, controlled by, or under common control with the first Person, and any other Person who has a substantial interest, direct or indirect, in the first Person or any of its Affiliates, including, any officer or director of the first Person or any of its Affiliates (and if that Person is an individual, any member of the immediate family (including parents, siblings, spouse, children, stepchildren, nephews, nieces and grandchildren) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust); provided, that neither Agent, any Lender nor any of their respective Affiliates shall be deemed an “Affiliateof Borrower for any purposes of this Agreement. For the purpose of this definition, a “substantial interestshall mean the direct or indirect legal or beneficial ownership of more than ten (10%) percent of any class of equity or similar interest.

 

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Agent” means Eclipse in its capacity as agent for the Lenders hereunder, and any successor agent appointed in accordance with Section 14.6 herein.

 

Agent Fee Letter” means that certain fee letter agreement dated as of the Closing Date between Agent and Borrowers.

 

Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, members, managers, attorneys, and agents.

 

Agent Professionals” means attorneys, accountants, appraisers, auditors, business valuation experts, liquidation agents, collection agencies, auctioneers, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Agent’s Bank” means the bank specified by Agent in Section 5 of Annex I or other bank as Agent may subsequently designate as such in writing to Borrower Representative.

 

Agreementand “this Agreement has the meaning set forth in the preamble to this Agreement.

 

Allocable Amounts” has the meaning set forth in Section 2.12(f)(ii) of this Agreement.

 

“Applicable Payment Percentage” has the meaning set forth in Section 12.10 of this Agreement.

 

Applicable Percentage” has the meaning set forth in Section 3.2(e) this Agreement.

 

Applicable Unused Line Rate” means, if the average balance of Revolving Loans for such determination period is less than $20,000,000, seven-tenths of one percent (0.70%) per annum; or, if the average balance of Revolving Loans for such determination period is equal to or greater than $20,000,000, three and three quarters tenth of one percent (0.375%).

 

Approved Electronic Communicationmeans each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, facsimile, ABLSoft or any other equivalent electronic service, whether owned, operated or hosted by Agent, any of its Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent pursuant to this Agreement or any other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information or material; provided, that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that Agent specifically instructs a Person to deliver in physical form. “Approved Fundmeans any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business, in each case that is administered, managed, advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Assigneehas the meaning set forth in Section 15.9(a).

 

Assignment and Assumptionmeans an assignment and assumption agreement substantially in the form of Exhibit G.

 

Assignment of Claims Act”, means the Assignment of Claims Act of 1940, as amended, currently codified at 31 U.S.C. 3727 and 41 U.S.C. 6305, and includes the prior historically referenced Federal Anti-Claims Act (31 U.S.C. 3727) and the Federal Anti-Assignment Act (41 U.S.C. 6305).

 

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Authorized Accounts Form” means an authorized accounts form substantially in the form of Exhibit D.

 

Availability Block means $5,000,000 until the Availability Block Release Date and thereafter $0.

 

Availability Block Release Date” the earlier of (i) August 1, 2021 or (ii) date on which the Loan Party Obligors have received at least $15,000,000 in aggregate proceeds following the Third Amendment Effective Date from the issuance of additional equity in the form of membership interests (or warrants therefor) in Holdings.

 

Bankruptcy Code means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

 

Base Rate means, for any day, the greatest of (a) the Floor, (b) the Federal Funds Rate in effect on such day plus ½%, (bc) the LIBOR Rate (which rate shall be calculated based upon a one (1) month period and shall be determined on a daily basis)Adjusted Term SOFR in effect on such day, (c)plus one percent (1.0%), provided, that this clause (c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or unascertainable, and (d) the rate of interest announced, from time to time, within Wells Fargo Bank, N.A. at its principal office in San Francisco as its “prime rate” in effect on such day, with the understanding that the “prime rate” is one of Wells Fargo Bank, N.A.’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo Bank, N.A. may designate (or, if such rate ceases to be so published, as quoted from such other generally available and recognizable source as Agent may select in its Permitted Discretion).

 

Base Rate Loan means any Loan which bears interest at or by reference to the Base Rate.

 

Base Rate Term SOFR Determination Day” has the meaning specified therefor in the definition of “Term SOFR”.

 

Benchmarkmeans, initially, USD LIBORthe Term SOFR Reference Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event, or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have has occurred with respect to USD LIBORthe Term SOFR Reference Rate or the then-current Benchmark, then Benchmark means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.6(d).

 

Benchmark Replacementmeans:, (a) with respect to any Benchmark Transition Event or Early Opt-in Election, the first alternative set forth in the order below that can be determined by Agent for the applicable Benchmark Replacement Date:

 

(i) the sum of: (A) Term SOFR and (B) the related Benchmark Replacement Adjustment;

 

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(ii) the sum of: (A) SOFR Average and (B) the related Benchmark Replacement Adjustment;

 

(iii) the sum of: (Aa) the alternate benchmark rate that has been selected by Agent and Borrower Representative as the replacement for the then-current Benchmark giving due consideration to (i) any selection or recommendation of a replacement benchmark 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 benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment; or

 

(b) with respect to any Term SOFR Transition Event, the sum of (i) Term SOFR and (iib) the related Benchmark Replacement Adjustment; provided, that, (x) in the case of clause (a)(i), if Agent decides that Term SOFR is not administratively feasible for Agent, then Term SOFR will be deemed unable to be determined for purposes of this definition and (y) in the case of clause (a)(i) or clause (b) of this definition, the applicable Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by Agent in its Permitted Discretion. If the if such Benchmark Replacement as so determined pursuant to clause (a)(i), (a)(ii) or (a)(iii) or clause (b) of this definition would be less than the Floor, thesuch Benchmark Replacement willshall be deemed to be the Floor for the purposes of thethis Agreement and the other Loan Documents.

 

Benchmark Replacement Adjustment means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any setting of such Unadjusted Benchmark Replacement:

 

(a) for purposes of clauses (a)(i), (a)(ii), and (b) of the definition of “Benchmark Replacement,” an amount equal to 0.11448% (11.448 basis points), and

 

(b) for purposes of clause (a)(iii) of the definition of “Benchmark Replacement,”, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Agent and Borrower Representative giving due consideration to (ia) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (iib) 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 such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.

 

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 “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment notices,length of lookback periods, and other technical, administrative or operational matters) that Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent decides that adoption of any portion of such market practice is not administratively feasible or if Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Agent decides is reasonably necessary in connection with the administration of the Agreement and the other Loan Documents).

 

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Benchmark Replacement Date means the earliest to occur of the following events with respect to the then-current Benchmark:

 

(a) (a) in the case of clause (a) or (b) of the definition of Benchmark Transition Event, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide such Benchmark (or such component thereof); or

 

(b) (b) in the case of clause (c) of the definition of Benchmark Transition Event, the first date of the publicon which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by to be non-representative; provided that such non-representativeness, will be determined by reference to the most recent statement or publication of information referenced therein; in such clause (c) even if such Benchmark (or such component thereof) continues to be provided on such date.

 

(c) (c) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after Agent has provided the Term SOFR Notice to the Lenders and Borrower pursuant to Section 3.6(d)(i)(B); or

 

(d) (d) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as Agent has not received, by 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.

 

(e) For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination

 

(f)

 

Benchmark Transition Event means the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(a) (a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof), permanently or indefinitely;, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof);

 

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(b) (b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board of Governors, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) permanently or indefinitely;, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof); or

 

(c) (c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) is no longernot, or as of a specified future date will not be, representative.

 

(d)

 

Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) 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).

 

Benchmark Unavailability Period means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.6(d) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.6(d).

 

Billed Accounts Advance Rate” means the advance rate set forth in Section 1(b)(i) of Annex I.

 

Blocked Accounthas the meaning set forth in Section 6.1.

 

Board of Governors” means FRB.

 

Borrowerand “Borrowers has the meaning set forth in the preamble to this Agreement.

 

Borrower Representative means Rubicon, in such capacity pursuant to the provisions of Section 2.9, or any permitted successor Borrower Representative selected by Borrowers and approved by Lender.

 

Borrowing Basemeans, as of any date of determination, the Dollar Equivalent Amount as of such date of determination of (a) the aggregate amount of Eligible Billed Accounts multiplied by the Billed Accounts Advance Rate, plus (b) the aggregate amount of Eligible Unbilled Accounts multiplied by the Unbilled Accounts Advance Rate but in no event to exceed the Unbilled Accounts Sublimit, minus (c) the Availability Block, minus (d) the Term Loan Push-Down Reserve and minus (d) all Reserves which Agent has established pursuant to Section 2.1(b) (including those to be established in connection with any requested Revolving Loan).

 

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Borrowing Base Certificatemeans a certificate in the form provided by Agent to Borrower Representative for use in reporting the Borrowing Base.

 

Business Day” means a day other than a Saturday or, Sunday or any other day on which Agent or banks inthe Federal Reserve Bank of New York are authorized to close and, in the case of a Business Day which relates to a LIBOR Loan, any day on which dealings are carried on in the London Interbank Eurodollar marketis closed.

 

Capital Expendituresmeans all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of Borrowers, but excluding expenditures made in connection with the acquisition, replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with cash awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

Capitalized Leasemeans any lease which is or should be capitalized on the balance sheet of the lessee thereunder in accordance with GAAP.

 

Client User Form” means a client user form in substantially the form attached hereto as Exhibit C.

 

Closing Date means December 14, 2018.

 

Closing Fee” has the meaning set forth in Section 3.2(a) of this Agreement.

 

Codemeans the Internal Revenue Code of 1986, as amended.

 

Collateralmeans all property and interests in property in or upon which a security interest, mortgage, pledge or other Lien is granted pursuant to this Agreement or the other Loan Documents, including all of the property of each Loan Party Obligor described in Section 5.1.

 

Collectionshas the meaning set forth in Section 6.1.

 

Commitmentand “Commitments means, individually or collectively as required by the context, the Revolving Loan Commitment.

 

Commitment Schedule” means the Commitment Schedule attached hereto as Annex III.

 

Compliance Certificate means a compliance certificate substantially in the form of Exhibit F hereto to be signed by the Chief Financial Officer or President of Borrower Representative.

 

Confidential Informationmeans confidential information that any Loan Party furnishes to the Agent pursuant to any Loan Document concerning any Loan Party’s business, but does not include any such information once such information has become, or if such information is, generally available to the public or available to the Agent (or other applicable Person) from a source other than the Loan Parties which is not, to the Agent’s knowledge, bound by any confidentiality obligation in respect thereof.

 

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Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 3.6(d) and other technical, administrative or operational matters) that Agent in consultation with Borrowers decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent decides that adoption of any portion of such market practice is not administratively feasible or if Agent in consultation with Borrowers determines that no market practice for the administration of any such rate exists, in such other manner of administration as Agent in consultation with Borrowers decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

 

Control Agreement” means an agreement with respect to any deposit, securities or commodities account, in form and substance reasonably satisfactory to Agent, establishing control (as defined in the UCC to the extent applicable) of such account by Agent and is executed and delivered by the bank (with respect to a deposit account), securities intermediary (with respect to a securities account), or commodities intermediary (with respect to a commodities account) maintaining such account, the applicable Loan Party Obligor, Agent and Term Agent.

 

Credit Bid” has the meaning set forth in Section 14.9 of this Agreement.

 

Defaultmeans any event or circumstance which with notice or passage of time, or both, would constitute an Event of Default.

 

Default Rate has the meaning set forth in Section 3.1.

 

Defaulting Lender means any Lender that (a) has failed, within one (1) Business Day of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to Agent or any other Lender any other amount required to be paid by it hereunder, (b) has notified Borrower Representative or Agent in writing, or it or its parent has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement or generally under other agreements in which it or its parent commits to extend credit, (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such certification in form and substance satisfactory to Agent, (d) had an involuntary proceeding commenced or an involuntary petition filed seeking (i) liquidation, reorganization or other relief in respect of such Lender or its parent or its or its parent’s debts, or of a substantial part of its or its parent’s assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Lender or its parent or for a substantial part of its or its parent’s assets, or (e) shall have or whose parent shall have (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consented to the institution of, or failed to contest in a timely and appropriate manner, any proceeding or petition described in clause (d) of this definition, (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or a substantial part of its assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) made a general assignment for the benefit of creditors or (vi) taken any action for the purpose of effecting any of the foregoing.

 

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Dilutionmeans, as of any date of determination, a percentage, based upon the experience of the immediately prior twelve (12) months, that is the result of dividing the Dollar Equivalent Amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to a Borrower’s Accounts during such period by (b)such Borrower’s billings with respect to Accounts during such period.

 

Dilution Reserve has the meaning set forth in Section 1(b)(i) of Annex I.

 

Division” in reference to any Person which is an entity, means the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity. The word “Divide” when capitalized, shall have a correlative meaning.

 

Dollar Equivalent Amount means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent.

 

Dollarsor “$ means United States Dollars.

 

E-Signaturemeans the process of attaching to or logically associating with an Approved Electronic Communication an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Approved Electronic Communication) with the intent to sign, authenticate or accept such Approved Electronic Communication.

 

Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of:

 

(a) a notification by Agent to (or the request by the Borrower Representative to Agent to notify) each of the other parties hereto that at least five currently outstanding Dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

 

(b) the joint election by Agent and Borrower Representative to trigger a fallback from USD LIBOR and the provision by Agent of written notice of such election to the Lenders.

 

Early Payment/Termination Premiumhas the meaning set forth in Section 3.2(e).

 

Eclipsemeans Eclipse Business Capital LLC, a Delaware limited liability company.

 

Electronic Signatures in Global and National Commerce Act” means 15 U.S.C. § 7001 et seq.

 

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Eligible Accountsmeans, collectively, Eligible Billed Accounts and Eligible Unbilled Accounts.

 

Eligible Billed Account means, at any time of determination and subject to the criteria below, an Account of a Borrower, which was generated and billed by a Borrower in the Ordinary Course of Business, and which Agent, in its Permitted Discretion, deems to be an Eligible Billed Account. The net amount of an Eligible Billed Account at any time shall be the face amount of such Eligible Billed Account as originally billed minus all customer deposits, unapplied cash collections and other Proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Without limiting the generality of the foregoing, the following Accounts shall not be Eligible Billed Accounts:

 

(i) the Account Debtor or any of its Affiliates is an Affiliate of any Loan Party;

 

(ii) it remains unpaid longer than the earlier to occur of (A) the number of days after the original invoice date set forth in Section 4(a) of Annex I or (B) the number of days after the original invoice due date set forth in Section 4(b) of Annex I;

 

(iii) the Account Debtor or its Affiliates are past any of the applicable dates referenced in clause (ii) above on other Accounts owing to a Borrower comprising more than twenty-five percent (25%) of all of the Accounts owing to a Borrower by such Account Debtor or its Affiliates;

 

(iv) all Accounts owing by the Account Debtor or its Affiliates (excluding the Account Debtors Walmart, Inc.(“Walmart”), Five Below (“Five Below”) and TJ Maxx (“TJ Maxx”)) represent more than tenfifteen percent (1015%) of all otherwise Eligible Billed Accounts (for Walmart, such percentage shall be twenty-five percent (25%))(for Five Below, such percentage shall be twenty percent (20%) solely for RiverRoad) (for TJ Maxx such percentage shall be twenty percent (20%) solely for Rubicon); provided, that Accounts which are deemed to be ineligible solely by reason of this clause (iv) shall be considered Eligible Billed Accounts to the extent of the amount thereof which does not exceed the applicable percentages set forth above of all otherwise Eligible Billed Accounts;

 

(v) a covenant, representation or warranty contained in this Agreement or any other Loan Document with respect to such Account (including any of the representations set forth in Section 7.4) has been breached;

 

(vi) the Account is subject to any contra relationship, counterclaim, dispute or set-off; provided, that Accounts which are deemed to be ineligible by reason of this clause (vi) shall be considered ineligible only to the extent of such applicable contra relationship, counterclaim, dispute or set-off;

 

(vii) the Account Debtor’s chief executive office or principal place of business is located outside of the United States;

 

(viii) it is payable in a currency other than Dollars;

 

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(ix) it is not absolutely owing to a Borrower or arises from a sale on a bill-and-hold, guarantied sale, sale-or-return, sale-on-approval, consignment, retainage or any other repurchase or return basis or consist of progress billings or other advance billings that are due prior to the completion of performance by a Borrower of the subject contract for goods or services;

 

(x) the Account Debtor is the United States of America or any state or political subdivision (or any department, agency or instrumentality thereof), unless such Borrower has complied with the Assignment of Claims Act or other applicable similar state or local law in a manner reasonably satisfactory to Agent;

 

(xi) it is not at all times subject to Agent’s duly perfected, first-priority security interest or is subject to any other Lien that is not a Permitted Lien, or the goods giving rise to such Account were, at the time of sale, subject to any Lien that is not a Permitted Liens;

 

(xii) it is evidenced by Chattel Paper or an Instrument of any kind (unless such Chattel Paper or Instrument is delivered to Agent in accordance with Section 5.2) or has been reduced to judgment;

 

(xiii) the Account Debtor’s total indebtedness to Borrowers exceeds the amount of any credit limit established by Borrowers or Agent or the Account Debtor is otherwise deemed not to be creditworthy by Agent; provided, that Accounts which are deemed to be ineligible solely by reason of this clause (xiii) shall be considered Eligible Billed Accounts to the extent the amount of such Accounts does not exceed the lower of such credit limits;

 

(xiv) there are facts or circumstances existing, or which could reasonably be anticipated to occur, which might result in an adverse change in the Account Debtor’s financial condition or impair or delay the collectability of all or any portion of such Account;

 

(xv) Agent has not been furnished with all documents and other information pertaining to such Account which Agent has requested, or which any Borrower is obligated to deliver to Agent, pursuant to this Agreement;

 

(xvi) Any Borrower has made an agreement with the Account Debtor to extend the time of payment thereof beyond the time periods set forth in clause (ii) above;

 

(xvii) Any Borrower has posted a surety or other bond in respect of the contract or transaction under which such Account arose;

 

(xviii) the Account Debtor is subject to any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law;

 

(xix) the sale giving rise to such Account is on cash in advance or cash on delivery terms;

 

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(xx) the goods giving rise to such Account have been sold by a Borrower to the Account Debtor outside such Borrower’s Ordinary Course of Business or the services giving rise to such Account have been performed by Borrower outside such Borrower’s Ordinary Course of Business;

 

(xxi) Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor;

 

(xxii) the Account Debtor on such Accounts is located in any jurisdiction which adopts a statute or other requirement that any Person that obtains business from within such jurisdiction or is otherwise subject to such jurisdiction’s tax law must file a “Business Activity Report” (or other applicable report) or make any required filings in a timely manner in order to enforce its claims in such jurisdiction’s courts or arising under such jurisdiction’s laws; provided, however, that such Accounts shall nonetheless be Eligible Billed Accounts if such Borrower has filed a “Business Activity Report” (or other applicable report or required filing);

 

(xxiii) any Eligible Unbilled Accounts or

 

(xxiv) any Accounts obtained in a Permitted Acquisition unless Agent has caused a field examination to be performed on such Accounts and the results of such examination are satisfactory to Agent and Agent has consented to such Accounts being Eligible Billed Accounts in writing.

 

“Eligible Unbilled Accounts” means at any time of determination and subject to the criteria set forth in the definition of Eligible Billed Account (other than the disqualification in subsection (xxi) thereof as to the Account not having been “billed”) an Account of a Borrower (excluding all Eligible Billed Accounts), which was generated by a Borrower in the Ordinary Course of Business but not yet billed, and which Agent, in its Permitted Discretion, deems to be an Eligible Unbilled Account, provided, no Account that arises from services provided more than 60 days prior to the date of determination shall qualify as an Eligible Unbilled Account unless (i) Agent has been provided with supporting documentation relating to such Account, (ii) such account will be billed in the next billing cycle for such Account Debtor and (iii) such Account does not arise from services provided more than 60 days prior to the end of the month during which such services were rendered.

 

Enforcement Action” means any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral, whether by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu of foreclosure, action in any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or otherwise.

 

ERISAmeans the Employee Retirement Income Security Act of 1974 and all rules, regulations and orders promulgated thereunder.

 

ERISA Affiliatemeans any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code and Section 302 of ERISA).

 

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ERISA Eventmeans: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employeras defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

 

Event of Default has the meaning set forth in Section 11.1.

 

Excess Availabilitymeans the amount, as determined by Agent, calculated at any date, equal to the(a) the lesser of (i) the Maximum Revolving Facility Amount minus Reserves (including, without limitation, the Term Loan Push-Down Reserve) and (ii) the Borrowing Base, minus (b) the sum of (i) the outstanding balance of all Revolving Loans plus (ii) fees and expenses which are due and payable by any Borrower under this Agreement but which have not been paid or charged to the Loan Account; provided, that if any of the Loan Limits for Revolving Loans is exceeded as of the date of calculation, then Excess Availability shall be zero.

 

Exchange Act” means the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.

 

Excluded Taxesmeans any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of Agent or any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof); (b) in the case of a Non-U.S. Recipient (as defined in Section 13(e)), U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Non-U.S. Recipient with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which Non-U.S. Recipient becomes a party to this Agreement or acquires a participation, except in each case to the extent that, pursuant to Section 13 amounts with respect to such Taxes were payable either to such Non-U.S. Recipient assignor (or Lender granting such participation) immediately before such assignment or grant of participation; (c) United States federal withholding Taxes that would not have been imposed but for such Recipient’s failure to comply with Section 13(e) (except where the failure to comply with Section 13(e) was the result of a change in law, ruling, regulation, treaty, directive, or interpretation thereof by a Governmental Authority after the date the Recipient became a party to this Agreement or a Participant) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

FATCAmeans Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

Fifth Amendment Effective Date” means April 25, 2022.

 

FIRREAmeans the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

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Fiscal Year means the fiscal year of Borrowers which ends on December 31 of each year.

 

Fourth Amendment Effective Date” means October 15, 2021.

 

FRBmeans the Board of Governors of the Federal Reserve System or any successor thereto.

 

Funding Account has the meaning set forth in Section 2.3(b).

 

GAAPmeans generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession) which are applicable to the circumstances as of the date of determination, in each case consistently applied.

 

Governing Documentsmeans, with respect to any Person, the certificate of incorporation, articles of incorporation, certificate of formation, certificate of limited partnership, by-laws, operating agreement, limited liability company agreement, limited partnership agreement or other similar governance document of such Person.

 

Governmental Authoritymeans the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantor Payment” has the meaning set forth in Section 2.12(f)(i).

 

Guaranty” or “Guarantied”, as applied to any Indebtedness, liability or other obligation, means (a) a guaranty, directly or indirectly, in any manner, including by way of endorsement (other than endorsements of negotiable instruments for collection in the Ordinary Course of Business), of any part or all of such Indebtedness, liability or obligation and (b) an agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or intended to assure, the payment or performance (or payment of damages in the event of non-performance) of any part or all of such Indebtedness, liability or obligation by any means (including the purchase of securities or obligations, the purchase or sale of property or services or the supplying of funds).

 

Indebtednessmeans (without duplication), with respect to any Person, (a) all obligations or liabilities of such Person, contingent or otherwise, for borrowed money, (b) all obligations of such Person represented by promissory notes, bonds, debentures or the like, or on which interest charges are customarily paid, (c) all liabilities secured by any Lien on such Person’s property owned or acquired, whether or not such liability shall have been assumed by such Person, (d) all obligations of such Person under conditional sale or other title-retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade payables which are not ninety (90) days past the invoice date incurred in the Ordinary Course of Business, but including the maximum potential amount payable under any earn-out or similar obligations), (f) all Capitalized Leases of such Person, (g) all obligations (contingent or otherwise) of such Person as an account party or applicant in respect of letters of credit and bankers’ acceptances or in respect of financial or other hedging obligations, (h) all equity interests issued by such Person subject to repurchase or redemption at any time on or prior to the Scheduled Maturity Date (valued at, in the case of redeemable preferred equity interests, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such equity interests plus accrued and unpaid dividends), other than voluntary repurchases or redemptions that are at the sole option of such Person, (i) all principal outstanding under any synthetic lease, off-balance sheet loan or similar financing product of such Person and (j) all Guaranties, endorsements (other than for collection in the Ordinary Course of Business) and other contingent obligations of such Person in respect of the obligations of others.

 

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Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Intellectual Propertymeans the collective reference to all rights, priorities 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 and trademark licenses 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.

 

Intercreditor Agreementmeans that certain Amended and Restated Intercreditor Agreement, dated as of February 27, 2020, by and between Agent and Term Agent, and acknowledged and agreed by the Borrowers and the other Loan Party Obligors, as the same may be amended, restated, supplemented or replaced from time to time subject to the terms thereof.

 

Investment Property means the collective reference to (a) all “investment propertyas such term is defined in Section 9-102 of the UCC, (b) all “financial assets as such term is defined in Section 8-102(a)(9) of the UCC and (c) whether or not constituting “investment propertyas so defined, all Pledged Equity.

 

Issuersmeans the collective reference to each issuer of Investment Property.

 

Lendermeans each Person listed on the Commitment Schedule and any other Person that shall have become a Lender hereunder pursuant to an Assignment and Assumption, other than any such Person that ceases to be a Lender hereunder pursuant to an Assignment and Assumption. Unless the context expressly provides otherwise, “Lender” shall include the Swingline Lender.

 

LIBOR Loan means any Loan which bears interest at a rate determined by reference to the LIBOR Rate.

 

LIBOR Loanmeans, for any calendar month, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/100 of 1%) that is the greater of (a) 1.50% per annum or (b) the rate per annum, as published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as the Agent may designate from time to time), for Dollars for a one-month period as of 11:00 a.m., London time, two Business Days prior to the commencement of such calendar month (and, if any such published rate is below zero, then the rate determined pursuant to this clause (b) shall be deemed to be zero). Each determination of the LIBOR Rate shall be made by Agent and shall be conclusive in the absence of manifest error. For the sake of clarity, the LIBOR Rate shall be adjusted monthly on the first day of each month.

 

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Lienmeans any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest or other security arrangement and any other preference, priority, or preferential arrangement in the nature of a security interest of any kind or nature whatsoever, including any conditional sale contract or other title-retention agreement, the interest of a lessor under a Capitalized Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

 

Loan Account has the meaning set forth in Section 3.4.

 

Loan Documentsmeans, collectively, this Agreement and all notes, guaranties, security agreements, mortgages, certificates, landlord’s agreements, Lock Box and Blocked Account agreements, Borrowing Base Certificates, Intercreditor Agreement, the Third Lien Subordination Agreement, Compliance Certificates, the Subordinated Debt Subordination Agreement and all other agreements, documents and instruments now or hereafter executed or delivered by any Borrower, any Loan Party, or any Other Obligor in connection with, or to evidence the transactions contemplated by, this Agreement.

 

Loan Guaranty means the guaranty encompassed in Section 12.

 

Loan Limitsmeans, collectively, the Loan Limits for Revolving Loans set forth in Section 1 of Annex I and all other limits on the amount of Loans set forth in this Agreement.

 

Loan Party means Rubicon, RiverRoad, Charter, Holdings and CleanCo.

 

Loan Party Obligormeans, individually, each Borrower, Charter, Holdings and CleanCo and any Obligor that becomes a Loan Party hereafter; and “Loan Party Obligorsmeans, collectively, each Borrower and each Loan Party Obligor.

 

Loansmeans, collectively, the Revolving Loans (including any Protective Advances and Overadvances) and the Swingline Loans.

 

Lock Box has the meaning set forth in Section 6.1.

 

Material Adverse Effectmeans any event, act, omission, condition or circumstance which, which individually or in the aggregate, has or could reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets or condition, financial or otherwise, of any Loan Party or any Other Obligor, as applicable, (b) the ability of any Loan Party or any Other Obligor, as applicable, to perform any of its obligations under any of the Loan Documents, (c) the validity or enforceability of, or Agent’s and Lenders’ rights and remedies under, any of the Loan Documents, (d) the ability of Agent and Lenders to realize upon Collateral in which Agent has previously perfected a Lien or (e) the existence, perfection or priority of any security interest granted in any Loan Document and covering Collateral in which Agent has previously perfected a Lien; provided, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to any action required or permitted by this Agreement or action taken (or omitted to be taken) with the written consent of or at the written request of Agent.

 

Material Contract means has the meaning set forth in Section 7.18.

 

Maturity Date means the Scheduled Maturity Date (or, if earlier, the Termination Date), or such earlier date as (i) the Obligations may be accelerated in accordance with the terms of this Agreement (including pursuant to Section 11.2) or (ii) the Maturity Date under (and as defined in) the Term Loan Agreement shall occur.

 

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Maximum Lawful Rate has the meaning set forth in Section 3.5.

 

Maximum Liability has the meaning set forth in Section 12.9.

 

Maximum Revolving Facility Amount means the amount set forth in Section 1(a) of Annex I.

 

Merger Agreement” has the meaning set forth in the Fifth Amendment.

 

Merger Sub LLC” has the meaning set forth in the Fifth Amendment.

 

Minimum Revolving Outstanding Amount” means Revolving Loans in an aggregate principal amount equal to $25,000,000.

 

Minimum Revolver Period” means from the Third Amendment Effective Date through and including September 30, 2021.

 

Monthly Administration Fee” has the meaning set forth in Section 3.2(b).

 

Multiemployer Planmeans any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Non-Consenting Lenderhas the meaning set forth in Section 15.5(b).

 

Non-Paying Guarantorhas the meaning set forth in Section 12.10.

 

Non-U.S. Recipienthas the meaning set forth in Section 13(e)(ii).

 

Notice of Borrowinghas the meaning set forth in Section 2.3.

 

Obligationsmeans all present and future Loans, advances, debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by any Borrower or any Loan Party Obligor to Agent and Lenders, whether evidenced by this Agreement or any other Loan Document, whether arising from an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect, whether absolute or contingent, whether due or to become due and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.

 

Obligormeans any guarantor, endorser, acceptor, surety or other Person liable on, or with respect to, any of the Obligations or who is the owner of any property which is security for any of the Obligations, other than Borrower.

 

Ordinary Course of Businessmeans, in respect of any transaction involving any Person, the ordinary course of business of such Person, as conducted by such Person as of the Closing Date and, without obligation on the part of such Person to undertake such practices, any practices that are utilized to improve past practices or to conform with customary operating procedures for a similar business, as reasonably determined by such Person.

 

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Other Obligor” means any Obligor other than any Loan Party Obligor.

 

Other Taxesmeans all present or future stamp, court or documentary, property, excise, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

Outstanding Amount” means with respect to Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Loans occurring on such date.

 

Overadvanceshas the meaning set forth in Section 2.2(b).

 

Parentmeans Rubicon Technologies, LLC.

 

Participanthas the meaning set forth in Section 15.10(b).

 

Paying Guarantorhas the meaning set forth in Section 12.10.

 

PBGCmeans the Pension Benefit Guaranty Corporation.

 

Pension Actmeans the Pension Protection Act of 2006.

 

Pension Funding Rules means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA, and any sections of the Code or ERISA related thereto that are enacted after the date of this Agreement.

 

Pension Planmeans any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by a Loan Party and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

Perfection Certificate means the Perfection Certificate attached to this Agreement as of the Closing Date, together with any updates thereto as contemplated by this Agreement or otherwise permitted by Agent from time to time.

 

Periodic Term SOFR Determination Dayhas the meaning specified therefor in the definition of “Term SOFR”.

 

Permitted Acquisition” means any consensual acquisition by any Loan Party Obligor (other than asset acquisitions by Holdings), whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the equity interests of, or a business line or unit or a division of, any Person; in each case, provided:

 

(i) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such acquisition;

 

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(ii) at or prior to the closing of any such acquisition, Agent will be granted a first priority Lien (subject only to Permitted Liens) in favor of Agent in substantially all the assets(wherever located) acquired pursuant thereto constituting Collateral (including, if applicable, any equity interests of any Person being acquired), and the Loan Party Obligors, and such Person shall have executed such documents and taken such actions as may be reasonably required by Agent in connection therewith (including, without limitation, the delivery of (A) certified copies of the resolutions of the governing board of Parent, any applicable Loan Party Obligor and such Person authorizing such Permitted Acquisition and the granting of Liens described herein, (B) legal opinions, in form and substance reasonably acceptable to Agent, with respect to the transactions described herein (if required), (C) evidence of insurance of the business to be acquired consistent with the requirements of this Agreement and (D) any joinders or other agreements required pursuant to Section 5.3);

 

(iii) the Borrower Representative shall have furnished Agent with five (5) Business Days’ (or such shorter period as may be agreed by agent) prior written notice of such intended acquisition and shall have furnished Agent with a current draft of the applicable material acquisition documents (and final copies thereof as and when executed);

 

the Borrower Representative shall have furnished to Agent at least ten (10) Business Days prior to the date on which any such acquisition is to be consummated or such shorter time as Agent may allow, a certificate of a responsible officer of Borrower, in form and substance reasonably satisfactory to Agent, certifying that all of the other requirements for a Permitted Acquisition will be satisfied on or prior to the closing date of such acquisition; provided, further that no hostile takeover or non-consensual transaction shall qualify as a Permitted Acquisition.

 

Permitted Discretionmeans a determination made by Agent in good faith and in the exercise of reasonable (from the perspective of an asset-based secured lender) business judgment.

 

Permitted Equity Transfersmeans transfers of beneficial ownership interests in Parent in compliance with Parent’s Governing Documents , provided that following such transfers, current equity owners as of the Closing Date continue (i) to, directly or indirectly, own and control at least fifty-one percent (51%) of the aggregate Voting Power represented by the issued and outstanding equity interests of Parent on a fully diluted basis and (ii) to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Rubicon Technologies, Inc. or Parent and in either case to direct the management policies and decisions of Parent.

 

Permitted Indebtedness means: (a) the Obligations; (b) the Indebtedness existing on the date hereof described in Section 7 of the Perfection Certificate; in each case along with extensions, refinancings, modifications, amendments and restatements thereof; provided, that (i) the principal amount thereof is not increased, (ii) if secured by a Permitted Lien, no additional collateral beyond that existing as of the Closing Date is granted to secure such Indebtedness; (iii) if such Indebtedness is subordinated to any or all of the Obligations, the applicable subordination terms shall not be modified without the prior written consent of Agent and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party; (c) Capitalized Leases and purchase-money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $15,000,000 at any time outstanding; (d) Indebtedness incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (e) Term Debt in an aggregate principal amount not to exceed the limits set forth in the Intercreditor Agreement; (f) the Subordinated Debt owing by Borrower solely to the extent the Subordinated Debt is subject to, and permitted by, the Subordinated Debt Subordination Agreement and (g) Indebtedness incurred under the Third Lien Loan Agreement in an aggregate principal amount at any time outstanding not to exceed $20,000,000 (plus amounts capitalized to principal in accordance with the terms of the Third Lien Loan Agreement as in effect on the Third Lien Debt Incurrence Date) so long as such Indebtedness is subject to the Third Lien Subordination Agreement.

 

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Permitted Liensmeans (a) purchase-money security interests in specific items of Equipment securing Permitted Indebtedness described under clause (c) of the definition of Permitted Indebtedness; (b) Liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained provided the same have no priority over any of Agent’s security interests; (c) Liens of materialmen, mechanics, carriers, or other similar Liens arising in the Ordinary Course of Business and securing obligations which are not delinquent or are being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such Lien) for which adequate reserves in accordance with GAAP are being maintained; (d) Liens which constitute banker’s Liens, rights of set-off, or similar rights as to Deposit Accounts or other funds maintained with a bank or other financial institution (but only to the extent such banker’s Liens, rights of set-off or other rights are in respect of customary service charges relative to such Deposit Accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to any Loan Party); (e) cash deposits or pledges of an aggregate amount not to exceed $100,000 to secure the payment of worker’s compensation, unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the Ordinary Course of Business; (f) judgment Liens in respect of judgments that do not constitute an Event of Default; (g) Liens securing the Term Debt, subject to the Intercreditor Agreement, including the relative Lien priorities set forth therein; and (h) Liens securing Third Lien Obligations, subject to the terms of the Third Lien Subordination Agreement, including the relative Lien Priorities set forth therein.

 

Permitted SPAC Merger” means the merger of Merger Sub LLC with and into Holdings, provided:

 

(i) the SPAC Merger shall be consummated pursuant to and in accordance with the terms and conditions of the Merger Agreement as in effect as of the Fifth Amendment Effective Date;

 

(ii) the SPAC Merger shall constitute a Permitted Equity Transfer; and

 

(iii) Agent shall maintain a Requisite Priority Lien (subject only to Permitted Liens) in the Collateral, and in connection therewith: (A) Loan Party Obligors and Merger Sub LLC shall deliver to the Agent certified copies of the resolutions of the governing board of any applicable Loan Party Obligor and such Person authorizing such Permitted SPAC Merger; (B) Holdings shall execute and deliver a Ratification Agreement, in form and substance reasonably acceptable to the Agent, ratifying and confirming the Loan Documents in its capacity as Borrower and Loan Party Obligor; and (C) Holdings and the Agent shall have agreed to the form of a UCC 3 amendment giving effect to Holdings name change to Rubicon Technologies Holdings, LLC or such other name as agreed upon among the Loan Parties.

 

The Borrower Representative shall have furnished to Agent at least five (5) Business Days (or such shorter period as may be agreed by Agent) prior to the date on which the SPAC Merger is to be consummated or such shorter time as Agent may allow, a certificate of a responsible officer of Borrower, in form and substance reasonably satisfactory to Agent certifying that all of the other requirements for a Permitted SPAC Merger will be satisfied on or prior to the closing date of the SPAC Merger.

 

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Permitted Tax Distributions” means, with respect to any Person, for any taxable period after the Closing Date during which time such Person is a pass-through entity for income tax purposes, any dividend or distribution to any holder of such Person’s stock or other equity interests to permit such holders to pay federal income taxes and all relevant state and local income taxes at a rate equal to the highest marginal applicable tax rate for the applicable tax year, however denominated imposed as a result of taxable income allocated to such holder as a partner of such Person under federal, state, and local income tax laws, taking into account applicable deductions, losses, and credits of such Person (including, without limitation, deductions pursuant to Section 199A of the Internal Revenue Code) and allocated to such holder in proportion and to the extent of such holder’s hold stock or other equity interests of such Person.

 

Personmeans any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government or any agency or political division thereof, or any other entity.

 

Planmeans any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of any Loan Party or any such plan to which any Loan Party (or with respect to any plan subject to Section 412 of the Code or Section 302 or Title IV of ERISA, any ERISA Affiliate) is required to contribute on behalf of any of its employees.

 

Pledged Equitymeans the equity interests listed on Sections 1(f) and 1(g) of the Perfection Certificate, together with any other equity interests, certificates, options, or rights or instruments of any nature whatsoever in respect of the equity interests of any Person that may be issued or granted to, or held by, any Loan Party Obligor while this Agreement is in effect, and including, to the extent attributable to, or otherwise related to, such pledged equity interests, all of such Loan Party Obligor’s (a) interests in the profits and losses of each Issuer, (b) rights and interests to receive distributions of each Issuer’s assets and properties and (c) rights and interests, if any, to participate in the management of each Issuer related to such pledged equity interests.

 

“Pro Rata Sharemeans with respect to all matters relating to any Lender the percentage obtained by dividing (i) the Loan Commitment of that Lender by (ii) the aggregate Loan Commitments of all Lenders, in each case as any such percentages may be adjusted by assignments pursuant to an Assignment and Assumption.

 

Protective Advances has the meaning set forth in Section 2.2(a).

 

Recipientmeans any Agent, any Lender, any Participant, or any other recipient of any payment to be made by or on account of any Obligation of any Loan Party under this Agreement or any other Loan Document, as applicable.

 

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two (2) London Banking Days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by Agent in its Permitted Discretion.

 

Registerhas the meaning set forth in Section 15.9(c).

 

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Released Parties has the meaning set forth in Section 10.1.

 

Relevant Governmental Bodymeans the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.

 

Replacement Lender has the meaning set forth in Section 3.6(c).

 

Reportable Eventmeans any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

 

Required Lendersmeans at any time Lenders (other than Defaulting Lenders) then holding at least fifty-one percent (51%) of the sum of their aggregate Loan Commitment then in effect; provided, that if there are two or more Lenders, then Required Lenders shall include at least two (2) Lenders (Lenders that are Affiliates or Approved Funds of one (1) another being considered as one Lender for purposes of this proviso).

 

Reserveshas the meaning set forth in Section 2.1(b).

 

Restricted Accountsmeans Deposit Accounts (a) established and used (and at all times will be used) solely for the purpose of paying current payroll obligations of Loan Parties (and which do not (and will not at any time) contain any deposits other than those necessary to fund current payroll), in each case in the Ordinary Course of Business, or (b) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, but solely to the extent that all funds on deposit therein are solely held for the benefit of, and owned by, employees (and will continue to be so held and owned) pursuant to such plan.

 

Revolving Loan Commitment means (a) as to any Lender, the aggregate commitment of such Lender to make Revolving Loans as set forth in the Commitment Schedule or in the most recent Assignment and Assumption to which it is a party (as adjusted to reflect any assignments as permitted hereunder) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Loans, which aggregate commitment shall be in an amount equal to the Maximum Revolving Facility Amount.

 

Revolving Loans has the meaning set forth in Section 2.1(a).

 

Scheduled Maturity Datemeans the date set forth in Section 6 of Annex I.

 

Securities Actmeans the Securities of Act of 1933, as amended.

 

Settlementhas the meaning set forth in Section 2.4(c).

 

Settlement Date has the meaning set forth in Section 2.4(c).

 

SOFR” means, with respect to any Business Day means a rate per annum equal to the secured overnight financing rate for such Business Day publishedas administered by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

 

SOFR Administratormeans the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

 

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SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

SOFR Average” means the compounded average of SOFR over a rolling calendar day period of thirty (30) days published by the Federal Reserve Bank of New York (or a successor administrator of the SOFR Average)

 

SOFR Loanmeans any Loan that bears interest at a rate determined by reference to Adjusted Term SOFR (other than pursuant to clause (c) of the definition of “Base Rate”).

 

SPAC Merger” shall have the meaning set forth in the Fifth Amendment.

 

Stated Rate has the meaning set forth in Section 3.5.

 

Subordinated Debt means unsecured debt of a Loan Party that is in an amount and on terms satisfactory to Agent and is subject to the Subordinated Debt Subordination Agreement.

 

Subordinated Debt Documents means the documents approved by Agent in writing to govern the Subordinated Debt.

 

Subordinated Debt Subordination Agreement means a subordination agreement with terms and conditions satisfactory to Agent that governs the respective priority and rights of the Subordinated Debt and the Obligations and is entered into by the holders of the Subordinated Debt (or their agent), the Agent and Borrower Representative (and any other relevant Loan Parties).

 

Subsidiarymeans any corporation or other entity of which a Person owns, directly or indirectly, through one or more intermediaries, more than 50% of the capital stock or other equity interest at the time of determination. Unless the context indicates otherwise, references to a Subsidiary shall be deemed to refer to a Subsidiary of Borrower.

 

Swingline Lender means Eclipse Business Capital SPV, LLC, in its capacity as lender of Swingline Loans hereunder.

 

Swingline Loans has the meaning set forth in Section 2.4(a).

 

Taxesmeans 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 Agent means Pathlight Capital LP, as Agent and Collateral Agent for the lenders under the Term Loan Agreement, and any successor agent thereunder.

 

Term Borrowing Base means the “Borrowing Base” as defined in the Term Loan Agreement.

 

Term Debt means the “Loans” and all other “Obligations” each as defined in the Term Loan Agreement.

 

Term Lenders means the lenders under the Term Loan Agreement.

 

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Term Loan Agreementmeans (i) that certain Loan and Security Agreement, dated as of the Third Amendment Effective Date, entered into by and among Borrowers and Loan Party Obligors, the Term Lenders and Term Agent, or (ii) one or more credit agreements among Borrowers and Loan Party Obligors, and other parties from time to time party thereto pursuant to which the Indebtedness under the Loan and Security Agreement referenced in clause (i) above or Indebtedness under a subsequent loan agreement referenced in this clause (ii) has been refinanced, replaced or extended in whole or in part in accordance with the Intercreditor Agreement, in each case as the same may be amended, restated, modified and/or supplemented from time to time in accordance with the terms thereof and the Intercreditor Agreement.

 

Term Loan Documents means the Term Loan Agreement, the Intercreditor Agreement and each other Loan Document (as defined in the Term Loan Agreement (as it may be refinanced (or replaced or extended) in accordance with clause (ii) of the definition thereof)), in each case as the same may be amended, restated, modified and/or supplemented from time to time in accordance with the terms thereof and the Intercreditor Agreement.

 

Term Loan Push-Down Reserve” has the meaning set forth in the Term Loan Agreement as in effect on the Third Amendment Effective Date or as amended from time to time in accordance with the Intercreditor Agreement.

 

Term SOFR means the forward-looking term rate with a tenor of approximately one (1) month based on SOFR that has been selected or recommended by the Relevant Governmental Body.:

 

Term SOFR Notice” means a notification by Agent to the Lenders and Borrower of the occurrence of a Term SOFR Transition Event.

 

Term SOFR Transition Event” means the determination by Agent that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in the replacement of the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.6(d) with a Benchmark Replacement the Unadjusted Benchmark Replacement component of which is not Term

 

(A) for any calculation for a SOFR, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, as such rate is published by the Term SOFR Administrator; provided, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for a tenor of one month has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for a tenor of one month as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for a tenor of one month was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day; and

 

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(B) for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day, as such rate is published by the Term SOFR Administrator; provided, that if as of 5:00 p.m. (New York City time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for a tenor of one month has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for a tenor of one month as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for a tenor of one month was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day.

 

Term SOFR Adjustment” means a percentage equal to 0.11448% (11.448 basis points) per annum.

 

Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by Agent in its reasonable discretion).

 

Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.

 

Termination Datemeans the date on which all of the Obligations have been paid in full in cash and all of Agent and Lenders’ lending commitments under this Agreement and under each of the other Loan Documents have been terminated.

 

Third Amendment Effective Date” means March 24, 2021.

 

Third Lien Agent means Mizzen Capital, LP, in its capacity as “Agent” under (and as defined in) the Third Loan Agreement, and any of its successors in such capacity.

 

Third Lien Debt Incurrence Date” means the date on which all of the following conditions are satisfied: (a) the Third Lien Subordination Agreement shall have been executed by the parties thereto, (b) the Agent and the Term Agent shall have confirmed in writing that each such Person is satisfied with the form and substance (including all terms and conditions) of the Third Lien Loan Agreement and other Third Lien Loan Documents, and the Third Lien Loan Agreement and other Third Lien Loan Documents shall have been executed by the parties thereto, and (c) the Third Lien Lenders shall have funded the loans pursuant to the Third Lien Loan Agreement.

 

Third Lien Lender” means each “Lender” under (and as defined in) the Third Lien Loan Agreement.

 

Third Lien Loan Agreement” means the subordinated term loan agreement dated as of the Third Lien Debt Incurrence Date by and among the Loan Party Obligors, the Third Lien Lenders and the Third Lien Agent, in form and substance (including all terms and conditions) satisfactory to the Agent.

 

Third Lien Loan Documents” means the “Loan Documents”, or other similar definition of the same effect, as defined in the Third Lien Loan Agreement as in effect on the Third Lien Debt Incurrence Date or as amended from time to time in accordance with the Third Lien Subordination Agreement.

 

Third Lien Obligations” means the “Obligations”, or other similar definition of the same effect as defined in the Third Lien Loan Agreement as in effect on the Third Lien Debt Incurrence Date or as amended from time to time in accordance with the Third Lien Subordination Agreement.

 

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Third Lien Subordination Agreement” means that certain Subordination and Intercreditor Agreement, dated as of the Third Lien Debt Incurrence Date, by and between, Agent, Term Agent and the Third Lien Agent and acknowledged by the Loan Party Obligors, and shall also include any replacement subordination agreement entered into in accordance with the terms thereof, in each case in form and substance (including all terms and conditions) satisfactory to the Agent.

 

UCCmeans, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of New York or other applicable jurisdiction.

 

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

“Unbilled Accounts Sublimit” means $35,000,000 through and including April 30, 2021 and thereafter $32,500,000.

 

Unbilled Accounts Advance Rate” means the advance rate set forth in Section 1(b)(ii) of Annex I.

 

Uniform Electronic Transactions Act” means that certain Uniform Electronic Transactions Act published by the Uniform Law Commission in 1999 giving electronic signatures the same effect as traditional handwritten signatures under the statute of frauds.

 

Unused Line Amountmeans an amount equal to (A) the Maximum Revolving Facility Amount, calculated without giving effect to any Reserves (including, without limitation, the Term Loan Push-Down Reserve) applied to the Maximum Revolving Facility Amount, minus (B) the average daily outstanding principal balance of the Revolving Loans for such period.

 

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

Unused Line Fee” has the meaning set forth in Section 3.2(c).

 

USD LIBOR means the London interbank offered rate for Dollars with a tenor of one (1) month

 

U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association (or any successor thereto) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

Voting Power” means, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person. The holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or similar governing body of such Person.

 

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1.2. Accounting Terms and Determinations.

 

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and either Borrower Representative or Agent shall so request, Required Lenders and Borrower Representative shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower Representative shall provide to Agent and Lenders financial statements and other documents required under this Agreement and the other Loan Documents which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (Codification of Accounting Standards 825-10) to value any Indebtedness or other liabilities of any Loan Party at “fair value”, as defined therein.

 

Notwithstanding anything to the contrary contained in the paragraph above or the definitions of Capital Expenditures or Capitalized Leases, in the event of a change in GAAP after the Closing Date requiring all leases to be capitalized, only those leases (assuming for purposes of this paragraph that they were in existence on the Closing Date) that would constitute Capitalized Leases on the Closing Date shall be considered Capitalized Leases (and all other such leases shall constitute operating leases) and all calculations and deliverables under this Agreement or the other Loan Documents shall be made in accordance therewith (other than the financial statements delivered pursuant to this Agreement; provided that all such financial statements delivered to Agent and Lenders in accordance with the terms of this Agreement after the date of such change in GAAP shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such change).

 

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1.3. Rates. The interest rate on LIBOR Loans and Base Rate Loans (when determined by reference to clause (b) of the definition of Base Rate) may be determined by reference to the LIBOR Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, ICE Benchmark Administration (“IBA”), the administrator of the London interbank offered rate, and the Financial Conduct Authority (the “FCA”), the regulatory supervisor of IBA, announced in public statements (the “Announcements”) that the final publication or representativeness date for the London interbank offered rate for Dollars for: (a) 1-week and 2-month tenor settings will be December 31, 2021 and (b) overnight, 1-month, 3-month, 6-month and 12-month tenor settings will be June 30, 2023. No successor administrator for IBA was identified in such Announcements. As a result, it is possible that immediately after such dates, the London interbank offered rate for such tenors may no longer be available or may no longer be deemed a representative reference rate upon which to determine the interest rate on LIBOR Loans or Base Rate Loans (when determined by reference to clause (b) of the definition of Base Rate). There is no assurance that the dates set forth in the Announcements will not change or that IBA or the FCA will not take further action that could impact the availability, composition or characteristics of any London interbank offered rate. Public and private sector industry initiatives have been and continue, as of the date hereof, to be underway to implement new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate or any other then-current Benchmark is no longer available or in certain other circumstances set forth in Section 3.6, such Section 3.6 provides a mechanism for determining an alternative rate of interest. Agent will notify Borrower Representative, pursuant to Section 3.6, of any change to the reference rate upon which the interest rate on LIBOR Loans and Base Rate Loans (when determined by reference to clause (b) of the definition of Base Rate) is based. However, Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (ia) the continuation of, administration of, submission of, calculation of or any other matter related to the London interbank offered rateTerm SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark, any component definition thereof or rates referred to in the definition of “LIBOR Rate”thereof, or with respect to any alternative, successor, or replacement rate thereto (including any then-current Benchmark or any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 3.6 (d), will be similar to, or produce the same value or economic equivalence of, the LIBOR Rate or any other Benchmark, or have the same volume or liquidity as did, the London interbank offered rateTerm SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark, prior to its discontinuance or unavailability, or (iib) the effect, implementation or composition of any Benchmark Replacement Conforming Changes. Agent and its Affiliatesaffiliates or other related entities may engage in transactions that affect the calculation of a Benchmarkthe Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to Borrowers and Loan Partiesa Borrower. Agent may select information sources or services in its reasonable discretion to ascertain anythe Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any other Benchmark, any component definition thereof or rates referencedreferred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to any Borrower, Loan Party, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

 

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1.4. Other Definitional Provisions and References.

 

References in this Agreement to “Articles, “Sections, “Annexes, “Exhibits or Schedulesshall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. Include, “includes and “including shall be deemed to be followed by “without limitation. “Or shall be construed to mean “and/or. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References “from or “throughany date mean, unless otherwise specified, “from and including or “through and including, respectively. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds. Time is of the essence for each performance obligation of the Loan Parties under this Agreement and each Loan Document. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any agreement, instrument or document (a) shall include all schedules, exhibits, annexes and other attachments thereto and (b) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document). The words “assetand “property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise specified herein Dollar ($) baskets set forth in the representations and warranty, covenants and event of default provisions of this Agreement (and other similar baskets) are calculated as of each date of measurement by the Dollar Equivalent Amount thereof as of such date of measurement. Reference to a Loan Party’s “knowledge” or similar concept means actual knowledge of a senior officer, or knowledge that a senior officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.

 

2. LOANS.

 

2.1. Amount of Loans.

 

(a) Revolving Loans. Subject to the terms and conditions of this Agreement, each Lender with a Revolving Loan Commitment will severally (and not jointly), from time to time prior to the Maturity Date, at Borrower Representative’s request, make revolving loans to Borrowers (Revolving Loans); provided, that after giving effect to each such Revolving Loan, (A) the outstanding balance of all Revolving Loans plus fees and expenses which are due and payable by Borrower under this Agreement but which have not been paid or charged to the Loan Account will not exceed the lesser of (x) the Maximum Revolving Facility Amount minus the amount of Reserves (including, without limitation, the Term Loan Push-Down Reserve) established against the Maximum Revolving Facility Amount and (y) the Borrowing Base, (B) the sum of each Lender’s outstanding balance of Revolving Loans will not exceed such Lender’s Revolving Loan Commitment and (C) none of the other Loan Limits for Revolving Loans will be exceeded. All Revolving Loans shall be made in and repayable in Dollars.

 

(b) Reserves. Agent may, with or without notice to Borrower Representative, from time to time establish and revise reserves against the Borrowing Base and the Maximum Revolving Facility Amount in such amounts and of such types as Agent deems appropriate in its Permitted Discretion (Reserves) to reflect (i) events, conditions, contingencies or risks which affect or may affect (A) the Collateral or its value, or the enforceability, perfection or priority of the security interests and other rights of Agent in the Collateral or (B) the assets, business or prospects of any Borrower or any Loan Party Obligor (including the Dilution Reserve), (ii) Agent’s good faith concern that any Collateral report or financial information furnished by or on behalf of any Borrower or any Loan Party Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect, (iii) any fact or circumstance which Agent determines in good faith constitutes, or could constitute, a Default or Event of Default, or (iv) any other events or circumstances which Agent determines in good faith make the establishment or revision of a Reserve prudent. In no event shall the establishment of a Reserve in respect of a particular actual or contingent liability obligate Agent to make advances to pay such liability or otherwise obligate Agent with respect thereto.

 

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(c) Minimum Revolving Outstanding Amount. During the Minimum Revolver Period, Borrowers shall maintain an Outstanding Amount of Revolving Loans in a minimum principal amount equal to the Minimum Revolving Outstanding Amount at all times. During the Minimum Revolver Period, Borrowers shall not be permitted to voluntarily prepay the Revolving Loans if any such prepayment would result in the Outstanding Amount of the Revolving Loans being less than the Minimum Revolving Outstanding Amount. Notwithstanding the foregoing two sentences, however, Borrower shall be required to repay the Revolving Loans if and to the extent such repayment is required under Section 2.5, even if such prepayment would result in the Outstanding Amount of Revolving Loans falling below the Minimum Revolving Outstanding Amount; provided that Borrowers shall re-borrow an amount sufficient to comply with this Section 2.1(c) as soon as they may do so pursuant to Section 2.1(a).

 

2.2. Protective Advances; Overadvances.

 

(a) Notwithstanding any contrary provision of this Agreement or any other Loan Document, at any time (i) after the occurrence and during the continuance of a Default or Event of Default or (ii) that any of the other applicable conditions precedent set forth in Section 4 or otherwise are not satisfied, Agent is authorized by each Borrower and each Lender, from time to time, in Agent’s sole discretion, to make such Revolving Loans to, or for the benefit of, any Borrower, as Agent in its sole discretion deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (the Revolving Loans described in this Section 2.2 shall be referred to as “Protective Advances). Notwithstanding any contrary provision of this Agreement or any other Loan Document, Agent may disburse the proceeds of any Protective Advance to any Borrower or to such other Person(s) as Agent determines in its sole discretion. All Protective Advances shall be payable immediately upon demand. Notwithstanding the foregoing, (i) the aggregate amount of all Protective Advances outstanding at any time shall not exceed an amount equal to ten percent (10%) of the Maximum Revolving Facility Amount and (ii) after giving effect to any such Protective Advances, the outstanding balance of all Revolving Loans will not exceed the Maximum Revolving Facility Amount.

 

(b) Notwithstanding any contrary provision of this this Agreement, at the request of Borrower Representative, Agent may in its sole discretion (but with absolutely no obligation), make Revolving Loans to any Borrower, on behalf of the Lenders with a Revolving Loan Commitment, in amounts that exceed Excess Availability (any such excess Revolving Loans are herein referred to herein, collectively, as “Overadvances”); provided, that, no Overadvance shall result in a Default due to any Borrower’s failure to comply with Section 2.1(a) for so long as such Overadvance remains outstanding in accordance with the terms of this paragraph, but solely with respect to the amount of such Overadvance. Overadvances may be made even if the conditions precedent set forth in Section 4.2 have not been satisfied. The authority of Agent to make Overadvances is limited to an aggregate amount not to exceed an amount equal to ten percent (10%) of the Maximum Revolving Facility Amount at any time. No Overadvance may remain outstanding for more than thirty (30) days and no Overadvance shall cause any Lender’s outstanding balance of Revolving Loans to exceed its Revolving Loan Commitment. Required Lenders may, at any time, revoke Agent’s authorization to make Overadvances, provided that any such revocation must be in writing and shall become effective prospectively upon Agent’s receipt thereof.

 

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(c) Upon the making of any Protective Advance or Overadvance (whether before or after the occurrence of a Default), each Lender with a Revolving Loan Commitment shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from Agent, without recourse or warranty, an undivided interest and participation in such Protective Advance or Overadvance, as applicable, in proportion to its Pro Rata Share of the Revolving Loan Commitment. Agent may, at any time, require the applicable Lenders to fund their participations. From and after the date, if any, on which any Lender is required to fund its participation in any Protective Advance or Overadvance, as applicable, purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by such Agent in respect of such Loan. Each Lender acknowledges and agrees that (i) Agent may elect to fund a Protective Advance or Overadvance through one or more of its Affiliates (including, without limitation, Eclipse Business Capital SPV, LLC) on behalf of Agent for administrative convenience and (ii) any such funding shall constitute a Protective Advance or Overadvance, as applicable, as if made by Agent subject to the terms and conditions of this Agreement.

 

2.3. Notice of Borrowing; Manner of Revolving Loan Borrowing.

 

(a) Borrower Representative shall request each Revolving Loan by submitting such request by ABLSoft (or, if requested by Agent, by delivering, in writing or by an Approved Electronic Communication, a Notice of Borrowing substantially in the form of Exhibit A hereto) (each such request a “Notice of Borrowing). Subject to the terms and conditions of this Agreement, Agent shall, except as provided in Section 2.2, deliver the amount of the Revolving Loan requested in the Notice of Borrowing for credit to any account of Borrower as Borrower Representative may specify at a bank acceptable to Agent (provided, that such account must be one identified on Section 3 of the Perfection Certificate and approved by Agent as an account to be used for funding of Loan proceeds) (any such account, a “Funding Account”) by wire transfer of immediately available funds (i) on the same day if the Notice of Borrowing is received by Agent on or before 10:00 a.m. Central Time on a Business Day or (ii) on the immediately following Business Day if the Notice of Borrowing is received by Agent after 10:00 a.m. Central Time on a Business Day or on a day that is not a Business Day. Agent shall charge to the Revolving Loan Agent’s usual and customary fees for the wire transfer of each Loan.

 

(b) Promptly following receipt of a Notice of Borrowing in accordance with this Section, Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Revolving Loan to be made as part of the requested borrowing. Each Lender shall make each Revolving Loan to be made by such Lender hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 p.m., Central Time, to the account of Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Pro Rata Share. Unless Agent shall have received notice from a Lender prior to the proposed date of any borrowing that such Lender will not make available to Agent such Lender’s share of such borrowing, Agent may assume that such Lender has made (or will make) such share available on such date in accordance with this Section and may, in reliance upon such assumption, make available to Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable borrowing available to Agent, then the applicable Lender and Borrowers severally agree to pay to Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrowers to but excluding the date of payment to Agent, at the interest rate applicable to such Revolving Loans. If such Lender pays such amount to Agent, then such amount shall constitute such Lender’s Revolving Loan included in such borrowing.

 

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2.4. Swingline Loans.

 

(a) Agent, Swingline Lender and the Lenders agree that in order to facilitate the administration of this Agreement and the other Loan Documents, promptly after Borrower Representative requests a Revolving Loan, the Swingline Lender may elect to have the terms of this Section 2.4 apply to such borrowing request by advancing, on behalf of the Lenders with a Revolving Loan Commitment and in the amount requested, same day funds to Borrowers (each such Loan made solely by the Swingline Lender pursuant to this Section 2.4 is referred to in this Agreement as a “Swingline Loan”), with settlement among them as to the Swingline Loans to take place on a periodic basis as set forth in Section 2.4(c). Each Borrower hereby authorizes the Swingline Lender to, and Swingline Lender shall, subject to the terms and conditions set forth herein (but without any further written notice required), deliver the amount of the Swingline Loan requested to the applicable Funding Account (i) on the same day if the Notice of Borrowing is received by Agent on or before 10:00 a.m. Central Time on a Business Day or (ii) on the immediately following Business Day if the Notice of Borrowing is received by Agent after 10:00 a.m. Central Time on a Business Day or on a day that is not a Business Day. The aggregate amount of Swingline Loans outstanding at any time shall not exceed $10,000,000. Swingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds Excess Availability (before giving effect to such Swingline Loan).

 

(b) Upon the making of a Swingline Loan (whether before or after the occurrence of a Default and regardless of whether a Settlement has been requested with respect to such Swingline Loan), each Lender with a Revolving Loan Commitment shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Swingline Lender, without recourse or warranty, an undivided interest and participation in such Swingline Loan in proportion to its Pro Rata Share of the Revolving Loan Commitment. The Swingline Lender may, at any time, require the applicable Lenders to fund their participations. From and after the date, if any, on which any Lender is required to fund its participation in any Swingline Loan purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by such Agent in respect of such Loan.

 

(c) Agent, on behalf of Swingline Lender, shall request settlement (a “Settlement”) with respect to Swingline Loans with the Lenders holding a Revolving Loan Commitment on at least a weekly basis or on any date that Agent elects, by notifying the applicable Lenders of such requested Settlement by facsimile, telephone, or e-mail no later than noon, Chicago time on the date of such requested Settlement (the “Settlement Date”). Each applicable Lender (other than the Swingline Lender) shall transfer the amount of such Lender’s Pro Rata Share of the outstanding principal amount of the Swingline Loan with respect to which Settlement is requested to Agent, to such account of Agent as Agent may designate, not later than 2:00 p.m., Chicago time, on such Settlement Date. Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth in Section 4.2 have then been satisfied. Such amounts transferred to Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together with such Swingline Lender’s Pro Rata Share of such Swingline Loan, shall constitute Revolving Loans of such Lenders, respectively. If any such amount is not transferred to Agent by any applicable Lender on such Settlement Date, the Swingline Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon.

 

2.5. Repayments.

 

(a) Revolving Loans. If at any time for any reason whatsoever (including as a result of currency fluctuations) (i) the outstanding balance of all Revolving Loans exceeds the lesser of (x) the Maximum Revolving Facility Amount and (y) the Borrowing Base or (ii) any of the Loan Limits for Revolving Loans are exceeded, then, in each case, Borrowers will immediately pay to Agent such amounts as shall cause Borrowers to eliminate such excess.

 

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(b) Reserved.

 

(c) Maturity Date Payments. All remaining outstanding monetary Obligations (including, all accrued and unpaid fees described in Section 3.2) shall be payable in full on the Maturity Date.

 

2.6. Prepayments / Voluntary Termination / Application of Prepayments.

 

(a) Reserved.

 

(b) Reserved.

 

(c) Reserved.

 

(d) Voluntary Termination of Loan Facilities. Borrower Representative may, on at least thirty (30) days prior written notice received by Agent, permanently terminate the Loan facilities by repaying all of the outstanding Obligations, including all principal, interest and fees with respect to the Revolving Loans, and an Early Payment/Termination Premium in the amount specified in Section 3.2(e). From and after such Termination Date, Agent shall have no obligation whatsoever to extend any additional Loans, and all of its lending Commitments hereunder shall be terminated.

 

(e) Reserved.

 

2.7. Obligations Unconditional.

 

(a) The payment and performance of all Obligations shall constitute the absolute and unconditional obligations of each Loan Party Obligor, and shall be independent of any defense or right of set-off, recoupment or counterclaim that any Loan Party Obligor or any other Person might otherwise have against Agent, any Lender or any other Person. All payments required by this Agreement or the other Loan Documents shall be made in Dollars (unless payment in a different currency is expressly provided otherwise in the applicable Loan Document) and paid free of any deductions or withholdings for any taxes or other amounts and without abatement, diminution or set-off. If any Loan Party Obligor is required by applicable law to make such a deduction or withholding from a payment under this Agreement or under any other Loan Document, such Loan Party Obligor shall pay to Agent such additional amount as shall be necessary to ensure that, after the making of such deduction or withholding, Agent receives (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made. Each Loan Party Obligor shall (a) pay the full amount of any deduction or withholding that it is required to make by law, to the relevant authority within the payment period set by applicable law and (b) promptly after any such payment, deliver to Agent an original (or certified copy) official receipt issued by the relevant authority in respect of the amount withheld or deducted or, if the relevant authority does not issue such official receipts, such other evidence of payment of the amount withheld or deducted as is reasonably acceptable to Agent.

 

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(b) If, at any time and from time to time after the Closing Date (or at any time before or after the Closing Date with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith), (a) any change in any existing law, regulation, treaty or directive or in the interpretation or application thereof, (b) any new law, regulation, treaty or directive enacted or application thereof or (c) compliance by Agent with any request or directive (whether or not having the force of law) from any Governmental Authority, central bank or comparable agency (i) subjects Agent or any Lender to any tax, levy, impost, deduction, assessment, charge or withholding of any kind whatsoever with respect to any Loan Document, or changes the basis of taxation of payments to Agent or any Lender of any amount payable thereunder (except for net income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by federal, state, local or other taxing authorities with respect to interest or fees payable hereunder or under any other Loan Document or changes in the rate of tax on the overall net income of Agent, any Lender or their respective members) or (ii) imposes, modifies or deems applicable any reserve (including any reserve imposed by the FRB, but excluding any reserve included in the determination of the LIBOR RateAdjusted Term SOFR), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Agent or any Lender or imposes on Agent or any Lender any other condition affecting its LIBORSOFR Loans or its obligation to make LIBORSOFR Loans, the result of which is to increase the cost to (or to impose a cost on) Agent or any Lender of making or maintaining any LIBORSOFR Loan or (iii) imposes on Agent or any Lender any other condition or increased cost in connection with the transactions contemplated thereby or participations therein, and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or continuing any Loan or to reduce any amount receivable hereunder or under any other Loan Documents, then, in each such case, Borrowers shall promptly pay to Agent or such Lender, when notified to do so by Agent or such Lender, any additional amounts necessary to compensate Agent or such Lender, on an after-tax basis, for such additional cost or reduced amount as determined by Agent or such Lender, but only to the extent such amounts relate to this Agreement or the Loan Documents. Each such notice of additional amounts payable pursuant to this Section 2.7(b) submitted by Agent or any Lender, as applicable, to Borrower Representative shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(c) This Section 2.7 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

2.8. Reversal of Payments. To the extent that any payment or payments made to or received by Agent or any Lender pursuant to this Agreement or any other Loan Document are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to any trustee, receiver or other Person under any state, federal or other bankruptcy or other such applicable law, then, to the extent thereof, such amounts (and all Liens, rights and remedies relating thereto) shall be revived as Obligations (secured by all such Liens) and continue in full force and effect under this Agreement and under the other Loan Documents as if such payment or payments had not been received by Agent or such Lender. This Section 2.8 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

2.9. Notes. The Loans and Commitments shall, at the request of any Lender, be evidenced by one or more promissory notes in form and substance reasonably satisfactory to such Lender. However, if such Loans are not so evidenced, such Loans may be evidenced solely by entries upon the books and records maintained by Agent.

 

2.10. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a) Unused Line Fees pursuant to Section 3.2(c) shall cease to accrue on the unfunded portion of the Revolving Loan Commitment of such Defaulting Lender.

 

(b) Any amount payable to a Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Lender, be retained by Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to Agent hereunder, (ii) second, to the funding of any Revolving Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent, (iii) third, if so determined by Agent and Borrowers, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment of any amounts owing to Borrowers or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by Borrowers or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (v) fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided, that if such payment is made at a time when the conditions set forth in Section 4.2 are satisfied, such payment shall be applied solely to prepay the Loans of all Revolving Lenders that are not Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, any Defaulting Lender.

 

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(c) No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver, consent or any other action the Lenders or the Required Lenders have taken or may take hereunder, provided that any waiver, amendment or modification requiring the consent of all Lenders or each directly affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

2.11. Appointment of Borrower Representative.

 

(a) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent and attorney-in-fact to request and receive Loans in the name or on behalf of such Borrower and any other Borrowers, deliver Notices of Borrowing, and Borrowing Base Certificates, give instructions with respect to the disbursement of the proceeds of the Loans, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) in the name or on behalf of any Borrower or Borrowers pursuant to this Agreement and the other Loan Documents. Lender may disburse the Loans to such bank account of Borrower Representative or a Borrower or otherwise make such Loans to a Borrower, in each case as Borrower Representative may designate or direct, without notice to any other Borrower. Notwithstanding anything to the contrary contained herein, Lender may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

 

(b) Borrower Representative hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 2.11. Borrower Representative shall ensure that the disbursement of any Loans that are at any time requested by or to be remitted to or for the account of a Borrower requested on behalf of a Borrower hereunder, shall be remitted or issued to or for the account of such Borrower.

 

(c) Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent to receive statements on account and all other notices from Lender with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

 

(d) Any notice, election, representation, warranty, agreement or undertaking made or delivered by or on behalf of any Borrower by Borrower Representative shall be deemed for all purposes to have been made or delivered by such Borrower, as the case may be, and shall be binding upon and enforceable against such Borrower to the same extent as if made or delivered directly by such Borrower.

 

(e) No resignation by or termination of the appointment of Borrower Representative as agent and attorney-in-fact as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to Agent. If the Borrower Representative resigns under this Agreement, Borrowers shall be entitled to appoint a successor Borrower Representative (which shall be a Borrower and shall be reasonably acceptable to Agent as such successor). Upon the acceptance of its appointment as successor Borrower Representative hereunder, such successor Borrower Representative shall succeed to all the rights, powers and duties of the retiring Borrower Representative and the term “Borrower Representative” shall mean such successor Borrower Representative for all purposes of this Agreement and the other Loan Documents, and the resigning or terminated Borrower Representative’s appointment, powers and duties as Borrower Representative shall be thereupon terminated.

 

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2.12. Joint and Several Liability.

 

(a) Joint and Several. Each Borrower hereby agrees that such Borrower is jointly and severally liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each other Borrower. Each Borrower agrees that its obligation hereunder shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.12 shall be absolute and unconditional, irrespective of, and unaffected by,

 

(i) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

 

(ii) the absence of any action to enforce this Agreement (including this Section 2.12) or any other Loan Document or the waiver or consent by Agent or any Lender with respect to any of the provisions thereof;

 

(iii) the existence, value or condition of, or failure to perfect Agent’s Lien against, any security for the Obligations or any action, or the absence of any action, by Agent in respect thereof (including the release of any such security);

 

(iv) the insolvency of any Loan Party or Other Obligor; or

 

(v) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

 

(b) Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent to marshal assets or to proceed in respect of the Obligations against any other Loan Party or Other Obligor, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 2.12 and such waivers, Agent and Lenders would decline to enter into this Agreement.

 

(c) Benefit of Joint and Several Obligations. Each Borrower agrees that the provisions of this Section 2.12 are for the benefit of Agent and Lenders and their successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower, Agent and any Lender, the obligations of such other Borrower under the Loan Documents.

 

(d) Subordination of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor with respect to any other Loan Party or any Other Obligor until the Obligations are indefeasibly paid in full in cash. Each Borrower acknowledges and agrees that this subordination is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 2.12, and that Agent and Lenders and their successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 2.12(d).

 

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(e) Election of Remedies. If Agent may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2.12. If, in the exercise of any of its rights and remedies, Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Agent and waives any claim based upon such action, even if such action by Agent shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent.

 

(f) Contribution with Respect to Guaranty Obligations.

 

(i) To the extent that any Borrower shall make a payment under this Section 2.12 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of the Commitments, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

(ii) As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Section 2.12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

(iii) This Section 2.12(f) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 2.12(f) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.12(a). Nothing contained in this Section 2.12(f) shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

 

(iv) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of each Borrower to which such contribution and indemnification is owing.

 

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(v) The rights of the indemnifying Borrowers against other Loan Parties under this Section 2.12(f) shall be exercisable upon the full and indefeasible payment of the Obligations and the termination of the Commitments.

 

(g) Liability Cumulative. The liability of Borrowers under this Section 2.12 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

3. INTEREST AND FEES; LOAN ACCOUNT.

 

3.1. Interest. All Loans and other monetary Obligations shall bear interest at the interest rate(s) set forth in Section 3 of Annex I, and accrued interest shall be payable (a) on the first day of each month in arrears, (b) upon a prepayment of Loan in accordance with Section 2.6 and (c) on the Maturity Date; provided, that after the occurrence and during the continuation of an Event of Default, all Loans and other monetary Obligations shall bear interest at a rate per annum equal to two (2) percentage points (2.00%) in excess of the rate otherwise applicable thereto (the “Default Rate), and all such interest shall be payable on demand. Changes in the interest rate shall be effective as of the date of any change in the Base Rate or LIBOR RateAdjusted Term SOFR, as applicable. Subject to Section 3.6 and so long as no Event of Default shall have occurred and be continuing, all Loans shall constitute LIBORSOFR Loans.

 

3.2. Fees. Borrowers shall pay Agent the following fees on the dates provided therefor, which fees are in addition to all fees and other sums payable by Borrowers or any other Person to Agent under this Agreement or under any other Loan Document and, in each case, are not refundable once paid:

 

(a) Closing Fee. A fee, for the ratable benefit of the Lenders, equal to $600,000 (the Closing Fee), which shall be deemed to be fully earned and payable as of the Closing Date.

 

(b) Monthly Administration Fee. A monthly fee, for the sole benefit of Agent, equal to $2,500 from the Closing Date through March 2019 and thereafter $4,000 (the “Monthly Administration Fee) for each month, or part thereof prior to the Termination Date. The Monthly Administration Fee shall payable on the Closing Date and monthly in advance on the first day of each month following the Closing Date.

 

(c) Unused Line Fee. An unused line fee (the “Unused Line Fee), for the ratable benefit of the Lenders, equal to the product of (i) the Applicable Unused Line Rate multiplied by (ii) the Unused Line Amount during the immediately preceding month (or part thereof), which fee shall be deemed to be fully earned and payable, in arrears, on the first day of each month until the Termination Date.

 

(d) Reserved.

 

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(e) Early Payment/Termination Premium. In the event that, for any reason (including as a result of any voluntary or mandatory prepayment of the Loans, any acceleration of the Loans resulting from an Event of Default, any foreclosure and sale of Collateral, or any sale of Collateral in any bankruptcy or insolvency proceeding), all or any portion of the Lenders’ commitment to make Revolving Loans is terminated prior to the Scheduled Maturity Date, in each case pursuant to Section 2.6(d), Section 11.2 or otherwise, then in each such case, in addition to the payment of the principal amount and all unpaid accrued interest and other amounts due thereon, Borrowers immediately shall be required to pay to Agent, for the ratable benefit of the Lenders, a premium (each, an “Early Payment/Termination Premium) (as liquidated damages and compensation for the cost of the Lenders being prepared to make funds available under this Agreement with respect to such Loans during the scheduled term of this Agreement) in an amount equal to the Applicable Percentage (as defined below) of the amount of any such Revolving Loan commitment termination, as applicable. In each such case, the “Applicable Percentageshall be (A) two percent (2.0%), if such event occurs on or before February 27, 2021, or (B) one percent (1.0%) if such event occurs after February 27, 2021 but on or before February 27, 2022 and (C) one half of one percent (0.50%) if such event occurs after February 27, 2022 but before November 27, 2022. For avoidance of doubt, no Early Payment/Termination Premium will be due and payable in the event the Loan is prepaid or terminated after November _, 2022. Each Borrower acknowledges and agrees that (x) the provisions of this paragraph shall remain in full force and effect notwithstanding any rescission by Agent of an acceleration with respect to all or any portion of the Obligations pursuant to Section 11.2 or otherwise, (y) payment of any Early Payment/Termination Premium under this paragraph constitutes liquidated damages and not a penalty and (z) the actual amount of damages to Lenders or profits lost by Lenders as a result of such early payment or termination would be impracticable and extremely difficult to ascertain, and the Early Payment/Termination Premium under this paragraph is provided by mutual agreement of Borrowers and Lenders as a reasonable estimation and calculation of such lost profits or damages of Borrowers and Lenders.

 

3.3. Computation of Interest and Fees. All interest and fees shall be calculated daily on the outstanding monetary Obligations based on the actual number of days elapsed in a year of 360 days.

 

3.4. Loan Account; Monthly Accountings. Agent shall maintain a loan account for Borrowers reflecting all outstanding Loans, along with interest accrued thereon and such other items reflected therein (the “Loan Account), and shall provide Borrower Representative with a monthly accounting reflecting the activity in the Loan Account, viewable by Borrowers on ABLSoft. Each accounting shall be deemed correct, accurate and binding on Borrowers and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Agent), unless Borrower Representative notifies Agent in writing to the contrary within thirty (30) days after such account is rendered, describing the nature of any alleged errors or omissions. However, Agent’s failure to maintain the Loan Account or to provide any such accounting shall not affect the legality or binding nature of any of the Obligations. Interest, fees and other monetary Obligations due and owing under this Agreement may, in Agent’s discretion, be charged to the Loan Account, and will thereafter be deemed to be Revolving Loans and will bear interest at the same rate as other Revolving Loans.

 

3.5. Further Obligations; Maximum Lawful Rate. With respect to all monetary Obligations for which the interest rate is not otherwise specified herein (whether such Obligations arise hereunder or under any other Loan Document, or otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time with respect to the Revolving Loans and shall be payable upon demand by Agent. In no event shall the interest charged with respect to any Loan or any other Obligation exceed the maximum amount permitted under applicable law. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable or other amounts hereunder or under any other Loan Document (the “Stated Rate) would exceed the highest rate of interest or other amount permitted under any applicable law to be charged (the “Maximum Lawful Rate), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest and other amounts payable shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the extent permitted by applicable law, continue to pay interest and such other amounts at the Maximum Lawful Rate until such time as the total interest and other such amounts received is equal to the total interest and other such amounts which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable or such other amounts payable. Thereafter, the interest rate and such other amounts payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest or other such amounts received by Agent exceed the amount which it could lawfully have received had the interest and other such amounts been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Agent has received interest or other such amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other Obligations (other than interest) payable hereunder, and if no such principal or other Obligations are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

 

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3.6. Certain Provisions Regarding LIBORSOFR Loans; Replacement of Lenders.

 

(a) Inadequate or Unfair Basis. If Agent or any Lender reasonably determines (which determination shall be binding and conclusive on Borrowers) that, by reason of circumstances affecting the interbank Eurodollar market or otherwise, adequate and reasonable means do not exist for ascertaining the applicable LIBOR RateAdjusted Term SOFR, then Agent or such Lender shall promptly notify Borrower Representative (and Agent, if applicable) thereof and, so long as such circumstances shall continue, (i) Agent and/or such Lender shall be under no obligation to make any LIBORSOFR Loans and (ii) on the last day of the current calendar month, each LIBORSOFR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

(b) Change in Law. If, after the Closing Date, any change in, or the adoption of any new, law, treaty or regulation, or any change in the interpretation of any applicable law or regulation by any Governmental Authority charged with the administration thereof, would make it (or in the good faith judgment of Agent or the applicable Lender cause a substantial question as to whether it is) unlawful for Agent or such Lender to make, maintain or fund LIBORSOFR Loans, then Agent or such Lender shall promptly notify Borrower Representative and, so long as such circumstances shall continue, (i) Agent or such Lender shall have no obligation to make any LIBORSOFR Loan and (ii) on the last day of the current calendar month for each LIBORSOFR Loan (or, in any event, on such earlier date as may be required by the relevant law, regulation or interpretation), such LIBORSOFR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

(c) If any Borrower becomes obligated to pay additional amounts to any Lender pursuant to Section 2.7(b), or any Lender gives notice of the occurrence of any circumstances described in Section 2.7(b), or if Lender becomes a Defaulting Lender, Borrowers may designate another Person engaged in the making of commercial loans in the ordinary course of business which is acceptable to Agent in its sole discretion (such other Person being called a “Replacement Lender”) to purchase the Loans and Commitments of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Assumption), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrowers hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

 

(d) Benchmark Replacement Setting.

 

(i) Benchmark Replacement.

 

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(A) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document if, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of, Agent and Borrower Representative may amend this Agreement to replace the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a)(i) or (a)(ii) of the definition of “ with a Benchmark Replacement” for. Any such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (a)(iii) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document inamendment with respect of anyto a Benchmark settingTransition Event will become effective at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan DocumentAgent has posted such proposed amendment to all affected Lenders and Borrower Representative so long as Agent has not received, by such time, written notice of objection to such Benchmark Replacementamendment from Lenders comprising the Required Lenders.

 

(B) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Term SOFR Transition Event and its related No replacement of a Benchmark with a Benchmark Replacement Date have occurredpursuant to this Section 3.6(d) will occur prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; provided that this clause (B) shall not be effective unless Agent has delivered to the Lenders and the Borrower a Term SOFR Notice. For the avoidance of doubt, Agent shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition Event and may elect or not elect to do so in its sole discretionTransition Start Date.

 

(B) (ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, Agent will in consultation with Borrowers 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 or any other Loan Document.

 

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(C) (iii) Notices; Standards for Decisions and Determinations. Agent will promptly notify Borrower Representative and the Lenders of (1) the implementation of any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event, or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date,and (2) the implementation of any Benchmark Replacement, (3) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement Conforming Changes, and(4). Agent will promptly notify Borrower Representative of the commencementremoval or conclusionreinstatement of any tenor of a Benchmark Unavailability Periodpursuant to Section 3.6(d)(i)(D). Any determination, decision or election that may be made by Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.6(d), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 3.6(d).

 

(D) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (1) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by Agent in its reasonable discretion or (II) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then Agent may modify the definition of “Term SOFR” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable, non-representative and (2) if a tenor that was removed pursuant to clause (1) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative (including a Benchmark Replacement), then Agent may modify the definition of “Term SOFR” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

(E) (iv) Benchmark Unavailability Period. Upon Borrower Representatives receipt of notice of the commencement of a Benchmark Unavailability Period, (1) Borrower Representative may revoke any pending request for a Borrowing based upon the LIBOR Rateborrowing of, conversion to or continuation of LIBOR RateSOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, Borrower Representative will be deemed to have converted any such request into a request for a Borrowingborrowing of or conversion to Base Rate Loans and (2) any outstanding affected SOFR Loans will be deemed to have been converted to Base Rate Loans at the end of the applicable calendar month. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an available tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

 

(v) London Interbank Offered Rate Benchmark Transition Event. On March 5, 2021, the IBA, the administrator of the London interbank offered rate, and the FCA, the regulatory supervisor of the IBA, made the Announcements that the final publication or representativeness date for (1) 1-week and 2-month London interbank offered rate tenor settings will be December 31, 2021 and (2) overnight, 1-month, 3-month, 6-month and 12-month London interbank offered rate tenor settings will be June 30, 2023. No successor administrator for the IBA was identified in such Announcements. The parties hereto agree and acknowledge that the Announcements resulted in the occurrence of a Benchmark Transition Event with respect to the London interbank offered rate pursuant to the terms of this Agreement and that any obligation of Agent to notify any parties of such Benchmark Transition Event pursuant to Section 3.6(d)(iii) shall be deemed satisfied

 

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(ii) No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to match fund any Obligation as to which interest accrues at Adjusted Term SOFR or the Term SOFR Reference Rate.

 

3.7. Term SOFR Conforming Changes.

 

In connection with the use or administration of Term SOFR, Agent will in consultation with Borrowers have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. Agent will promptly notify Borrower Representative and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.

 

4. CONDITIONS PRECEDENT.

 

4.1. Conditions to Initial Loans.

 

Each Lender’s obligation to fund the initial Loans under this Agreement is subject to the following conditions precedent (as well as any other conditions set forth in this Agreement or any other Loan Document), all of which must be satisfied in a manner acceptable to Agent (and as applicable, pursuant to documentation which in each case is in form and substance acceptable to Agent):

 

(a) each Loan Party Obligor shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable Persons to have duly executed and or delivered, to Agent such agreements, instruments, documents, proxies and certificates as Agent may require, including such other agreements, instruments, documents and certificates listed on the closing checklist attached hereto as Exhibit B;

 

(b) Agent shall have completed its business and legal due diligence pertaining to the Loan Parties and their respective businesses and assets, with results thereof satisfactory to Agent in its sole discretion;

 

(c) each Lender’s obligations and commitments under this Agreement shall have been approved by such Lender’s Credit Committee;

 

(d) after giving effect to such Loans, as well as to the payment of all trade payables older than sixty days past due and the consummation of all transactions contemplated hereby to occur on the Closing Date, closing costs and any book overdraft, Excess Availability shall be no less than $30,000,000;

 

(e) since December 31, 2017, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party; and

 

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(f) Borrowers shall have paid to Agent all fees due on the date hereof, and shall have paid or reimbursed Agent for all of Agent’s costs, charges and expenses incurred through the Closing Date (and in connection herewith, Borrowers hereby irrevocably authorizes Agent to charge such fees, costs, charges and expenses as Revolving Loans) provided, that Borrowers shall only be obligated to pay or reimburse Agent for legal fees in amount up to and not to exceed $30,000.

 

4.2. Conditions to all Loans. No Lender shall be obligated to fund any Loans, unless the following conditions are satisfied:

 

(a) Borrower Representative shall have provided to Agent such information as Agent may require in order to determine the Borrowing Base (including the items set forth in Section 7.15(a),

 

(b) and (c) (as applicable)), as of such borrowing or issue date, after giving effect to such Loans;

 

(b) each of the representations and warranties set forth in this Agreement and in the other Loan Documents shall be true and correct in all respects as of the date such Loan is made (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), both before and after giving effect thereto;

 

(c) no Default or Event of Default shall be in existence, both before and after giving effect thereto; and

 

(d) no event shall have occurred or circumstance shall exist that has or could reasonably be expected to have a Material Adverse Effect.

 

Each request (or deemed request) by Borrowers for funding of a Loan shall constitute a representation by each Borrower that the foregoing conditions are satisfied on the date of such request and on the date of such funding or issuance. As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it deems appropriate in connection therewith.

 

5. COLLATERAL.

 

5.1. Grant of Security Interest. To secure the full payment and performance of all of the Obligations, each Loan Party Obligor hereby assigns to Agent and grants to Agent, for itself and on behalf of the Lenders, a continuing security interest in all property of each Loan Party Obligor, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including: (a) all Accounts and all Goods whose sale, lease or other disposition by any Loan Party Obligor has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, any Loan Party Obligor; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guaranty claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory (whether or not Eligible Inventory); (d) all Goods (other than Inventory), including Equipment, vehicles, and Fixtures; (e) all Investment Property, including all rights, privileges, authority, and powers of each Loan Party Obligor as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member, equity holder or shareholder, as applicable, of each Issuer and any rights related to any Loan Party Obligors’ capital account within the Issuer in respect of Investment Property; (f) all Deposit Accounts, bank accounts, deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims including those listed in Section 2 of the Perfection Certificate (if any); (i) all Supporting Obligations; (j) all life insurance policies; (k) all leases; (l) any other property of any Loan Party Obligor now or hereafter in the possession, custody or control of Agent or any agent or any parent, Affiliate or Subsidiary of Agent, any Lender or any Participant with Lender in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (m) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property (including hazard, flood and credit insurance), and all of each Loan Party Obligor’s books and records relating to any of the foregoing and to any Loan Party’s business.

 

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5.2. Possessory Collateral. Promptly, but in any event no later than five (5) Business Days after any Loan Party Obligor’s receipt of any portion of the Collateral evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper and any Investment Property consisting of certificated securities, such Loan Party Obligor shall deliver the original thereof to Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Agent (in form and substance acceptable to Agent). If an endorsement or assignment of any such items shall not be made for any reason, Agent is hereby irrevocably authorized, as attorney and agent-in-fact (coupled with an interest) for each Loan Party Obligor, to endorse or assign the same on such Loan Party Obligor’s behalf.

 

5.3. Further Assurances. Each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as may from time to time be necessary or desirable or as Agent may from time to time require in order to (a) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (b) establish, create, preserve, protect and perfect a first priority Lien (subject only to Permitted Liens) in favor of Agent in all the Collateral (wherever located) from time to time owned by the Loan Party Obligors and in all capital stock and other equity from time to time issued by the Loan Parties (other than Parent) (including appraisals of real property in compliance with FIRREA), (c) cause Parent and each Subsidiary of Borrower to guaranty all of the Obligations, all pursuant to documentation that is in form and substance reasonably satisfactory to Agent and (d) facilitate the collection of the Collateral. Without limiting the foregoing, each Loan Party Obligor shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (or cause each other applicable Person to take, execute, acknowledge and deliver) to Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Agent, as Agent may request from time to time to perfect, protect and maintain Agent’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.

 

5.4. UCC Financing Statements. Each Loan Party Obligor authorizes Agent to file, transmit or communicate, as applicable, from time to time, UCC Financing Statements, along with amendments and modifications thereto, in all filing offices selected by Agent, listing such Loan Party Obligor as the Debtor and Agent as the Secured Party, and describing the collateral covered thereby in such manner as Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor,” or words of similar effect, in each case without such Loan Party Obligor’s signature. Each Loan Party Obligor also hereby ratifies its authorization for Agent to have filed, in any filing office, any Financing Statements filed prior to the date hereof.

 

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6. CERTAIN PROVISIONS REGARDING ACCOUNTS, COLLECTIONS AND APPLICATIONS OF PAYMENTS.

 

6.1. Lock Boxes and Blocked Accounts. Each Loan Party Obligor hereby represents and warrants that all Deposit Accounts and all other depositary and other accounts maintained by each Loan Party Obligor as of the Closing Date are described in Section 3 of the Perfection Certificate, which description includes for each such account the name of the Loan Party Obligor maintaining the account, the name of the financial institution at which the account is maintained, the account number and the purpose of the account. After the Closing Date, no Loan Party Obligor shall open any new Deposit Account or any other depositary or other account without the prior written consent of Agent and without updating Section 3 of the Perfection Certificate to reflect such Deposit Account or other account. No Deposit Account or other account of any Loan Party Obligor shall at any time constitute a Restricted Account other than accounts expressly indicated on Section 3 of the Perfection Certificate as being Restricted Accounts (and each Loan Party Obligor hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of Restricted Account to qualify as a Restricted Account). Each Loan Party Obligor will, at its expense, establish (and revise from time to time as Agent may require) procedures acceptable to Agent, in Agent’s sole discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party Obligor’s Accounts and other Collateral (Collections), which shall include (a) directing all Account Debtors to send all Account proceeds directly to a post office box designated by Agent either in the name of such Loan Party Obligor (but as to which Agent has access subject to a Control Agreement) or, at Agent’s option, in the name of Agent (a “Lock Box) and (b) depositing all Collections received by such Loan Party Obligor into one or more bank accounts maintained in the name of such Loan Party Obligor (but as to which Agent has access subject to a Control Agreement) or, at Agent’s option, in the name of Agent (each, a “Blocked Account), under an arrangement acceptable to Agent with a depository bank acceptable to Agent, pursuant to which all funds deposited into each Blocked Account are to be transferred to Agent in such manner, and with such frequency, as Agent shall specify, and/or (c) a combination of the foregoing. Each Loan Party Obligor agrees to execute, and to cause its depository banks and other account holders to execute, such Lock Box and Blocked Account control agreements and other documentation as Agent shall require from time to time in connection with the foregoing, all in form and substance acceptable to Agent, and in any event such arrangements and documents must be in place on the date hereof with respect to accounts in existence on the date hereof, or prior to any such account being opened with respect to any such account opened after the date hereof, in each case excluding Restricted Accounts. Prior to the Closing Date, Borrowers shall deliver to Agent a complete and executed Authorized Accounts form regarding each Borrower’s operating account(s) into which the proceeds of Loans are to be paid in the form of Exhibit D annexed hereto.

 

6.2. Application of Payments. All amounts paid to or received by Agent in respect of monetary Obligations, from whatever source (whether from any Borrower or any other Loan Party Obligor pursuant to such other Loan Party Obligor’s guaranty of the Obligations, any realization upon any Collateral or otherwise) shall be applied by Agent to the Obligations as follows:

 

(i) FIRST, to reimburse Agent for all out-of-pocket costs and expenses, and all indemnified losses, incurred by Agent which are reimbursable to Agent in accordance with this Agreement or any of the other Loan Documents;

 

(ii) SECOND, to any accrued but unpaid interest on any Protective Advances;

 

(iii) THIRD, to the outstanding principal of any Protective Advances;

 

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(iv) FOURTH, to any accrued but unpaid fees owing to Agent and Lenders under this Agreement and/or any other Loan Documents;

 

(v) FIFTH, to any unpaid accrued interest on the Obligations;

 

(vi) SIXTH, to the outstanding principal of the Loans; and

 

(vii) SEVENTH, to the payment of any other outstanding Obligations; and after payment in full in cash of all of the outstanding monetary Obligations, any further amounts paid to or received by Agent in respect of the Obligations (so long as no monetary Obligations are outstanding) shall be paid over to Borrowers or such other Person(s) as may be legally entitled thereto.

 

For purposes of determining the Borrowing Base, such amounts will be credited to the Loan Account and the Collateral balances to which they relate upon Agent’s receipt of an advice from Agent’s Bank (set forth in Section 5 of Annex I) that such items have been credited to Agent’s account at Agent’s Bank (or upon Agent’s deposit thereof at Agent’s Bank in the case of payments received by Agent in kind), in each case subject to final payment and collection. However, for purposes of computing interest on the Obligations, such items shall be deemed applied by Agent two (2) Business Days after Agent ‘s receipt of advice of deposit thereof at Agent’s Bank.

 

6.3. Notification; Verification. Agent or its designee may, from time to time: (a) whether or not a Default or Event of Default has occurred, verify directly with the Account Debtors of the Loan Party Obligors (or by any manner and through any medium Agent considers advisable) the validity, amount and other matters relating to the Accounts and Chattel Paper of the Loan Party Obligors, by means of mail, telephone or otherwise, either in the name of the applicable Loan Party Obligor or Agent or such other name as Agent may choose; (b) whether or not a Default or Event of Default has occurred, notify Account Debtors of the Loan Party Obligors that Agent has a security interest in the Accounts of the Loan Party Obligors and direct such Account Debtors to make payment thereof directly to Agent; each such notification to be sent on the letterhead of such Loan Party Obligor and substantially in the form of Exhibit E annexed hereto; and (c) following the occurrence and during the continuance of a Default or Event of Default, demand, collect or enforce payment of any Accounts and Chattel Paper (but without any duty to do so) and, in furtherance of the foregoing, each Loan Party Obligor hereby authorizes Account Debtors to make payments directly to Agent and to rely on notice from Agent without further inquiry. Agent may on behalf of each Loan Party Obligor endorse all items of payment received by Agent that are payable to such Loan Party Obligor for the purposes described above.

 

6.4. Power of Attorney.

 

Without limiting any of Agent’s and the other Lenders’ other rights under this Agreement or any other Loan Document, each Loan Party Obligor hereby grants to Agent an irrevocable power of attorney, coupled with an interest, authorizing and permitting Agent (acting through any of its officers, employees, attorneys or agents), at Agent’s option but without obligation, with or without notice to such Loan Party Obligor, and at each Loan Party Obligor’s expense, to do any or all of the following, in such Loan Party Obligor’s name or otherwise:

 

(a) at any time, whether or not an Event of Default has occurred or is continuing, (i) execute on behalf of such Loan Party Obligor any documents that Agent may, in its sole discretion, deem advisable in order to perfect, protect and maintain Agent’s security interests, and priority thereof, in the Collateral and to fully consummate all the transactions contemplated by this Agreement and the other Loan Documents (including such Financing Statements and continuation Financing Statements, and amendments or other modifications thereto, as Agent shall deem necessary or appropriate) and to notify Account Debtors of the Loan Party Obligors in the manner contemplated by Section 6.3, (ii) endorse such Loan Party Obligor’s name on all checks and other forms of remittances received by Agent, (iii) pay any sums required on account of such Loan Party Obligor’s taxes or to secure the release of any Liens therefor, (iv) pay any amounts necessary to obtain, or maintain in effect, any of the insurance described in Section 7.14, (v) receive and otherwise take control in any manner of any cash or non-cash items of payment or Proceeds of Collateral, (vi) receive, open and dispose of all mail addressed to such Loan Party Obligor at any post office box or lockbox maintained by Agent for such Loan Party Obligor or at any other business premises of Agent and (vii) endorse or assign to Agent on such Loan Party Obligor’s behalf any portion of Collateral evidenced by an agreement, Instrument or Document if an endorsement or assignment of any such items is not made by such Loan Party Obligor pursuant to Section 5.2; and

 

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(b) at any time, after the occurrence and during the continuance of an Event of Default, (i) execute on behalf of such Loan Party Obligor any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real or personal property which is part of the Collateral or in which Agent has an interest, (ii) execute on behalf of such Loan Party Obligor any invoices relating to any Accounts, any draft against any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of mechanic’s, materialman’s or other Lien, (iii) execute on behalf of such Loan Party Obligor any notice to any Account Debtor, (iv) pay, contest or settle any Lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same, (v) grant extensions of time to pay, compromise claims relating to, and settle Accounts, Chattel Paper and General Intangibles for less than face value and execute all releases and other documents in connection therewith, (vi) settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor, (vii) instruct any third party having custody or control of any Collateral or books or records belonging to, or relating to, such Loan Party Obligor to give Agent the same rights of access and other rights with respect thereto as Agent has under this Agreement or any other Loan Document, (viii) change the address for delivery of such Loan Party Obligor’s mail, (ix) vote any right or interest with respect to any Investment Property, and (x) instruct any Account Debtor to make all payments due to any Loan Party Obligor directly to Agent.

 

Any and all sums paid, and any and all costs, expenses, liabilities, obligations and reasonable attorneys’ fees (internal and external counsel) of Agent with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Each Loan Party Obligor agrees that Agent’s rights under the foregoing power of attorney and any of Agent’s other rights under this Agreement or the other Loan Documents shall not be construed to indicate that Agent or any Lender is in control of the business, management or properties of any Loan Party Obligor.

 

6.5. Disputes. Each Loan Party Obligor shall promptly notify Agent of all disputes or claims relating to its Accounts and Chattel Paper. Each Loan Party Obligor agrees that it will not, without Agent’s prior written consent, compromise or settle any of its Accounts or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts or Chattel Paper; except (unless otherwise directed by Agent during the existence of a Default or an Event of Default) such Loan Party Obligor may take any of such actions in the Ordinary Course of Business consistent with past practices, provided that Borrower Representative promptly reports the same to Agent.

 

6.6. Invoices. At Agent’s request, each Loan Party Obligor will cause all invoices and statements that it sends to Account Debtors or other third parties to be marked and authenticated, in a manner reasonably satisfactory to Agent, to reflect Agent’s security interest therein and payment instructions (including, but not limited to, in a manner to meet the requirements of Section 9-404(a)(2) of the UCC).

 

Reserved.

 

7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS.

 

To induce Agent and the Lenders to enter into this Agreement, each Loan Party Obligor represents, warrants and covenants as follows (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof and be deemed remade as of each date on which any Loan is made (except to the extent any such representation or warranty expressly relates only to any earlier or specified date, in which case such representation or warranty will be made as of such earlier or specified date) and (ii) shall not be affected by any knowledge of, or any investigation by, Agent or any Lender and (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date):

 

7.1. Existence and Authority. Each Loan Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdiction is identified in Section 1(a) of the Perfection Certificate) and is qualified to do business in each jurisdiction in which the operation of its business requires that it be qualified (which each such jurisdiction is identified in Section 1(a) of the Perfection Certificate) or, if such Loan Party is not so qualified, such Loan Party may cure any such failure without losing any of its rights, incurring any liens or material penalties, or otherwise affecting Agent’s rights. Each Loan Party has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby. The execution, delivery and performance by each Loan Party Obligor of this Agreement and all of the other Loan Documents to which such Loan Party Obligor is a party have been duly and validly authorized, do not violate such Loan Party Obligor’s Governing Documents or any applicable law or any material agreement or instrument or any court order which is binding upon any Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon any Loan Party or its property, and do not require the consent of any Person. No Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of any of the Loan Documents. This Agreement and each of the other Loan Documents have been duly executed and delivered by, and are enforceable against, each of the Loan Party Obligors who have signed them, in accordance with their respective terms. Section 1(f) of the Perfection Certificate sets forth the ownership of each Borrower and its Subsidiaries and, as of the Closing Date, Parent.

 

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7.2. Names; Trade Names and Styles. The name of each Loan Party Obligor set forth on Section 1(b) of the Perfection Certificate is its correct and complete legal name as of the date hereof, and except as stated in Section 1(b) of the Perfection Certificate, and no Loan Party Obligor has used any other name at any time in the past five (5) years, or at any time will use any other name, in any tax filing made in any jurisdiction. Listed in Section 1(b) of the Perfection Certificate are all prior names used by each Loan Party Obligor at any time in the past five (5) years and all of the present and prior trade names used by any Loan Party Obligor at any time in the past five (5) years. Borrower Representative shall give Agent at least thirty (30) days’ prior written notice (and will deliver an updated Section 1(b) of the Perfection Certificate to reflect the same) before it or any other Loan Party Obligor changes its legal name or does business under any other name.

 

7.3. Title to Collateral; Third Party Locations; Permitted Liens. Each Loan Party Obligor has, and at all times will continue to have, good and marketable title to all of the Collateral. The Collateral now is, and at all times will remain, free and clear of any and all Liens, except for Permitted Liens. Agent now has, and will at all times continue to have, a first priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and each Loan Party Obligor will at all times defend Agent and the Collateral against all claims of others. None of the Collateral which is Equipment is, or will at any time, be affixed to any real property in such a manner, or with such intent, as to become a fixture. Except for leases or subleases as to which Borrowers have delivered to Agent a landlord’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion; provided, that such waiver may be conditioned upon Agent establishing a rent or other similar Reserve satisfactory to Agent in its sole discretion), no Loan Party Obligor is or will be a lessee or sublessee under any real property lease or sublease. Except for warehouses as to which Borrowers have delivered to Agent a warehouseman’s waiver in form and substance reasonably satisfactory to Agent (unless waived by Agent in its sole discretion; provided, that such waiver may be conditioned upon Agent establishing a rent or other similar Reserve satisfactory to Agent in its sole discretion), no Loan Party Obligor is or will at any time be a bailor of any Goods at any warehouse or otherwise. Prior to causing or permitting any Collateral to at any time be located upon premises in which any third party (including any landlord, warehouseman, or otherwise) has an interest, Borrower Representative shall notify Agent and the applicable Loan Party Obligor shall cause each such third party to execute and deliver to Agent, in form and substance reasonably acceptable to Agent, such waivers, collateral access agreements, and subordinations as Agent shall specify, so as to, among other things, ensure that Agent’s rights in the Collateral are, and will at all times continue to be, superior to the rights of any such third party and that Agent has access to such Collateral. Each applicable Loan Party Obligor will keep at all times in full force and effect, and will comply at all times with all the terms of, any lease of real property where any of the Collateral now or in the future may be located.

 

7.4. Accounts and Chattel Paper. As of each date reported by Borrowers, all Accounts which any Borrower has then reported to Agent as then being Eligible Accounts comply in all respects with the criteria for eligibility set forth in the respective definitions of Eligible Billed Accounts and Eligible Unbilled Accounts. All such Accounts, and all Chattel Paper owned by any Loan Party Obligor, are genuine and in all respects what they purport to be, arise out of a completed, bona fide and unconditional and non-contingent sale and delivery of goods or rendition of services by a Borrower in the Ordinary Course of Business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto, each Account Debtor thereunder had the capacity to contract at the time any contract or other document giving rise to such Accounts and Chattel Paper were executed, and the transactions giving rise to such Accounts and Chattel Paper comply with all applicable laws and governmental rules and regulations.

 

7.5. Electronic Chattel Paper. To the extent that any Loan Party Obligor obtains or maintains any Electronic Chattel Paper, such Loan Party Obligor shall at all times create, store and assign the record or records comprising the Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies Agent as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Agent or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Agent, (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

 

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7.6. Capitalization; Investment Property.

 

(a) No Loan Party, directly or indirectly, owns, or shall at any time own, any capital stock or other equity interests of any other Person except as set forth in Sections 1(f) and 1(g) of the Perfection Certificate, which Sections list all Investment Property owned by each Loan Party Obligor.

 

(b) None of the Pledged Equity has been issued or otherwise transferred in violation of the Securities Act, or other applicable laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity pledged by each Loan Party Obligor hereunder constitutes all of the issued and outstanding equity interests of each Issuer owned by such Loan Party Obligor.

 

(c) All of the Pledged Equity has been duly and validly issued and is fully paid and non-assessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. There are no outstanding options, warrants or similar agreements, documents, or instruments with respect to any of the Pledged Equity.

 

(d) Each Loan Party Obligor has caused each Issuer to amend or otherwise modify its Governing Documents, books, records, and related agreements, documents and instruments, as applicable, to reflect the rights and interests of Agent hereunder, and to the extent required to enable and empower Agent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Equity and other Investment Property.

 

(e) Each Loan Party Obligor will take any and all actions required or requested by Agent, from time to time, to (i) cause Agent to obtain control of any Investment Property in a manner reasonably acceptable to Agent and (ii) obtain from any Issuers and such other Persons as Agent shall specify, for the benefit of Agent, written confirmation of Agent’s control over such Investment Property and take such other actions as Agent may request to perfect Agent’s security interest in any Investment Property. For purposes of this Section 7.6, Agent shall have control of Investment Property if (A) pursuant to Section 5.2, such Investment Property consists of certificated securities and the applicable Loan Party Obligor delivers such certificated securities to Agent (with all appropriate endorsements), (B) such Investment Property consists of uncertificated securities and either (x) the applicable Loan Party Obligor delivers such uncertificated securities to Agent or (y) the Issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with instructions originated by Agent without further consent by the applicable Loan Party Obligor and (C) such Investment Property consists of security entitlements and either (x) Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with entitlement orders originated by Agent without further consent by the applicable Loan Party Obligor. Each Loan Party Obligor that is a limited liability company or a partnership hereby represents and warrants that it has not, and at no time will, elect pursuant to the provisions of Section 8-103 of the UCC to provide that its equity interests are securities governed by Article 8 of the UCC.

 

(f) No Loan Party owns, or has any present intention of acquiring, any “margin securityor any “margin stockwithin the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called “margin securityand “margin stock). None of the proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any margin security or margin stock or for any other purpose which might constitute the transactions contemplated hereby a “purpose creditwithin the meaning of said Regulations T, U or X, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Exchange Act, or any rules or regulations promulgated under such statutes.

 

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(g) No Loan Party Obligor shall vote to enable, or take any other action to cause or to permit, any Issuer to issue any equity interests of any nature, or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any equity interests of any nature of any Issuer.

 

(h) No Loan Party Obligor shall take, or fail to take, any action that would in any manner impair the value or the enforceability of Agent’s Lien on any of the Investment Property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document with respect to any of the Investment Property.

 

(i) In the case of any Loan Party Obligor which is an Issuer, such Issuer agrees that the terms of Section 11.3(g)(iii) shall apply to such Loan Party Obligor with respect to all actions that may be required of it pursuant to such Section 11.3(g)(iii) regarding the Investment Property issued by it.

 

(j) Each Loan Party Obligor has made all capital contributions heretofore required to be made to the respective Issuer in respect of any Investment Property constituting limited liability company interests and no additional capital contributions are required to be made in respect of the respective limited liability company interests.

 

7.7. Commercial Tort Claims. No Loan Party Obligor has any Commercial Tort Claims pending other than those listed in Section 2 of the Perfection Certificate, and each Loan Party Obligor shall promptly (but in any case, no later than five (5) Business Days thereafter) notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party. Such notice shall constitute such Loan Party Obligor’s authorization to amend such Section 2 to add such Commercial Tort Claim and shall automatically be deemed to amend such Section 2 to include such Commercial Tort Claim.

 

7.8. Jurisdiction of Organization; Location of Collateral. Sections 1(c) and 1(d) of the Perfection Certificate set forth (a) each place of business of each Loan Party Obligor (including its chief executive office), (b) all locations where all Inventory, Equipment, and other Collateral owned by each Loan Party Obligor is kept and (c) whether each such Collateral location and place of business (including each Loan Party Obligor’s chief executive office) is owned by a Loan Party or leased (and if leased, specifies the complete name and notice address of each lessor). No Collateral is located outside the United States or in the possession of any lessor, bailee, warehouseman or consignee, except as expressly indicated in Sections 1(c) and 1(d) of the Perfection Certificate. Each Loan Party Obligor will give Agent at least thirty (30) days’ prior written notice before changing its jurisdiction of organization, opening any additional place of business, changing its chief executive office or the location of its books and records, or moving any of the Collateral to a location other than one of the locations set forth in Sections 1(c) and 1(d) of the Perfection Certificate, and will execute and deliver all Financing Statements, landlord waivers, collateral access agreements, mortgages, and all other agreements, instruments and documents which Agent shall require in connection therewith prior to making such change, all in form and substance reasonably satisfactory to Agent. Without the prior written consent of Agent, no Loan Party Obligor will at any time (i) change its jurisdiction of organization or (ii) allow any Collateral to be located outside of the continental United States of America.

 

7.9. Financial Statements and Reports; Solvency.

 

(a) All financial statements delivered to Agent and Lenders by or on behalf of any Loan Party have been, and at all times will be, prepared in conformity with GAAP in all material respects (except to the extent that equity expenses are not reflected in interim financial statements) and completely and fairly reflect the financial condition of each Loan Party covered thereby, at the times and for the periods therein stated, in all material respects.

 

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(b) As of the date hereof (after giving effect to the Loans to be made on the date hereof, and the consummation of the transactions contemplated hereby), and as of each other day that any Loan is made (after giving effect thereof), (i) the fair saleable value of all of the assets and properties of each Loan Party, individually, exceeds the aggregate liabilities and Indebtedness of each such Loan Party (including contingent liabilities), (ii) each Loan Party, individually, is solvent and able to pay its debts as they come due, (iii) each Loan Party, individually, has sufficient capital to carry on its business as now conducted and as proposed to be conducted, (iv) no Loan Party is contemplating either the liquidation of all or any substantial portion of its assets or property, or the filing of any petition under any state, federal, or other bankruptcy or insolvency law and (v) no Loan Party has knowledge of any Person contemplating the filing of any such petition against any Loan Party.

 

7.10. Tax Returns and Payments; Pension Contributions. Each Loan Party has timely filed all tax returns and reports required by applicable law, has timely paid all applicable Taxes, assessments, deposits and contributions owing by such Loan Party and will timely pay all such items in the future as they became due and payable. Each Loan Party may, however, defer payment of any contested taxes; provided, that such Loan Party (a) in good faith contests its obligation to pay such Taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Agent in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to keep the contested taxes from becoming a Lien upon any of the Collateral and (d) maintains adequate reserves therefor in conformity with GAAP. No Loan Party is aware of any claims or adjustments proposed for any prior tax years that could result in additional taxes becoming due and payable by any Loan Party. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable laws. Each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of each Loan Party, nothing has occurred that would prevent or cause the loss of such tax-qualified status. There are no pending or, to the best knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000 of any Loan Party. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in liabilities individually or in the aggregate of any Loan Party in excess of $100,000. No ERISA Event has occurred, and no Loan Party is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, in each case that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000. Each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, in each case except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is sixty percent (60%) or higher and no Loan Party knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below sixty percent (60%) as of the most recent valuation date. No Loan Party or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Loan Party or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000. No Pension Plan has been terminated by the plan administrator thereof or by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000.

 

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7.11. Compliance with Laws; Intellectual Property; Licenses.

 

(a) Each Loan Party has complied, and will continue at all times to comply, in all material respects with all provisions of all applicable laws and regulations, including those relating to the ownership of real or personal property, the conduct and licensing of each Loan Party’s business, the payment and withholding of Taxes, ERISA and other employee matters, and safety and environmental matters.

 

(b) No Loan Party has received written notice of default or violation, or is in default or violation, with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, local, municipal or other Governmental Authority relating to any aspect of any Loan Party’s business, affairs, properties or assets. No Loan Party has received written notice of or been charged with, or is, to the knowledge of any Loan Party, under investigation with respect to, any violation in any material respect of any provision of any applicable law.

 

(c) No Loan Party Obligor owns any Intellectual Property, except as set forth in Section 4 of the Perfection Certificate. Except as set forth in Section 4 of the Perfection Certificate, none of the Intellectual Property owned by any Loan Party Obligor is the subject of any licensing or franchise agreement pursuant to which such Loan Party Obligor is the licensor or franchisor. Each Loan Party Obligor shall promptly (but in any event within thirty (30) days thereafter) notify Agent in writing of any additional Intellectual Property rights acquired or arising after the Closing Date and shall submit to Agent a supplement to Section 4 of the Perfection Certificate to reflect such additional rights; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party Obligor shall execute a separate security agreement granting Agent a security interest in such Intellectual Property (whether owned on the Closing Date or thereafter), in form and substance reasonably acceptable to Agent and suitable for registering such security interest in such Intellectual Property with the United States Patent and Trademark Office and/or United States Copyright Office, as applicable; provided, that such Loan Party Obligor’s failure to do so shall not impair Agent’s security interest therein. Each Loan Party owns or has, and will at all times continue to own or have, the valid right to use all material patents, trademarks, copyrights, software, computer programs, equipment designs, network designs, equipment configurations, technology and other Intellectual Property used, marketed and sold in such Loan Party’s business, and each Loan Party is in compliance, and will continue at all times to comply, in all material respects with all licenses, user agreements and other such agreements regarding the use of Intellectual Property. No Loan Party has any knowledge that, or has received any notice claiming that, any of such Intellectual Property infringes upon or violates the rights of any other Person.

 

(d) Each Loan Party has and will continue at all times to have, all federal, state, local and other licenses and permits required to be maintained in connection with such Loan Party’s business operations, and all such licenses and permits are valid and in full force and effect. Each Loan Party has, and will continue at all times to have, complied with the requirements of such licenses and permits in all material respects, and has received no written notice of any pending or threatened proceedings for the suspension, termination, revocation or limitation thereof. No Loan Party is aware of any facts or conditions that could reasonably be expected to cause or permit any of such licenses or permits to be voided, revoked or withdrawn.

 

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7.12. Litigation. Section 1(e) of the Perfection Certificate discloses all claims, proceedings, litigation or investigations pending or (to the best of each Loan Party Obligor’s knowledge) threatened against any Loan Party as of the Third Amendment Effective Date. There is no claim, suit, litigation, proceeding or investigation pending or (to the best of each Loan Party Obligor’s knowledge) threatened by or against or affecting any Loan Party in any court or before any Governmental Authority (or any basis therefor known to any Loan Party Obligor) which may result, either separately or in the aggregate, in liability in excess of $100,000 for the Loan Parties, in any Material Adverse Effect, or in any material impairment in the ability of any Loan Party to carry on its business in substantially the same manner as it is now being conducted.

 

7.13. Use of Proceeds. All proceeds of all Loans shall be used by Borrowers solely (a) with respect to Loans made on the Closing Date, to repay in full certain revolving line of credit with Renasant Bank (formerly known as Brand Bank) entered into as of August 31, 2018 in the original principal amount of $15,000,000, (b) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby, (c) for Borrowers’ working capital purposes and (d) for such other purposes as specifically permitted pursuant to the terms of this Agreement. All proceeds of all Loans will be used solely for lawful business purposes.

 

7.14. Insurance.

 

(a) Each Loan Party will at all times carry property, liability and other insurance, with insurers reasonably acceptable to Agent, in such form and amounts, and with such deductibles and other provisions, as Agent shall reasonably require, but in any event, in such amounts and against such risks as is usually carried by companies engaged in similar business and owning similar properties in the same general areas in which such Loan Party operates, and each Borrower will provide Agent with evidence reasonably satisfactory to Agent that such insurance is, at all times, in full force and effect. A true and complete listing of such insurance as of the Third Amendment Effective Date, including issuers, coverages and deductibles, is set forth in Section 5 of the Perfection Certificate. Each property insurance policy shall name Agent as lender loss payee and shall contain a lender’s loss payable endorsement, each liability insurance policy shall name Agent as an additional insured, and each business interruption insurance policy shall be collaterally assigned to Agent, all in form and substance reasonably satisfactory to Agent. All policies of insurance shall provide that they may not be cancelled or changed without at least thirty (30) days’ (or, with respect to nonpayment of premiums, ten (10) days’) prior written notice to Agent, and shall otherwise be in form and substance reasonably satisfactory to Agent. Borrower Representative shall advise Agent promptly of any policy cancellation, non-renewal, reduction, or material amendment with respect to any insurance policies maintained by any Loan Party or any receipt by any Loan Party of any notice from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any of such policies, and Borrower Representative shall promptly deliver to Agent copies of all notices and related documentation received by any Loan Party in connection with the same.

 

(b) Borrower Representative shall deliver to Agent no later than fifteen (15) days prior to the expiration of any then current insurance policies, insurance certificates evidencing renewal of all such insurance policies required by this Section 7.14. Borrower Representative shall deliver to Agent, upon Agent’s request, certificates evidencing such insurance coverage in such form as Agent shall specify.

 

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(c) IF ANY LOAN PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO AGENT) OR TO PAY ANY PREMIUM RELATING THERETO, THEN AGENT, WITHOUT WAIVING OR RELEASING ANY OBLIGATION OR DEFAULT BY ANY BORROWER HEREUNDER, MAY (BUT SHALL BE UNDER NO OBLIGATION TO) OBTAIN AND MAINTAIN SUCH POLICIES OF INSURANCE AND PAY SUCH PREMIUMS AND TAKE SUCH OTHER ACTIONS WITH RESPECT THERETO AS AGENT DEEMS ADVISABLE UPON NOTICE TO BORROWER REPRESENTATIVE. SUCH INSURANCE, IF OBTAINED BY AGENT, MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S INTERESTS OR PAY ANY CLAIM MADE BY OR AGAINST ANY LOAN PARTY WITH RESPECT TO THE COLLATERAL. SUCH INSURANCE MAY BE MORE EXPENSIVE THAN THE COST OF INSURANCE ANY LOAN PARTY MAY BE ABLE TO OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY UPON THE APPLICABLE LOAN PARTY PROVIDING EVIDENCE THAT IT HAS OBTAINED THE INSURANCE AS REQUIRED ABOVE. ALL SUMS DISBURSED BY AGENT IN CONNECTION WITH ANY SUCH ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGES RELATING THERETO AND REASONABLE INTERNAL AND EXTERNAL ATTORNEY COSTS, SHALL CONSTITUTE LOANS HEREUNDER, SHALL BE PAYABLE ON DEMAND BY BORROWERS TO AGENT AND, UNTIL PAID, SHALL BEAR INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO LOANS HEREUNDER.

 

7.15. Financial, Collateral and Other Reporting / Notices. Each Loan Party has kept, and will at all times keep, adequate records and books of account with respect to its business activities and the Collateral in which proper entries are made in accordance with GAAP reflecting all its financial transactions (except for the amortization of liquidated damages which is presented in sales and marketing for internal purposes and to the extent that equity expenses are not reflected in interim financial statements). Each Loan Party Obligor will cause to be prepared and furnished to Agent, in each case in a form and in such detail as is acceptable to Agent the following items (the items to be provided under this Section 7.15 shall be delivered to Agent by posting on ABLSoft or, if requested by Agent, by another form of Approved Electronic Communication or in writing):

 

(a) Annual Financial Statements. Not later than one hundred and eighty (180) days after the close of Fiscal Year 2018 and one hundred twenty (120) days after the close of each subsequent Fiscal Year, unqualified, audited financial statements of each Loan Party as of the end of such Fiscal Year, including balance sheet, income statement, and statement of cash flow for such Fiscal Year, in each case on a consolidated and consolidating basis, certified by a firm of independent certified public accountants of recognized standing selected by Borrowers but acceptable to Agent, together with a copy of any management letter issued in connection therewith. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants and (ii) any Default or Event of Default is then in existence;

 

(b) Interim Financial Statements. Not later than thirty (30) days after the end of each month hereafter, including the last month of each Fiscal Year, unaudited interim financial statements of each Loan Party as of the end of such month and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such month and the then-elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year and the corresponding figures from the budget for the Fiscal Year covered by such financial statements, in each case on a consolidated and consolidating basis, certified by the principal financial officer of Borrower Representative as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations (including management discussion and analysis of such results) of each Loan Party for such month and period subject only to changes from ordinary course year-end audit adjustments and except that such statements need not contain footnotes. Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants, and (ii) any Default or Event of Default is then in existence;

 

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(c) Borrowing Base / Collateral Reports / Insurance Certificates / Perfection Certificates / Other Items. The items described on Annex II hereto by the respective dates set forth therein.

 

(d) Projections, Etc. Not later than ten (10) days prior to the end of each Fiscal Year, monthly business projections for the following Fiscal Year for the Loan Parties on a consolidated and consolidating basis, which projections shall include for each such period Borrowing Base and Term Borrowing Base projections, profit and loss projections, balance sheet projections, income statement projections and cash flow projections;

 

(e) Shareholder Reports, Etc. Promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which each Loan Party has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which any Loan Party files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or any national securities exchange;

 

(f) ERISA Reports. Copies of any annual report to be filed pursuant to the requirements of ERISA in connection with each Plan subject thereto promptly upon request by Agent and in addition, each Loan Party shall promptly notify Agent upon having knowledge of any ERISA Event; and

 

(g) Tax Returns. Each federal and state income tax return filed by any Loan Party or Other Obligor promptly (but in no event later than ten (10) days following the filing of such return), together with such supporting documentation as is supplied to the applicable tax authority with such return and proof of payment of any amounts owing with respect to such return.

 

(h) Notification of Certain Changes. Promptly (and in no case later than the earlier of (i) three (3) Business Days after the occurrence of any of the following and (ii) such other date that such information is required to be delivered pursuant to this Agreement or any other Loan Document) notification to Agent in writing of (A) the occurrence of any Default or Event of Default, (B) the occurrence of any event that has had, or may have, a Material Adverse Effect, (C) any change in any Loan Party’s officers or directors, (D) any investigation, action, suit, proceeding or claim (or any material development with respect to any existing investigation, action, suit, proceeding or claim) relating to any Loan Party, any officer or director of a Loan Party (in his or her capacity as an officer or director of a Loan Party), the Collateral or which may result in a Material Adverse Effect, (E) any material loss or damage to the Collateral, (F) any event or the existence of any circumstance that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, any Default, or any Event of Default, or which would make any representation or warranty previously made by any Loan Party to Agent untrue in any material respect or constitute a material breach if such representation or warranty was then being made, (G) any actual or alleged breaches of any Material Contract or termination or threat to terminate any Material Contract or any material amendment to or modification of a Material Contract, or the execution of any new Material Contract by any Loan Party and (H) any change in any Loan Party’s certified independent accountant. In the event of each such notice under this Section 7.15(h), Borrower Representative shall give notice to Agent of the action or actions that each Loan Party has taken, is taking, or proposes to take with respect to the event or events giving rise to such notice obligation.

 

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(i) Amendments to Term Loan Documents. Promptly following the occurrence of such event, any amendment, waiver, supplement, or other modification of any Term Loan Document (accompanied by a true, correct and complete copy thereof).

 

(j) Amendments to Third Lien Loan Documents. Promptly following the occurrence of such event, any amendment, waiver, supplement, or other modification of any Third Lien Loan Document (accompanied by a true, correct and complete copy thereof).

 

(k) Other Information. Promptly upon request, such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or each Loan Party’s and each Other Obligor’s business or financial condition or results of operations; and

 

(l) Notices Under Material Contracts. Promptly upon any delivery to Loan Party or any of their Subsidiaries of any material notices under any Material Contract (including any notice of default or termination or intent to terminate), a written statement describing such event, with copies of such amendments, notices or new contracts (if applicable), delivered to Agent, and a description of any actions being taken pursuant thereto.

 

(m) Notice Under Merger Agreement. Promptly upon any delivery to Loan Party or any of their Subsidiaries of any material notices under the Merger Agreement, a written statement describing such event, with copies of such notices or documents (if applicable), delivered to Agent, and a description of any actions being taken pursuant thereto.

 

7.16. Litigation Cooperation. Should any third-party suit, regulatory action, or any other judicial, administrative, or similar proceeding be instituted by or against Agent or any Lender with respect to any Collateral or in any manner relating to any Loan Party, this Agreement, any other Loan Document or the transactions contemplated hereby, each Loan Party Obligor shall, without expense to Agent or any Lender, make available each Loan Party, such Loan Party’s officers, employees and agents, and any Loan Party’s books and records, without charge, but only to the extent that Agent or such Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding, subject in all events to confidentiality obligations owed to third-parties and preservation of the lawyer-client privilege between a Loan Party and its attorneys.

 

7.17. Maintenance of Collateral, Etc. Each Loan Party Obligor will maintain all of the Collateral in good working condition, ordinary wear and tear excepted, and no Loan Party Obligor will use the Collateral for any unlawful purpose.

 

7.18. Material Contracts. Except as expressly disclosed in Section 1(h) of the Perfection Certificate as of the Third Amendment Effective Date, no Loan Party is (a) a party to any contract which has had or could reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (x) any contract to which it is a party or by which any of its assets or properties is bound, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in liabilities in excess of $100,000 or (y) any Material Contract. Except for the contracts and other agreements listed in Section 1(h) of the Perfection Certificate, no Loan Party is party, as of the Fourth Amendment Effective Date, to any (i) employment agreements covering the management of any Loan Party, (ii) collective bargaining agreements or other labor agreements covering any employees of any Loan Party, (iii) agreements for managerial, consulting or similar services to which any Loan Party is a party or by which it is bound, (iv) agreements regarding any Loan Party, its assets or operations or any investment therein to which any of its equity holders is a party, (v) patent licenses, trademark licenses, copyright licenses or other lease or license agreements to which any Loan Party is a party, either as lessor or lessee, or as licensor or licensee, (vi) distribution, marketing or supply agreements to which any Loan Party is a party, (vii) customer agreements to which any Loan Party is a party (in each case with respect to any contract of the type described in the preceding clauses (i), (iii), (iv), (v), (vi) and (vii) requiring payments by or to any Loan Party of more than $2,500,000 in the aggregate in any Fiscal Year), (viii) partnership agreements to which any Loan Party is a partner, limited liability company agreements to which any Loan Party is a member or manager, or joint venture agreements to which any Loan Party is a party, (ix) real estate leases, or (x) any Service Contract (as defined in the Intercreditor Agreement) constituting a Material Contract under the Term Loan Agreement or (xi) any other contract to which any Loan Party is a party, in each case with respect to this clause (x) the breach, nonperformance or cancellation of which, could reasonably be expected to have a Material Adverse Effect; (each such contract and agreement, described in the preceding clauses (i) to (x), a “Material Contract). The Material Contracts listed in the Perfection Certificate are in full force and effect and there are no events of defaults thereunder or any event which with notice or passage of time, or both, would constitute an event of default thereunder.

 

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7.19. No Default. No Default or Event of Default has occurred and is continuing.

 

7.20. No Material Adverse Change. Since December 31, 2017 there has been no material adverse change in the condition (financial or otherwise), business, operations, or properties of any Loan Party or any Other Obligor.

 

7.21. Full Disclosure. Excluding projections and other forward-looking information, pro forma financial information and information of a general economic or industry nature, no report, notice, certificate, information or other statement delivered or made (including, in electronic form) by or on behalf of any Loan Party, any Other Obligor or any of their respective Affiliates to Agent or Lender in connection with this Agreement or any other Loan Document contains or will at any time contain any untrue statement of a material fact, or omits or will at any time omit to state any material fact necessary to make any statements contained herein or therein not misleading. Except for matters of a general economic or political nature which do not affect any Loan Party or any Other Obligor uniquely, there is no fact presently known to any Loan Party Obligor which has not been disclosed to Agent, which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Any projections and other forward-looking information and pro forma financial information contained in such materials were prepared in good faith based upon assumptions that were believed by such Loan Party to be reasonable at the time prepared and at the time furnished in light of conditions and facts then known (it being recognized that such projections and other forward-looking information and pro forma financial information are not to be viewed as facts and that actual results during the period or periods covered by any such projections or information may differ from the projected results, and such differences may be material).

 

7.22. Sensitive Payments. No Loan Party (a) has made or will at any time make any contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the applicable laws of the United States or the jurisdiction in which made or any other applicable jurisdiction, (b) has established or maintained or will at any time establish or maintain any unrecorded fund or asset for any purpose or made any false or artificial entries on its books, (c) has made or will at any time make any payments to any Person with the intention that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment or (d) has engaged in or will at any time engage in any “trading with the enemyor other transactions violating any rules or regulations of the Office of Foreign Assets Control or any similar applicable laws, rules or regulations.

 

7.23. Parent. Parent does not and shall not at any time (a) engage in any business activities other than serving as a passive holding company for each Loan Party, (b) have any material assets other than the outstanding shares of equity interests issued by each Loan Party, (c) have any Subsidiaries other than Loan Parties or (d) have any material liabilities other than the Obligations and the Term Debt.

 

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7.24. Subordinated Debt.

 

(a) Borrower Representative has furnished Agent a true, correct and complete copy of each of the Subordinated Debt Documents. No statement or representation made in any of the Subordinated Debt Documents by any Borrower or any other Loan Party or, to any Borrower Representative’s knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect as of the time that such statement or representation is made. Each of the representations and warranties of the Loan Parties set forth in each of the Subordinated Debt Documents are true and correct in all material respects. No portion of the Subordinated Debt is, or at any time shall be, (i) secured by any assets of any of the Loan Parties or any other Person or any equity issued by any of the Loan Parties or any other Person or (ii) guarantied by any Person(except to the extent expressly permitted by the Subordinated Debt Subordination Agreement).

 

(b) The provisions of the Subordinated Debt Subordination Agreement are enforceable against each holder of the Subordinated Debt. Each Borrower and each other Loan Party Obligor acknowledges that Agent is entering into this Agreement and extending credit and making the Loans in reliance upon the Subordinated Debt Subordination Agreement and this Section 7.24. All Obligations constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Subordinated Debt Documents.

 

7.25. Access to Collateral, Books and Records. At reasonable times, Agent and its representatives or agents shall have the right to inspect the Collateral and to examine and copy each Loan Party’s books and records. Each Loan Party Obligor agrees to give Agent access to any or all of such Loan Party Obligor’s, and each of its Subsidiaries’, premises to enable Agent to conduct such inspections and examinations. Such inspections and examinations shall be at Borrowers’ expense and the charge therefor shall be $1,150 per person per day (or such higher amount as shall represent Agent’s then current standard charge), plus out-of-pocket expenses. Agent may, at Borrowers’ expense, use each Loan Party’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Agent, in its sole discretion, deems appropriate. Each Loan Party Obligor hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties; provided, however, that in no event shall this constitute or be construed as a waiver of attorney-client privilege.

 

7.26. Appraisals. Each Loan Party Obligor will permit Agent and each of its representatives or agents to conduct appraisals and valuations of the Collateral at such times and intervals as Agent may designate (including any appraisals that may be required to comply with FIRREA). Such appraisals and valuations shall be at Borrowers’ expense.

 

7.27. Lender Meetings. Upon the request of any Agent or the Required Lenders (which request, so long as no Event of Default shall have occurred and be continuing, shall not be made more than once during each fiscal quarter), participate in a telephonic meeting with the Agents and the Lenders at such time as may be agreed to by Borrower Representative and such Agent or the Required Lenders.

 

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7.28. Interrelated Businesses. Loan Parties make up a related organization of various entities constituting a single economic and business enterprise so that Loan Parties share an identity of interests such that any benefit received by any one of them benefits the others. From time to time each of the Loan Parties may render services to or for the benefit of the other Loan Parties, purchase or sell and supply goods to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other Loan Parties (including inter alia, the payment by such Loan Parties of creditors of the other Loan Parties and guarantees by such Loan Parties of indebtedness of the other Loan Parties and provides administrative, marketing, payroll and management services to or for the benefit of the other Loan Parties). Loan Parties have the same centralized accounting and legal services, certain common officers and directors and generally do not provide stand-alone consolidating financial statements to creditors.

 

7.29. Post-Closing Matters. Loan Party Obligors shall complete each of the post-closing obligations and/or provide to Agent each of the documents, instruments, agreements and information listed on Schedule 7.29 attached on or before the date set forth for each such item thereon, each of which shall be completed or provided in form and substance reasonably satisfactory to Agent. Loan Party Obligors’ failure to complete and satisfy any of the obligations under this Agreement on or before the dates indicated on Schedule 7.29, or Loan Party Obligors’ failure to deliver any of the above listed items on or before the dates on Schedule 7.29, shall constitute an Event of Default hereunder.

 

7.30. Term Debt.

 

(a) Borrowers have furnished Agent a true, correct and complete copy of each of the Term Debt Documents. The Liens securing the Term Debt and the guarantees of the Term Debt shall, in each case, be subject to the terms of the Intercreditor Agreement.

 

(b) Borrowers and each other Loan Party Obligor acknowledges that Agent is entering into this Agreement and extending credit and making the Loans in reliance upon the Intercreditor Agreement and this Section 7.30.

 

7.31. Third Lien Obligations.

 

(a) Borrowers have furnished Agent a true, correct and complete copy of each of the Third Lien Loan Documents. The Third Lien Obligations and the Liens securing the Third Lien Obligations and the guarantees of the Third Lien Obligation shall, in each case, be subject to the terms of the Third Lien Subordination Agreement.

 

(b) Borrowers and each other Loan Party Obligor acknowledges that Agent and Lenders are entering into this Fourth Amendment and extending credit and making the Loans in reliance upon the Third Lien Subordination Agreement and this Section 7.31.

 

8. NEGATIVE COVENANTS. No Loan Party Obligor shall, and no Loan Party Obligor shall permit any other Loan Party to:

 

(a) Merge with or into another Person, Divide, or consolidate with another Person, form any new Subsidiary including by any Division thereof, or acquire any interest in any Person other than (i) a Permitted Acquisition or (ii) the Permitted SPAC Merger;

 

(b) acquire all or a material portion of the assets or the business of any Person other than a Permitted Acquisition;

 

(c) acquire any assets except in the Ordinary Course of Business and as otherwise expressly permitted by this Agreement other than a Permitted Acquisition;

 

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(d) substantially change the nature of the business in which it is presently engaged or enter into any transaction outside the Ordinary Course of Business that is not expressly permitted by this Agreement;

 

(e) sell, lease, assign, transfer, return, liquidate, or dispose of any Collateral or other assets with an aggregate value in excess of $100,000 in any calendar month, except that each Loan Party may (i) sell finished goods Inventory in the Ordinary Course of Business and (ii) dispose of worn-out or surplus Equipment to the extent that such Equipment is exchanged for credit against the purchase price of similar replacement Equipment or the proceeds of such disposition are promptly applied to the purchase price of such replacement Equipment;

 

(f) make any loans to, or investments in, any Affiliate or other Person in the form of money or other assets; provided, that (i) Borrowers may make loans to and investments in its wholly-owned domestic Subsidiaries that are Loan Party Obligors and (ii) Parent may make investments in Borrowers;

 

(g) incur any Indebtedness other than the Obligations and Permitted Indebtedness;

 

(h) create, incur, assume or suffer to exist any Lien or other encumbrance of any nature whatsoever or authorize under the UCC of any jurisdiction a Financing Statement naming the Loan Party as debtor, or execute any security agreement authorizing any secured party thereunder to file such Financing Statement, other than in favor of Agent to secure the Obligations, on any of its assets whether now or hereafter owned, other than Permitted Liens;

 

(i) authorize, enter into, or execute any agreement giving a Secured Party control of a Deposit Account as contemplated by Section 9-104 of the UCC other than in favor of Agent to secure the Obligations and Term Agent to secure the Term Debt, subject to the terms of the Intercreditor Agreement;

 

(j) enter into any covenant or other agreement that restricts or is intended to restrict it from pledging or granting a security interest in, mortgaging, assigning, encumbering or otherwise creating a Lien on any of its property, whether, real or personal, tangible or intangible, existing or hereafter acquired, in favor of Agent;

 

(k) guaranty or otherwise become liable with respect to the obligations (other than the (i) Obligations (ii) the Term Debt, subject to the terms of the Intercreditor Agreement, and (iii) the Third Lien Obligations, subject to the terms of the Third Lien Subordination Agreement) of another party or entity;

 

(l) pay or distribute any dividends or other distributions on any Loan Party’s stock or other equity interest (except for dividends payable solely in capital stock or other equity interests of such Loan Party and dividends and distributions to Borrowers from a Loan Party Obligor); provided, that notwithstanding the foregoing, Borrowers may declare and accrue any distribution or dividend for members or shareholders; provided further that so long as no Default or Event of Default exists or would result therefrom, to the extent Parent is treated as a flow-through entity for federal income tax purposes, the Loan Parties and their Subsidiaries may make Permitted Tax Distributions.

 

(m) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Loan Party’s capital stock or other equity interests, except for redemptions of (i) “Incentive Units” (as defined in Parent’s Governing Documents) in an aggregate amount, for all such redemptions after the Closing Date, not to exceed $250,000, or (ii) any other “Units” (as defined in Parent’s Governing Documents) so long as no Default or Event of Default exists or would result therefrom and solely to the extent such redemptions are financed with the proceeds of equity interests of Parent or Subordinated Debt permitted under clause (e) of the definition of Permitted Indebtedness;

 

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(n) refinance any Term Debt or agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Term Loan Documents, except to the extent permitted under the Intercreditor Agreement;

 

(o) dissolve or elect to dissolve;

 

(p) engage, directly or indirectly, in a business other than the business which is being conducted on the date hereof, wind up its business operations or cease substantially all, or any material portion, of its normal business operations, or suffer any material disruption, interruption or discontinuance of a material portion of its normal business operations;

 

(q) pay any principal or other amount on any Indebtedness that is contractually subordinated to Agent in violation of the applicable subordination or intercreditor agreement;

 

(r) enter into any transaction with an Affiliate other than on arms-length terms disclosed to Agent in writing;

 

(s) change its jurisdiction of organization or enter into any transaction which has the effect of changing its jurisdiction of organization except as provided for in Section 7.8;

 

(t) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Loan Party’s Governing Documents, except for such amendments or other modifications required by applicable law or that are not materially adverse to Agent and Lenders, and then, only to the extent such amendments or other modifications are fully disclosed in writing to Agent no less than five (5) Business Days prior to being effectuated;

 

(u) enter into or assume any agreement prohibiting the creation or assumption of any Lien to secure the Obligations or any Lien upon its properties or assets, whether now owned or hereafter acquired, except (i) pursuant to the Term Loan Documents (as amended from time to time in accordance with the Intercreditor Agreement) or (ii) in connection with any document or instrument governing Liens permitted pursuant to clause (a) of the definition of Permitted Liens provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien;

 

(v) create or otherwise cause or suffer to exist or become effective any encumbrance or restriction (other than any Loan Documents, the Term Loan Documents (as amended from time to time in accordance with the Intercreditor Agreement) or the Third Lien Documents (as amended from time to time in accordance with the Third Lien Subordination Agreement)) of any kind on the ability of any such Person to pay or make any dividends or distributions to any Borrower (other than any Loan Documents, the Term Loan Documents (as amended from time to time in accordance with the Intercreditor Agreement) or the Third Lien Documents (as amended from time to time in accordance with the Third Lien Subordination Agreement)), to pay any of the Obligations, to make loans or advances or to transfer any of its property or assets to any Borrower (other than any Loan Documents, the Term Loan Documents (as amended from time to time in accordance with the Intercreditor Agreement) or the Third Lien Documents (as amended from time to time in accordance with the Third Lien Subordination Agreement)); or

 

(w) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of (i) any Subordinated Debt Document in violation of the Subordinated Debt Subordination Agreement, (ii) any Term Loan Document in violation of the Intercreditor Agreement or (iii) any Third Lien Loan Document in violation of the Third Lien Subordination Agreement.

 

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(x) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of (i) any Third Lien Loan Document in violation of the Third Lien Subordination Agreement or (ii) refinance or replace any Third Lien Obligations, except as permitted under the Third Lien Subordination Agreement, which refinancing or replacement of the Third Lien Obligations shall be subject to the Third Lien Subordination Agreement or another subordination agreement in form and substance acceptable to Agent.

 

9. FINANCIAL COVENANTS. Each Loan Party Obligor shall at all times comply with the following Financial Covenants:

 

9.1. Capital Expenditure Limitation. The Loan Parties shall not make any Capital Expenditures if, after giving effect to such Capital Expenditures, the aggregate cost of all Capital Expenditures of the Loan Parties would exceed $15,000,000 during any Fiscal Year.

 

9.2. Minimum Excess Availability. The Loan Parties shall not permit Excess Availability at any time to be less than the greater of (a) $4,000,000 and (b) 7.5% of the Borrowing Base (calculated using $0 for the Term Loan Push-Down Reserve regardless of its actual value at the time of determination).

 

10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY.

 

10.1. Release. Each Borrower and each other Loan Party Obligor on behalf of itself and its successors, assigns, heirs and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender and any and all Participants and Affiliates, and their respective successors and assigns, and their respective directors, members, managers, officers, employees, attorneys and agents, including without limitation each Agent-Related Person, and any other Person affiliated with or representing Agent or any Lender (collectively, the “Released Parties) of and from any and all liability, including all actual or potential claims, demands or causes of action of any kind, nature or description whatsoever, whether arising in law or equity or under contract or tort or under any state or federal law or otherwise, which any Borrower or any Loan Party or any of their successors, assigns or other legal representatives has had, now has or has made claim to have against any of the Released Parties for or by reason of any act, omission, matter, cause or thing whatsoever, including any liability arising from acts or omissions pertaining to the transactions contemplated by this Agreement and the other Loan Documents, whether based on errors of judgment or mistake of law or fact, from the beginning of time to and including the Closing Date, whether such claims, demands and causes of action are matured or known or unknown. Notwithstanding any provision in this Agreement to the contrary, this Section 10.1 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans. Such release is made on the date hereof and remade upon each request for a Loan by any Borrower.

 

10.2. Limitation of Liability. In no circumstance will any of the Released Parties be liable for lost profits or other special, punitive, or consequential damages. Notwithstanding any provision in this Agreement to the contrary, this Section 10.2 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

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10.3. Indemnity.

 

(a) Each Loan Party Obligor hereby agrees to indemnify the Released Parties and hold them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including internal and external attorneys’ fees), of every nature, character and description, which the Released Parties may sustain or incur based upon or arising out of any of the transactions contemplated by this Agreement or any other Loan Documents or any of the Obligations, any Collateral relating thereto, any drafts thereunder and any errors or omissions relating thereto, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Agent or any Lender relating to any Loan Party or the Obligations (except any such amounts sustained or incurred solely as the result of the gross negligence or willful misconduct of such Released Parties, as finally determined by a court of competent jurisdiction). Notwithstanding any provision in this Agreement to the contrary, this Section 10.3 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

(b) To the extent that any Loan Party Obligor fails to pay any amount required to be paid by it to Agent (or any Released Party of Agent) under paragraph (a) above, each Lender severally agrees to pay to Agent (or such Released Party), such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that any such payment by the Lenders shall not relieve any Loan Party of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred by or asserted against Agent in its capacity as such.

 

11. EVENTS OF DEFAULT AND REMEDIES.

 

11.1. Events of Default. The occurrence of any of the following events shall constitute an Event of Default:

 

(a) Payment. If any Loan Party Obligor or any Other Obligor fails to pay to Agent, when due, any principal or interest payment or any other monetary Obligation required under this Agreement or any other Loan Document;

 

(b) Breaches of Representations and Warranties. If any warranty, representation, statement, report or certificate made or delivered to Agent or any Lender by or on behalf of any Loan Party or any Other Obligor is untrue or misleading in any material respect (except where such warranty or representation is already qualified by Material Adverse Effect, materiality, dollar thresholds or similar qualifications, in which case such warranty or representation shall be accurate in all respects);

 

(c) Breaches of Covenants.

 

(i) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in Section 5.2, 6.1, 6.6, 6.7, 7.2 (limited to the last sentence of Section 7.2), 7.3, 7.7, 7.8, 7.11(c), 7.13, 7.14, 7.15, 7.24, 7.25, 7.29, 8 or 9; or

 

(ii) If any Loan Party or any Other Obligor defaults in the due observance or performance of any covenant, condition or agreement contained in any provision of this Agreement or any other Loan Document and not addressed in clauses Sections 11.1(a), (b) or (c)(i), and the continuance of such default unremedied for a period of ten (10) Business Days; provided, that such ten (10) Business Day grace period shall not be available for any default that is not reasonably capable of being cured within such period or for any intentional default;

 

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(d) Judgment. If one or more judgments aggregating in excess of $100,000 is obtained against any Loan Party or any Other Obligor which remains unstayed for more than thirty (30) days or is enforced;

 

(e) Cross-Default. If any default occurs with respect to the Term Debt, Third Lien Obligations or any other Indebtedness (other than the Obligations or the Subordinated Debt) of any Loan Party or any Other Obligor if (i) such default shall consist of the failure to pay such Indebtedness when due, whether by acceleration or otherwise or (ii) the effect of such default is to permit the holder, with or without notice or lapse of time or both, to accelerate the maturity of any such Indebtedness or to cause such Indebtedness to become due prior to the stated maturity thereof (without regard to the existence of any subordination or intercreditor agreements);

 

(f) Death or Dissolution. The dissolution, death, termination of existence, insolvency or business failure or suspension or cessation of business as usual of any Loan Party or any Other Obligor (or of any general partner of any Loan Party or any Other Obligor if it is a partnership);

 

(g) Voluntary Bankruptcy or Similar Proceedings. If any Loan Party or any Other Obligor shall apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, admit in writing its inability to pay its debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt or insolvent or be the subject of an order for relief under the Bankruptcy Code or under any bankruptcy or insolvency law of a foreign jurisdiction, or file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;

 

(h) Involuntary Bankruptcy or Similar Proceedings. The commencement of an involuntary case or other proceeding against any Loan Party or any Other Obligor seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or if an order for relief is entered against any Loan Party or any Other Obligor under any bankruptcy, insolvency or other similar applicable law as now or hereafter in effect; provided, that if such commencement of proceedings is involuntary, such action shall not constitute an Event of Default unless such proceedings are not dismissed within forty-five (45) days after the commencement of such proceedings, though Agent and Lenders shall have no obligation to make Loans during such forty-five (45) day period or, if earlier, until such proceedings are dismissed;

 

(i) Revocation or Termination of Guaranty or Security Documents. The actual or attempted revocation or termination of, or limitation or denial of liability under, any guaranty of any of the Obligations, or any security document securing any of the Obligations, by any Loan Party or Other Obligor;

 

(j) Subordinated Debt.

 

(i) A Default or Event of Default (as such terms are defined in the Subordinated Debt Documents or Third Lien Loan Agreement, as applicable) with respect to any Subordinated Debt or the Third Lien Obligations, as applicable or the occurrence of any condition or event that results in the Subordinated Debt or Third Lien Obligations, as applicable, becoming due prior to its scheduled maturity as of the Closing Date (or in the case of the Third Lien Obligations, the Third Lien Debt Incurrence Date) or permits any holder or holders of the Subordinated Debt or the Third Loan Obligations, as applicable, or any trustee or agent on its or their behalf to cause the Subordinated Debt or the Third Lien Obligations, as applicable, to become due, or require the prepayment, repurchase, redemption of defeasance thereof, prior to its scheduled maturity as of the Closing Date (or, in the case of the Third Lien Obligations, the Third Lien Debt Incurrence Date); or

 

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(ii) If any Loan Party or Other Obligor makes any payment on account of any Indebtedness or obligation (including the Third Lien Obligations), the payment of which has been contractually subordinated to the Obligations other than payments which are not prohibited by the applicable subordination provisions pertaining thereto (or, in the case of the Third Lien Obligations, the Third Lien Subordination Agreement), or if any Person who has subordinated such Indebtedness or obligations attempts to limit or terminate any applicable subordination provisions pertaining thereto (or, in the case of the Third Lien Obligations, the Third Lien Subordination Agreement);

 

(k) Criminal Indictment or Proceedings. If there is any indictment of any Loan Party, any Loan Party’s officers, any Other Obligor or any Other Obligor’s officers under any criminal statute or commencement of criminal proceedings against any such Person;

 

(l) Change of Control. If (i) current equity owners as of the Closing Date collectively cease to, directly or indirectly, own and control at least 51% of the aggregate Voting Power represented by the issued and outstanding equity interests of Parent on a fully diluted basis, (ii) such current equity owners as of the Closing Date collectively cease to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Parent and to direct the management policies and decisions of Parent, (iii) Parent ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of Rubicon, CleanCo or Charter or (iv) Charter ceases to directly own and control one hundred percent (100%) of each class of the outstanding equity interests of RiverRoad;;

 

(m) Change of Management. If (i) Nate Morris ceases to be employed as, and actively perform the duties of, the chief executive officer of Holdings, or (ii) Christopher Spooner ceases to be employed as, and actively perform the duties of, the vice president of finance of Holdings, in each case unless a successor is appointed within ninety (90) days after the termination of such individual’s employment and such successor is reasonably satisfactory to Agent;

 

(n) Invalid Liens. If any Lien purported to be created by any Loan Document shall cease to be a valid perfected first priority Lien (subject only to any priority accorded by law to Permitted Liens) on any material portion of the Collateral, or any Loan Party or any Other Obligor shall assert in writing that any Lien purported to be created by any Loan Document is not a valid perfected first priority Lien (subject only to any priority accorded by law to Permitted Liens) on the assets or properties purported to be covered thereby; except to the extent arising from or related to a failure to file continuation statements in connection with any UCC Financing Statement;

 

(o) Termination of Loan Documents. If any of the Loan Documents shall cease to be in full force and effect (other than as a result of the discharge thereof in accordance with the terms thereof or by written agreement of all parties thereto);

 

(p) Liquidation Sales. The determination by any Loan Party to employ an agent or other third party or otherwise engage any Person or solicit proposals for the engagement of any Person (i) in connection with the proposed liquidation all or a material portion of its assets, or (ii) to conduct any so-called liquidation or “Going-Out-Of-Business” sales;

 

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(q) Loss of Collateral. The (i) uninsured loss, theft, damage or destruction of any of the Collateral, (ii) the insured loss, theft, damage or destruction of any of the Collateral in an amount in excess of $100,000 in the aggregate for all such events during any Fiscal Year, or (iii) except as permitted hereby, the sale, lease or furnishing under a contract of service of, any of the Collateral.

 

(r) Plans. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or any Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $100,000, (ii) the existence of any Lien under Section 430(k) or Section 6321 of the Code or Section 303(k) or Section 4068 of ERISA on any assets of a Loan Party, or (iii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $100,000.

 

(s) Intercreditor Agreement. The lien subordination provisions of the Intercreditor Agreement shall for any reason (other than as a result of any act or omission of Agent or any Lender) be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person, other than Agent or any Lender, shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations or Liens of Agent, for any reason shall not have the priority contemplated by this Agreement or the Intercreditor Agreement.

 

(t) Third Lien Subordination Agreement. The lien or payment subordination provisions of the Third Lien Subordination Agreement shall for any reason (other than as a result of any act or omission of Agent or any Lender) be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person, other than Agent or Lender, shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations or Liens of Agent, for any reason shall not have the priority contemplated by this Agreement or the Third Lien Subordination Agreement

 

11.2. Remedies with Respect to Lending Commitments/Acceleration, Etc. Upon the occurrence and during the continuation of an Event of Default, Agent may (in its sole discretion), or at the direction of Required Lenders, shall, (a) terminate all or any portion of its commitment to lend to or extend credit to Borrowers under this Agreement and/or any other Loan Document, without prior notice to any Loan Party and/or (b) demand payment in full of all or any portion of the Obligations (whether or not payable on demand prior to such Event of Default), together with the Early Payment/Termination Premium in the amount specified in Section 3.2(e) and/or (c) take any and all other and further actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity. Notwithstanding the foregoing sentence, upon the occurrence of any Event of Default described in Section 11.1(g) or Section 11.1(h), without notice, demand or other action by Agent all of the Obligations (including the Early Payment/Termination Premium in the amount specified in Section 3.2(e)) shall immediately become due and payable whether or not payable on demand prior to such Event of Default.

 

11.3. Remedies with Respect to Collateral. Without limiting any rights or remedies Agent or any Lender may have pursuant to this Agreement, the other Loan Documents, under applicable law or otherwise, upon the occurrence and during the continuation of an Event of Default:

 

(a) Any and All Remedies. Agent may take any and all actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity, and the rights and remedies herein and therein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law or otherwise.

 

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(b) Collections; Modifications of Terms. Agent may, but shall be under no obligation to: (i) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to, or is subject to a security interest in favor of, Agent; (ii) demand, sue for, collect and give receipts for and take all necessary or desirable steps to collect any Collateral or Proceeds in its or any Loan Party Obligor’s name, and apply any such collections against the Obligations as Agent may elect; (iii) take control of any Collateral and any cash and non-cash Proceeds of any Collateral; (iv) enforce, compromise, extend, renew settle or discharge any rights or benefits of each Loan Party Obligor with respect to or in and to any Collateral, or deal with the Collateral as Agent may deem advisable; and (v) make any compromises, exchanges, substitutions or surrenders of Collateral Agent deems necessary or proper in its reasonable discretion, including extending the time of payment, permitting payment in installments, or otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected without notice to, consent of, or any other action of any Loan Party and without otherwise discharging or affecting the Obligations, the Collateral or the security interests granted to Agent under this Agreement or any other Loan Document.

 

(c) Insurance. Agent may file proofs of loss and claim with respect to any of the Collateral with the appropriate insurer, and may endorse in its own and each Loan Party Obligor’s name any checks or drafts constituting Proceeds of insurance. Any Proceeds of insurance received by Agent may be applied by Agent against payment of all or any portion of the Obligations as Agent may elect in its reasonable discretion.

 

(d) Possession and Assembly of Collateral. Agent may take possession of the Collateral and/or, without removal, render each Loan Party Obligor’s Equipment unusable. Upon Agent’s request, each Loan Party Obligor shall assemble the Collateral and make it available to Agent at one or more places designated by Agent.

 

(e) Set-off. Agent may and, without any notice to, consent of or any other action by any Loan Party (such notice, consent or other action being expressly waived), set-off or apply (i) any and all deposits (general or special, time or demand, provisional or final) at any time held by or for the account of Agent or any Affiliate of Agent and (ii) any Indebtedness at any time owing by Agent or any Affiliate of Agent or any Participant in the Loans to or for the credit or the account of any Loan Party Obligor to the repayment of the Obligations, irrespective of whether any demand for payment of the Obligations has been made.

 

(f) Disposition of Collateral.

 

(i) Sale, Lease, etc. of Collateral. Agent may, without demand, advertising or notice, all of which each Loan Party Obligor hereby waives (except as the same may be required by the UCC or other applicable law and is not waivable under the UCC or such other applicable law), at any time or times in one or more public or private sales or other dispositions, for cash, on credit or otherwise, at such prices and upon such terms as determined by Agent (provided such price and terms are commercially reasonable within the meaning of the UCC to the extent such sale or other disposition is subject to the UCC requirements that such sale or other disposition must be commercially reasonable), (A) sell, lease, license or otherwise dispose of any and all Collateral and/or (B) deliver and grant options to a third party to purchase, lease, license or otherwise dispose of any and all Collateral. Agent may sell, lease, license or otherwise dispose of any Collateral in its then-present condition or following any preparation or processing deemed necessary by Agent in its reasonable discretion. Agent may be the purchaser at any such public or private sale or other disposition of Collateral, and in such case Agent may make payment of all or any portion of the purchase price therefor by the application of all or any portion of the Obligations due to Agent to the purchase price payable in connection with such sale or disposition. Agent may, if it deems it reasonable, postpone or adjourn any sale or other disposition of any Collateral from time to time by an announcement at the time and place of the sale or disposition to be so postponed or adjourned without being required to give a new notice of sale or disposition; provided, that Agent shall provide the applicable Loan Party Obligor with written notice of the time and place of such postponed or adjourned sale or disposition. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s compliance with any requirements of applicable law in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any sale, lease, license or other disposition of such Collateral.

 

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(ii) Deficiency. Each Loan Party Obligor shall remain liable for all amounts of the Obligations remaining unpaid as a result of any deficiency of the Proceeds of the sale, lease, license or other disposition of Collateral after such Proceeds are applied to the Obligations as provided in this Agreement.

 

(iii) Warranties; Sales on Credit. Agent may sell, lease, license or otherwise dispose of the Collateral without giving any warranties and may specifically disclaim any and all warranties, including but not limited to warranties of title, possession, merchantability and fitness. Each Loan Party Obligor hereby acknowledges and agrees that Agent’s disclaimer of any and all warranties in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any such disposition of the Collateral. If Agent sells, leases, licenses or otherwise disposes of any of the Collateral on credit, Borrowers will be credited only with payments actually made in cash by the recipient of such Collateral and received by Agent and applied to the Obligations. If any Person fails to pay for Collateral acquired pursuant this Section 11.3(f) on credit, Agent may re-offer the Collateral for sale, lease, license or other disposition.

 

(g) Investment Property; Voting and Other Rights; Irrevocable Proxy.

 

(i) All rights of each Loan Party Obligor to exercise any of the voting and other consensual rights which it would otherwise be entitled to exercise in accordance with the terms hereof with respect to any Investment Property, and to receive any dividends, payments, and other distributions which it would otherwise be authorized to receive and retain in accordance with the terms hereof with respect to any Investment Property, shall immediately, at the election of Agent (without requiring any notice) cease, and all such rights shall thereupon become vested solely in Agent, and Agent (personally or through an agent) shall thereupon be solely authorized and empowered, without notice, to (A) transfer and register in its name, or in the name of its nominee, the whole or any part of the Investment Property, it being acknowledged by each Loan Party Obligor that any such transfer and registration may be effected by Agent through its irrevocable appointment as attorney-in-fact pursuant to Section 11.3(g)(ii) and Section 6.4, (B) exchange certificates or instruments representing or evidencing Investment Property for certificates or instruments of smaller or larger denominations, (C) exercise the voting and all other rights as a holder with respect to all or any portion of the Investment Property (including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor as a member or as a shareholder (as applicable) of the Issuer), (D) collect and receive all dividends and other payments and distributions made thereon, (E) notify the parties obligated on any Investment Property to make payment to Agent of any amounts due or to become due thereunder, (F) endorse instruments in the name of each Loan Party Obligor to allow collection of any Investment Property, (G) enforce collection of any of the Investment Property by suit or otherwise, and surrender, release, or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any liabilities of any nature of any Person with respect thereto, (H) consummate any sales of Investment Property or exercise any other rights as set forth in Section 11.3(f), (I) otherwise act with respect to the Investment Property as though Agent was the outright owner thereof and (J) exercise any other rights or remedies Agent may have under the UCC, other applicable law or otherwise.

 

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(ii) EACH LOAN PARTY OBLIGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS ITS PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY OBLIGOR WITH RESPECT TO ALL OF EACH SUCH LOAN PARTY OBLIGOR’S INVESTMENT PROPERTY WITH THE RIGHT, DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO TAKE ANY OF THE FOLLOWING ACTIONS: (A) TRANSFER AND REGISTER IN AGENT’S NAME, OR IN THE NAME OF ITS NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTE THE PLEDGED EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND COLLECT ANY DIVIDEND OR ANY OTHER PAYMENT OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR, THE INVESTMENT PROPERTY OR ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO INDORSE ANY INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY OBLIGOR FOR THE SAME, (D) EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL ECONOMIC RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS OF EACH LOAN PARTY OBLIGOR AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF THE ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT WHICH AGENT MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND IRREVOCABLE UNTIL (x) ALL OF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, (y) AGENT AND LENDERS HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (z) THE COMMITMENTS UNDER THIS AGREEMENT HAVE EXPIRED OR HAVE BEEN TERMINATED (IT BEING UNDERSTOOD AND AGREED THAT SUCH OBLIGATIONS WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME PAYMENT, IN WHOLE OR IN PART, OF ANY OF THE OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY LENDER FOR ANY REASON WHATSOEVER, INCLUDING AS A PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE UNDER ANY BANKRUPTCY, INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT HAD NOT BEEN MADE; IT BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR RETURNED, ALL REASONABLE OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING ALL REASONABLE INTERNAL AND EXTERNAL ATTORNEYS’ FEES AND DISBURSEMENTS) INCURRED BY AGENT AND LENDERS IN DEFENDING AND ENFORCING SUCH REINSTATEMENT SHALL HEREBY BE DEEMED TO BE INCLUDED AS A PART OF THE OBLIGATIONS). SUCH APPOINTMENT OF AGENT AS PROXY AND AS ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN ANY GOVERNING DOCUMENTS OF ANY LOAN PARTY OBLIGOR, ANY ISSUER, OR OTHERWISE.

 

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(iii) In order to further effect the foregoing transfer of rights in favor of Agent, during the continuance of an Event of Default, each Loan Party Obligor hereby authorizes and instructs each Issuer of Investment Property pledged by such Loan Party Obligor to comply with any instruction received by such Issuer from Agent without any other or further instruction from such Loan Party Obligor, and each Loan Party Obligor acknowledges and agrees that each Issuer shall be fully protected in so complying, and to pay any dividends, distributions, or other payments with respect to any of the Investment Property directly to Agent.

 

(iv) Upon exercise of the proxy set forth herein, all prior proxies given by any Loan Party Obligor with respect to any of the Pledged Equity or other Investment Property, other than to Agent, are hereby revoked, and no subsequent proxies, other than to Agent will be given with respect to any of the Pledged Equity or any of the other Investment Property unless Agent otherwise subsequently agrees in writing. Agent, as proxy, will be empowered and may exercise the irrevocable proxy to vote the Pledged Equity and the other Investment Property at any and all times during the existence of an Event of Default, including, at any meeting of shareholders or members, as the case may be, however called, and at any adjournment thereof, or in any action by written consent, and may waive any notice otherwise required in connection therewith. To the fullest extent permitted by applicable law, Agent shall have no agency, fiduciary or other implied duties to any Loan Party Obligor, any Issuer, any Loan Party or any other Person when acting in its capacity as such proxy or attorney-in-fact. Each Loan Party Obligor hereby waives and releases any claims that it may otherwise have against Agent with respect to any breach, or alleged breach, of any such agency, fiduciary or other duty.

 

(v) Any transfer to Agent or its nominee, or registration in the name of Agent or its nominee, of the whole or any part of the Investment Property shall be made solely for purposes of effectuating voting or other consensual rights with respect to the Investment Property in accordance with the terms of this Agreement and is not intended to effectuate any transfer of ownership of any of the Investment Property. Notwithstanding the delivery by Agent of any instruction to any Issuer or any exercise by Agent of an irrevocable proxy or otherwise, Agent shall not be deemed the owner of, or assume any obligations or any liabilities whatsoever of the owner or holder of, any Investment Property unless and until Agent expressly accepts such obligations in a duly authorized and executed writing and agrees in writing to become bound by the applicable Governing Documents or otherwise becomes the owner thereof under applicable law (including through a sale as described in Section 11.3(f)). The execution and delivery of this Agreement shall not subject Agent to, or transfer or pass to Agent, or in any way affect or modify, the liability of any Loan Party Obligor under the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise. In no event shall the execution and delivery of this Agreement by Agent, or the exercise by Agent of any rights hereunder or assigned hereby, constitute an assumption of any liability or obligation whatsoever of any Loan Party Obligor to, under, or in connection with any of the Governing Documents of any Issuer or any related agreements, documents, or instruments or otherwise.

 

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(vi) Compliance with the Securities Act as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, as well as any applicable “Blue Sky” or other state securities laws, if applicable to the Collateral or the portion thereof being sold, may require strict limitations as to the manner in which the Agent or any subsequent transferee may dispose of the Collateral. With respect to any disposition as to which the Securities Act or analogous state securities laws is applicable, each Loan Party Obligor hereby waives any objection to sale in a compliant manner, and agrees that the Agent has no obligation to obtain the maximum possible price for the Collateral so long as the Agent proceeds in a commercially reasonable manner. Without limiting the generality of the foregoing, each Loan Party Obligor agrees that in conducting a disposition of the Collateral as to which the Securities Act or analogous state securities laws applies, Agent may seek to sell the Collateral by private placement, and may restrict bidders and prospective purchasers to those who are willing to represent that they are purchasing for investment only and not for distribution and who otherwise satisfy qualifications designed to ensure compliance with the Securities Act and analogous state securities laws and those that may be established in the Issuer’s Governing Documents. Each Loan Party Obligor acknowledges that in order to protect Agent’s interest, it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, including, without limitation, a public offering under the Securities Act. In order to address these potential compliance requirements, Agent may solicit offers to purchase the Collateral from a limited number of bidders reasonably believed by Agent to be institutional investors or accredited investors. If Agent solicits offers in a commercially reasonable manner, then acceptance by Agent of one or more of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral and Agent will not be responsible or liable for selling all or any portion of the Collateral at a price that Agent deems in good faith to be reasonable. Agent is under no obligation to delay a disposition of any portion of the Collateral that are securities under the Securities Act or applicable “Blue Sky” or other state securities law for the period of time necessary to permit any Loan Party Obligor or the Issuer to register the securities for public sale under the Securities Act or under applicable “Blue Sky” or other state securities laws, even if a Loan Party Obligor or the Issuer agrees to do so. In addition, to the extent not prohibited by applicable law, each Loan Party Obligor waives any right to prior notice (except to the extent expressly provided in this Agreement) or judicial hearing in connection with the taking possession or the disposition of any of the Collateral, including any right which Loan Party Obligor otherwise would have.

 

(vii) To the extent permitted under applicable law, Agent is not required to conduct any foreclosure sale of the Investment Property or any portion thereof.

 

(viii) Agent, at its option, may obtain the appointment of a receiver to take possession of the Investment Property and, at the option of Agent, a receiver may be empowered (i) to collect, receive and enforce all distributions, (ii) to exercise the rights of Agent as provided in this Agreement, (iii) to collect all other amounts owed to any Loan Party Obligor in respect of the Investment Property as and when due to any Loan Party Obligor, (iv) to otherwise collect, sell or dispose of the Investment Property, (v) to exercise all rights in and under the Investment Property; and (vi) to turn over all net proceeds to Agent. Each Loan Party Obligor irrevocably and unconditionally agrees that a receiver may be appointed by a court to take the actions listed above without regard to the adequacy of the security for the Obligations, and the actions of the receiver may be taken in the name of the receiver, any Loan Party Obligor or Agent.

 

(ix) Agent may elect to conduct a sale of an economic interest in any Investment Property constituting limited liability company interests that does not result in the purchaser being admitted as a substitute limited liability company member in the Issuer, and that any sale or dispositions made in good faith will be considered commercially reasonable, notwithstanding the possibility that a substantially higher price might be realized if the purchaser were able to be admitted as a substitute limited liability company member rather than the holder of only an economic interest in the Issuer.

 

(x) Agent may disclose to prospective purchasers all of the information relating to the Investment Property (and the applicable Issuer) that is in the Agent’s possession or otherwise available to the Agent.

 

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(xi) Each Loan Party Obligor hereby authorizes and instructs their respective Issuer to comply with any instruction received by it from Agent in writing that (i) states that an Event of Default has occurred and is continuing and (ii) is otherwise in accordance with the terms of the provisions of this Agreement as to Investment Property, without any other or further instructions from the respective Loan Party Obligor, and such Loan Party Obligor agrees that Issuer be fully protected in so complying.

 

(h) Election of Remedies. Agent shall have the right in Agent’s sole discretion to determine which rights, security, Liens or remedies Agent may at any time pursue, foreclose upon, relinquish, subordinate, modify or take any other action with respect to, without in any way impairing, modifying or affecting any of Agent’s other rights, security, Liens or remedies with respect to any Collateral or any of Agent’s rights or remedies under this Agreement or any other Loan Document.

 

(i) Agent’s Obligations. Each Loan Party Obligor agrees that Agent shall not have any obligation to preserve rights to any Collateral against prior parties or to marshal any Collateral of any kind for the benefit of any other creditor of any Loan Party Obligor or any other Person. Agent shall not be responsible to any Loan Party Obligor or any other Person for loss or damage resulting from Agent’s failure to enforce its Liens or collect any Collateral or Proceeds or any monies due or to become due under the Obligations or any other liability or obligation of any Loan Party Obligor to Agent.

 

(j) Waiver of Rights by Loan Party Obligors. Except as otherwise expressly provided for in this Agreement or by non-waivable applicable law, each Loan Party waives (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent on which any Loan Party Obligor may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this regard, (ii) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent to exercise any of its remedies and (iii) the benefit of all valuation, appraisal, marshaling and exemption laws. If any notice of a proposed sale or other disposition of any part of the Collateral is required under applicable law, each Loan Party Obligor agrees that ten (10) calendar days prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made is commercially reasonable.

 

12. LOAN GUARANTY.

 

12.1. Guaranty. Each Loan Party Obligor hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guaranties to Agent, for the ratable benefit of the Lenders, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, all of the Obligations and all reasonable costs and expenses, including all court costs and reasonable attorneys’ and paralegals’ fees (including internal and external counsel and paralegals) and expenses of Agent or any Lender in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, any Borrower, any Loan Party Obligor or any Other Obligor of all or any part of the Obligations (and such costs and expenses paid or incurred shall be deemed to be included in the Obligations). Each Loan Party Obligor further agrees that the Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guaranty notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf of any branch or Affiliate of Agent that extended any portion of the Obligations.

 

12.2. Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of collection. Each Loan Party Obligor waives any right to require Agent to sue or otherwise take action against any Borrower, any other Loan Party Obligor, any Other Obligor, or any other Person obligated for all or any part of the Obligations, or otherwise to enforce its payment against any Collateral securing all or any part of the Obligations.

 

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12.3. No Discharge or Diminishment of Loan Guaranty.

 

(a) Except as otherwise expressly provided for herein, the obligations of each Loan Party Obligor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of all of the Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of any Borrower or any Obligor; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or any Obligor or their respective assets or any resulting release or discharge of any obligation of any Borrower or any Obligor; or (iv) the existence of any claim, setoff or other rights which any Loan Party Obligor may have at any time against any Borrower, any Obligor, Agent, or any other Person, whether in connection herewith or in any unrelated transactions.

 

(b) The obligations of each Loan Party Obligor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Borrower or any Obligor of the Obligations or any part thereof.

 

(c) Further, the obligations of any Loan Party Obligor hereunder shall not be discharged or impaired or otherwise affected by: (i) the failure of Agent to assert any claim or demand or to enforce any remedy with respect to all or any part of the Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Obligations; (iii) any release, non-perfection or invalidity of any indirect or direct security for all or any part of the Obligations or all or any part of any obligations of any Obligor; (iv) any action or failure to act by Agent with respect to any Collateral; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Loan Party Obligor or that would otherwise operate as a discharge of any Loan Party Obligor as a matter of law or equity (other than the indefeasible payment in full in cash of all of the Obligations).

 

12.4. Defenses Waived. To the fullest extent permitted by applicable law, each Loan Party Obligor hereby waives any defense based on or arising out of any defense of any Loan Party Obligor or the unenforceability of all or any part of the Obligations from any cause, or the cessation from any cause of the liability of any Loan Party Obligor, other than the indefeasible payment in full in cash of all of the Obligations. Without limiting the generality of the foregoing, each Loan Party Obligor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower, any Obligor, or any other Person. Each Loan Party Obligor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder. Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any Collateral, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any Obligor or exercise any other right or remedy available to it against any Borrower or any Obligor, without affecting or impairing in any way the liability of any Loan Party Obligor under this Loan Guaranty except to the extent the Obligations have been fully and indefeasibly paid in cash. To the fullest extent permitted by applicable law, each Loan Party Obligor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan Party Obligor against any Borrower or any Obligor or any security.

 

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12.5. Rights of Subrogation. No Loan Party Obligor will assert any right, claim or cause of action, including a claim of subrogation, contribution or indemnification that it has against any Borrower or any Obligor, or any Collateral, until the Termination Date.

 

12.6. Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or any other Person, or otherwise, each Loan Party Obligor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not Agent is in possession of this Loan Guaranty. If acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Obligations shall nonetheless be payable by the Loan Party Obligors forthwith on demand by Agent. This Section 12.6 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

12.7. Information. Each Loan Party Obligor assumes all responsibility for being and keeping itself informed of each Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that each Loan Party Obligor assumes and incurs under this Loan Guaranty, and agrees that Agent shall not have any duty to advise any Loan Party Obligor of information known to it regarding those circumstances or risks.

 

12.8. Termination. To the maximum extent permitted by law, each Loan Party Obligor hereby waives any right to revoke this Loan Guaranty as to future Obligations. If such a revocation is effective notwithstanding the foregoing waiver, each Loan Party Obligor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agent, (b) no such revocation shall apply to any Obligations in existence on the date of receipt by Agent of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms or other terms and conditions thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Agent, (d) no payment by any Borrower, any other Loan Party Obligor, or from any other source, prior to the date of Agent’s receipt of written notice of such revocation shall reduce the maximum obligation of any Loan Party Obligor hereunder and (e) any payment, by any Borrower or from any source other than a Loan Party Obligor which has made such a revocation, made subsequent to the date of such revocation, shall first be applied to that portion of the Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of any Loan Party Obligor hereunder.

 

12.9. Maximum Liability. The provisions of this Loan Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Loan Party Obligor under this Loan Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Loan Party Obligor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the amount of such liability shall, without any further action by the Loan Party Obligors, Agent or any Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Loan Party Obligor’s “Maximum Liability). This Section 12.9 with respect to the Maximum Liability of each Loan Party Obligor is intended solely to preserve the rights of Agent and the Lenders to the maximum extent not subject to avoidance under applicable law, and no Loan Party Obligor or any other Person shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Loan Party Obligor hereunder shall not be rendered voidable under applicable law. Each Loan Party Obligor agrees that the Obligations may at any time and from time to time exceed the Maximum Liability of each Loan Party Obligor without impairing this Loan Guaranty or affecting the rights and remedies of Agent hereunder; provided, that nothing in this sentence shall be construed to increase any Loan Party Obligor’s obligations hereunder beyond its Maximum Liability.

 

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12.10. Contribution. In the event any Loan Party Obligor shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Loan Guaranty (such Loan Party Obligor a “Paying Guarantor), each other Loan Party Obligor (each a “Non-Paying Guarantor) shall contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Payment Percentageof such payment or payments made, or losses suffered, by such Paying Guarantor. For purposes of this Section 12.10, each Non-Paying Guarantor’s “Applicable Payment Percentage with respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was made by reference to the ratio of (x) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from any Borrower after the date hereof (whether by loan, capital infusion or by other means) to (y) the aggregate Maximum Liability of all Loan Party Obligors hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Loan Party Obligor, the aggregate amount of all monies received by such Loan Party Obligors from any Borrower after the date hereof (whether by loan, capital infusion or by other means). Nothing in this provision shall affect any Loan Party Obligor’s several liability for the entire amount of the Obligations (up to such Loan Party Obligor’s Maximum Liability). Each of the Loan Party Obligors covenants and agrees that its right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of all of the Obligations. This provision is for the benefit of Agent and the Lenders and the Loan Party Obligors and may be enforced by any one, or more, or all of them, in accordance with the terms hereof.

 

12.11. Liability Cumulative. The liability of each Loan Party Obligor under this Section 12 is in addition to and shall be cumulative with all liabilities of each Loan Party Obligor to Agent and the Lenders under this Agreement and the other Loan Documents to which such Loan Party Obligor is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES.

 

(a) Any and all payments by or on account of any obligation of the Loan Party Obligors hereunder or under any other Loan Document shall to the extent permitted by applicable laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable laws require the Loan Party Obligors to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such laws as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

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(b) If any Loan Party Obligor shall be required by applicable law to withhold or deduct any Taxes from any payment, then (i) such Loan Party Obligor shall withhold or make such deductions as are required based upon the information and documentation it has received pursuant to subsection (e) below, (ii) such Loan Party Obligor shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the applicable law and (iii) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Loan Party Obligors shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made. Upon request by Agent or other Recipient, Borrower Representative shall deliver to Agent or such other Recipient, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment of Indemnified Taxes, a copy of any return required by applicable law to report such payment or other evidence of such payment reasonably satisfactory to Agent or such other Recipient, as the case may be.

 

(c) Without limiting the provisions of subsections (a) and (b) above, the Loan Party Obligors shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(d) Without limiting the provisions of subsections (a) through (c) above, each Loan Party Obligor shall, and does hereby, on a joint and several basis, indemnify Agent, each Lender and each other Recipient (and their respective directors, officers, employees, affiliates and agents) and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes and Other Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid or incurred by Agent, any Lender or any other Recipient on account of, or in connection with any Loan Document or a breach by a Loan Party Obligor thereof, and any penalties, interest and related expenses and losses arising therefrom or with respect thereto (including the fees, charges and disbursements of any internal or external counsel or other tax advisor for Agent, any Lender or any other Recipient (or their respective directors, officers, employees, affiliates, and agents)), whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of any such payment or liability delivered to Borrower Representative shall be conclusive absent manifest error. Notwithstanding any provision in this Agreement to the contrary, this Section 13 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

 

(e) Each Lender shall deliver to Borrower Representative and each Lender and each Participant shall deliver to Agent, at the time or times prescribed by applicable laws, such properly completed and executed documentation prescribed by applicable laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit Borrower Representative or Agent, as the case may be, to determine (x) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (y) if applicable, the required rate of withholding or deduction and (z) such Lender’s or Participant’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Recipient by the Loan Party Obligors pursuant to this Agreement or otherwise to establish such Recipient’s status for withholding tax purposes in the applicable jurisdiction; provided, that each Recipient shall only be required to deliver such documentation as it may legally provide. Without limiting the generality of the foregoing, if a Borrower is resident for tax purposes in the United States:

 

(i) each Lender (or Participant) that is a “United States personwithin the meaning of Section 7701(a)(30) of the Code shall deliver to Borrower Representative and Agent (or any Lender granting a participation as applicable) an executed original of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable law or reasonably requested by Borrower Representative or Agent (or Lender granting a participation) as will enable Borrower Representative or Agent (or Lender granting a participation) as the case may be, to determine whether or not such Lender (or Participant) is subject to backup withholding or information reporting requirements under the Code;

 

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(ii) each Lender (or Participant) that is not a “United States personwithin the meaning of Section 7701(a)(30) of the Code (a “Non-U.S. Recipient) shall deliver to Borrower Representative and Agent (or any Lender granting a participation in case the Non-U.S. Recipient is a Participant) on or prior to the date on which such Non-U.S. Person becomes a party to this Agreement or a Participant (and from time to time thereafter upon the reasonable request of Borrower Representative or Agent but only if such Non-U.S. Recipient is legally entitled to do so), whichever of the following is applicable: (A) executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (B) executed originals of Internal Revenue Service Form W-8ECI; (C) executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation; (D) each Non-U.S. Recipient claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, shall provide (x) a certificate to the effect that such Non-U.S. Recipient is not (1) a “bankwithin the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholderof Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporationdescribed in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN; and/or (E) executed originals of any other form prescribed by applicable law (including FATCA) as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable law to permit Borrower Representative or Agent to determine the withholding or deduction required to be made. Each Non-U.S. Recipient shall promptly notify Borrower Representative and Agent (or any Lender granting a participation if the Non-U.S. Recipient is a Participant) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

 

(f) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower Representative and Agent at the time or times prescribed by applicable laws and at such time or times reasonably requested by Borrower Representative or Agent such documentation prescribed by applicable laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower Representative or Agent as may be necessary for Borrower Representative and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this subsection (f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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14. AGENT

 

14.1. Appointment. Each of the Lenders hereby irrevocably appoints Agent as its agent and authorizes Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent, each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) make Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein and execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents; (e) manage, supervise or otherwise deal with Collateral; (f) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (g) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents, (h) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, applicable law or otherwise, including the determination of eligibility of Accounts, the necessity and amount of Reserves and all other determinations and decisions relating to ordinary course administration of the credit facilities contemplated hereunder; and (i) incur and pay such expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents, whether or not any Loan Party is obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Documents or otherwise. The provisions of this Article are solely for the benefit of Agent and the Lenders, and the Loan Parties shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” as used herein or in any other Loan Documents (or any similar term) with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

14.2. Rights as a Lender. The Person serving as Agent hereunder, if it is a Lender, shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Loan Party or any Subsidiary or any Affiliate thereof as if it were not Agent hereunder without notice to or consent of the other Lenders.

 

14.3. Duties and Obligations. Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders, and, (c) except as expressly set forth in the Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any Subsidiary that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity. Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct as determined by a final nonappealable judgment of a court of competent jurisdiction. Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to Agent by a Borrower or a Lender, and Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to Agent. Agent shall be under no obligation to any Lender 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 to inspect the books and records or properties of any Loan Party.

 

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14.4. Reliance. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional (who may be counsel for any Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document, unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable 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. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

 

14.5. Actions through Sub-Agents. Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by Agent. Agent may also perform its duties through employees and other Agent-Related Persons. Agent shall not be responsible for the negligence or misconduct of any sub-agent, employee or Agent Professional that it selects as long as such selection was made without gross negligence or willful misconduct. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Affiliates and other related parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the related parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

 

14.6. Resignation. Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, Agent may resign at any time by notifying the Lenders and Borrower Representative. Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower Representative, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of its appointment as Agent hereunder by its successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The fees payable by Borrowers to a successor Agent shall be the same as those payable to its predecessor, unless otherwise agreed by Borrower Representative and such successor. Notwithstanding the foregoing, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectiveness of its resignation to the Lenders and Borrower Representative, whereupon, on the date of effectiveness of such resignation stated in such notice, (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents, provided that, solely for purposes of maintaining any security interest granted to the Agent under any Loan Document for the benefit of the Lenders, the retiring Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Lenders and, in the case of any Collateral in the possession of Agent, shall continue to hold such Collateral, in each case until such time as a successor Agent is appointed and accepts such appointment in accordance with this paragraph (it being understood and agreed that the retiring Agent shall have no duly or obligation to take any further action under any Loan Document, including any action required to maintain the perfection of any such security interest), and (b) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, provided that (i) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of any Person other than Agent shall be made directly to such Person and (ii) all notices and other communications required or contemplated to be given or made to Agent shall also directly be given or made to each Lender. Following the effectiveness of the Agent’s resignation from its capacity as such, the provisions of this Article, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective related parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent and in respect of the matters referred to in the proviso under clause (a) above.

 

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14.7. Non-Reliance.

 

(a) Each Lender acknowledges and agrees that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender further acknowledges the extensions of credit made hereunder are commercial loans and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document, and all applicable laws relating to the transactions contemplated hereby, and made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender shall, independently and without reliance upon any Agent-Related Person, any arranger of this credit facility or any amendment thereto or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning any Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own credit analysis and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder , and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document and in deciding whether or to the extent to which it will continue as a Lender or assign or otherwise transfer its rights, interests and obligations hereunder. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. Each Lender acknowledges that Agent does not have any duty or responsibility, either initially or on a continuing to provide such Lender with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement.

 

(b) Each Lender hereby agrees that (i) it has requested a copy of each appraisal, audit or field examination report prepared by or on behalf of Agent; (ii) Agent (A) makes no representation or warranty, express or implied, as to the completeness or accuracy of any such report or any of the information contained therein or any inaccuracy or omission contained in or relating to any such report and (B) shall not be liable for any information contained in any such report; (iii) such reports are not comprehensive audits or examinations, and that any Person performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ officer certificates and Loan Documents provided hereunder and that Agent undertakes no obligation to update, correct or supplement such reports; (iv) it will keep all such reports confidential and strictly for its internal use, not share any such report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (v) without limiting the generality of any other indemnification provision contained in this Agreement, (A) it will hold Agent and any such other Person preparing any such report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any such report in connection with any extension of credit that the indemnifying Lender has made or may make to any Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (B) it will pay and protect, and indemnify, defend, and hold Agent and any such other Person preparing any such report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonable attorneys’ fees of both internal and external counsel) of Agent or any such other Person as the direct or indirect result of any third parties who might obtain all or part of any such report through the indemnifying Lender.

 

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14.8. Not Partners or Co-Venturers; Agent as Representative of the Secured Parties.

 

(a) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of Agent) authorized to act for, any other Lender. Agent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement.

 

(b) In its capacity, Agent is a “representative” of the Lenders within the meaning of the term “secured party” as defined in the UCC. Each Lender authorizes Agent to enter into each of the Loan Documents to which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Lender (other than Agent) shall have the right individually to seek to realize upon the security granted by any Loan Document, it being understood and agreed that such rights and remedies may be exercised solely by Agent for the benefit of the Lenders upon the terms of the Loan Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Obligations, Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Lenders any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of Agent on behalf of the Lenders.

 

(c) Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the UCC can be perfected by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions. Agent shall have no obligation whatsoever to any of the Lenders (i) to verify or assure that the Collateral exists or is owned by any Borrower or its Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement or eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein,

 

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14.9. Credit Bidding. The Loan Parties and the Lenders hereby irrevocably authorize Agent, during the continuance of an Event of Default and in exercise of remedies permitted under Section 12 of this Agreement or applicable law, based upon the instruction of the Required Lenders, to Credit Bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (and the Loan Parties shall approve Agent as a qualified bidder and such Credit Bid as qualified bid) at any sale thereof conducted by Agent, based upon the instruction of the Required Lenders, under any provisions of the UCC, as part of any sale or investor solicitation process conducted by any Loan Party, any interim receiver, receiver, receiver and manager, administrative receiver, trustee, agent or other Person pursuant or under any insolvency laws; provided, however, that (i) the Required Lenders may not direct Agent in any manner that does not treat each of the Lenders equally, without preference or discrimination, in respect of consideration received as a result of the Credit Bid, (ii) the acquisition documents shall be commercially reasonable and contain customary protections for minority holders such as among other things, anti-dilution and tag-along rights, (iii) the exchanged debt or equity securities must be freely transferable, without restriction (subject to applicable securities laws) and (iv) reasonable efforts shall be made to structure the acquisition in a manner that causes the governance documents pertaining thereto to not impose any obligations or liabilities upon the Lenders individually (such as indemnification obligations). Agent, based upon the instruction of the Required Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such Credit Bid or purchase and in connection therewith Agent may reduce the Obligations owed to the Lenders (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration. For purposes of the preceding sentence, the term “Credit Bid” shall mean, an offer submitted by Agent (on behalf of the Lender group), based upon the instruction of the Required Lenders, to acquire the property of any Loan Party or any portion thereof in exchange for and in full and final satisfaction of all or a portion (as determined by Agent, based upon the instruction of the Required Lenders) of the claims and Obligations under this Agreement and other Loan Documents.

 

14.10. Certain Collateral Matters. The Lenders irrevocably authorize Agent, at its option and in its discretion, (a) to release any Lien granted to or held by Agent under any Loan Document (i) upon termination of the Commitments and payment in full of all Loans and all other obligations of Borrowers hereunder; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder (including the release of any guarantor); (iii) subject to Section 15.5 if approved, authorized or ratified in writing by the Required Lenders; or (iv) to the extent required under the terms of the Intercreditor Agreement, (b) to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is permitted by clause (a) of the definition of Permitted Liens (it being understood that Agent may conclusively rely on a certificate from Borrower Representative in determining whether the Indebtedness secured by any such Lien is permitted hereunder) and (c) enter into and perform, or take any other actions in connection with, the Intercreditor Agreement, Third Lien Subordination and any Subordinated Debt Subordination Agreement. Each Lender hereby agrees, solely for the benefit of Agent, that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement, Third Lien Subordination Agreement or any Subordinated Debt Subordination Agreement. Upon request by Agent at any time, the Lenders will confirm in writing Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 14.10. Agent may, and at the direction of Required Lenders shall, give blockage notices in connection with any Subordinated Debt and each Lender hereby authorizes Agent to give such notices. Each Lender further agrees that it will not act unilaterally to deliver such notices.

 

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14.11. Restriction on Actions by Lenders. Each Lender agrees that it shall not, without the express written consent of Agent, and shall, upon the written request of Agent (to the extent it is lawfully entitled to do so), set off against the Obligations, any amounts owing by such Lender to a Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken, any action, including the commencement of any legal or equitable proceedings to foreclose any loan or otherwise enforce any security interest in any of the Collateral or to enforce all or any part of this Agreement or the other Loan Documents. All Enforcement Actions under this Agreement and the other Loan Documents against the Loan Parties or any third party with respect to the Obligations or the Collateral may only be taken by Agent (at the direction of the Required Lenders or as otherwise permitted in this Agreement) or by its agents at the direction of Agent.

 

14.12. Expenses. Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Agent to reimburse Agent for such reasonable out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses by a Loan Party, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable share thereof. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any such costs or out of pocket expenses (including reasonable Agent Professional fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

 

14.13. Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent will promptly notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with this Agreement; provided, that unless and until Agent has received any such request, 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.

 

14.14. Liability of Agent. None of the Agent-Related Persons shall (a) be liable to any Lender for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any of their respective Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower, or any of their respective Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lenders 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 to inspect the books and records or properties of any Borrower or their respective Subsidiaries.

 

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15. GENERAL PROVISIONS.

 

15.1. Notices.

 

(a) Notice by Approved Electronic Communications. Agent and each of its Affiliates is authorized to transmit, post or otherwise make or communicate, in its sole discretion (but shall not be required to do so), by Approved Electronic Communications in connection with this Agreement or any other Loan Document and the transactions contemplated therein. Agent is hereby authorized to establish procedures to provide access to and to make available or deliver, or to accept, notices, documents and similar items by posting to ABLSoft. All uses of ABLSoft and other Approved Electronic Communications shall be governed by and subject to, in addition to the terms of this Agreement, the separate terms, conditions and privacy policy posted or referenced in such system (or such terms, conditions and privacy policy as may be updated from time to time, including on such system) and any related contractual obligations executed by Agent and Loan Parties in connection with the use of such system. Each of the Loan Parties, the Lenders and Agent hereby acknowledges and agrees that the use of ABLSoft and other Approved Electronic Communications is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing Agent and each of its Affiliates to transmit Approved Electronic Communications. ABLSoft and all Approved Electronic Communications shall be provided “as is and “as available. None of Agent or any of its Affiliates or related persons warrants the accuracy, adequacy or completeness of ABLSoft or any other electronic platform or electronic transmission and disclaims all liability for errors or omissions therein. No warranty of any kind is made by Agent or any of its Affiliates or related persons in connection with ABLSoft or any other electronic platform or electronic transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects. Each Borrower and each other Loan Party executing this Agreement agrees that Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with ABLSoft, any Approved Electronic Communication or otherwise required for ABLSoft or any Approved Electronic Communication. Prior to the Closing Date, Borrower Representative shall deliver to Agent a complete and executed Client User Form regarding Borrowers’ use of ABLSoft in the form of Exhibit C annexed hereto. No Approved Electronic Communications shall be denied legal effect merely because it is made electronically. Approved Electronic Communications that are not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Approved Electronic Communication, an E-Signature, upon which Agent and the Loan Parties may rely and assume the authenticity thereof. Each Approved Electronic Communication containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each E-Signature shall be deemed sufficient to satisfy any requirement for a “signature and each Approved Electronic Communication shall be deemed sufficient to satisfy any requirement for a “writing, in each case including pursuant to this Agreement, any other Loan Document, the UCC, the Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each party or beneficiary hereto agrees not to contest the validity or enforceability of an Approved Electronic Communication or E-Signature under the provisions of any applicable law requiring certain documents to be in writing or signed; provided, that nothing herein shall limit such party’s or beneficiary’s right to contest whether an Approved Electronic Communication or E-Signature has been altered after transmission.

 

(b) All Other Notices. All notices, requests, demands and other communications under or in respect of this Agreement or any transactions hereunder, other than those approved for or required to be delivered by Approved Electronic Communications (including via ABLSoft or otherwise pursuant to Section 15.1(a)), shall be in writing and shall be personally delivered or mailed (by prepaid registered or certified mail, return receipt requested), sent by prepaid recognized overnight courier service, or by email to the applicable party at its address or email address indicated below,

 

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If to Agent:

 

Eclipse BUSINESS Capital LLC,

as Agent

123 N Wacker Suite 2400

Chicago, IL 60606

Attention: Tracy Salyers

Email: tsalyers@eclipsebuscap.com

 

If to Borrower Representative, any Borrower or any other Loan Party:

 

Rubicon Global, LLC

950 East Paces Ferry Rd NE

Suite 1900

Atlanta, Georgia 30326

Attention: Chris Waters

Email: chris.waters@rubiconglobal.com

 

with a mandatory copy to:

 

Chamberlain Hrdlicka White Williams & Aughtry, P.C.

191 Peachtree Street, NE

46th Floor

Atlanta, Georgia 30303

Attention: Scott A. Augustine

Email: scott.augustine@chamberlainlaw.com

 

or, as to each party, at such other address as shall be designated by such party in a written notice to the other party delivered as aforesaid. All such notices, requests, demands and other communications shall be deemed given (i) when personally delivered, (ii) three (3) Business Days after being deposited in the mails with postage prepaid (by registered or certified mail, return receipt requested), (iii) one (1) Business Day after being delivered to the overnight courier service, if prepaid and sent overnight delivery, addressed as aforesaid and with all charges prepaid or billed to the account of the sender or (iv) when sent by email transmission to an email address designated by such addressee and the sender receives a confirmation of transmission.

 

15.2. Severability. If any provision of this Agreement or any other Loan Document is held invalid or unenforceable, either in its entirety or by virtue of its scope or application to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or not applicable to given circumstances, or excised from this Agreement or such other Loan Document, as the situation may require, and this Agreement and the other Loan Documents shall be construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included herein or therein, as the case may be.

 

15.3. Integration. This Agreement and the other Loan Documents represent the final, entire and complete agreement between each Loan Party party hereto and thereto and Agent and supersede all prior and contemporaneous negotiations, oral representations and agreements, all of which are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

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15.4. Waivers. The failure of Agent and the Lenders at any time or times to require any Loan Party to strictly comply with any of the provisions of this Agreement or any other Loan Documents shall not waive or diminish any right of Agent later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of Agent or its agents or employees, but only by a specific written waiver signed by an authorized officer of Agent and any necessary Lenders and delivered to Borrowers. Once an Event of Default shall have occurred, it shall be deemed to continue to exist and not be cured or waived unless specifically waived in writing by an authorized officer of Agent and Required Lenders and delivered to Borrowers. Each Loan Party Obligor waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, Instrument, Account, General Intangible, Document, Chattel Paper, Investment Property or guaranty at any time held by Agent on which such Loan Party Obligor is or may in any way be liable, and notice of any action taken by Agent, unless expressly required by this Agreement, and notice of acceptance hereof.

 

15.5. Amendments.

 

(a) No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that, except to the extent set forth in Section 14.9 hereof, no amendment, modification, waiver or consent shall (i) extend or increase the Commitment of any Lender without the written consent of such Lender, (ii) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby; (iv) amend or modify the definitions of Borrowing Base, Eligible Accounts, Eligible Billed Accounts or Eligible Unbilled Accounts , or any components thereof (including, without limitation, any Advance Rates), without the written consent of each Lender; or (v) release any guarantor from its obligations under any Guaranty, other than as part of or in connection with any disposition permitted hereunder, or release or subordinate its liens on all or any substantial part of the Collateral granted under any of the other Loan Documents (except as permitted by Section 14.10), change the definition of Required Lenders, any provision of Section 6.2, any provision of this Section 15.4, the provisions of Section 14.9 or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case set forth in this clause (v), the written consent of all Lenders. No provision of Section 14 or other provision of this Agreement affecting Agent in its capacity as such shall be amended, modified or waived without the consent of Agent. No provision of this Agreement affecting any Loan Party shall be amended or modified without the prior written consent of Borrower Representative. Any amendment contemplated by Section 3.6(d) of this Agreement in connection with a Benchmark Transition event or an Early Opt-in Election shall be effective as contemplated by such section 3.6(d).

 

(b) If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of all Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then, so long as Agent is not a Non-Consenting Lender, Agent and/or a Person or Persons reasonably acceptable to Agent shall have the right to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent and/or such Person or Persons, all of the Loans and Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all such Loans and Commitments held by such Non-Consenting Lenders and all accrued interest, fees, expenses and other amounts then due with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Assumption.

 

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15.6. Time of Essence. Time is of the essence in the performance by each Loan Party Obligor of each and every obligation under this Agreement and the other Loan Documents.

 

15.7. Expenses, Fee and Costs Reimbursement. Each Borrower hereby agrees to promptly pay (a) all reasonable out of pocket costs and expenses of Agent (including the out of pocket fees, costs and expenses of internal and external legal counsel to, and appraisers, accountants, consultants and other professionals and advisors retained by or on behalf of, Agent) in connection with (i) all loan proposals and commitments pertaining to the transactions contemplated hereby (whether or not such transactions are consummated), (ii) the examination, review, due diligence investigation, documentation, negotiation, and closing of the transactions contemplated by the Loan Documents (whether or not such transactions are consummated), (iii) the creation, perfection and maintenance of Liens pursuant to the Loan Documents, (iv) the performance or enforcement by Agent of its rights and remedies under the Loan Documents (or determining whether or how to perform or enforce such rights and remedies), (v) the administration of the Loans (including usual and customary fees for wire transfers and other transfers or payments received by Agent on account of any of the Obligations) and Loan Documents, (vi) any amendments, modifications, consents and waivers to and/or under any and all Loan Documents (whether or not such amendments, modifications, consents or waivers are consummated), (vii) any periodic public record searches conducted by or at the request of Agent (including, title investigations and public records searches), pending litigation and tax lien searches and searches of applicable corporate, limited liability company, partnership and related records concerning the continued existence, organization and good standing of certain Persons), (viii) protecting, storing, insuring, handling, maintaining, auditing, examining, valuing or selling any Collateral, (ix) any litigation, dispute, suit or proceeding relating to any Loan Document and (x) any workout, collection, bankruptcy, insolvency and other enforcement proceedings under any and all of the Loan Documents (it being agreed that (A) such costs and expenses may include the costs and expenses of workout consultants, investment bankers, financial consultants, appraisers, valuation firms and other professionals and advisors retained by or on behalf of Agent (B) each Lender shall also be entitled to reimbursement for all reasonable out of pocket costs and expense of the type described in this clause (x), provided that, to the extent of an actual or reasonably perceived conflict of interest, such reimbursement shall be limited to one additional counsel for the Lenders as a whole), and (b) without limiting the preceding clause (a), all reasonable out of pocket costs and expenses of Agent in connection with Agent’s reservation of funds in anticipation of the funding of the initial Loans to be made hereunder. Any fees, costs and expenses owing by any Borrower or other Loan Party Obligor hereunder shall be due and payable within three (3) days after written demand therefor.

 

15.8. Benefit of Agreement; Assignability. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender; provided, that neither each Borrower nor any other Loan Party Obligor may assign or transfer any of its rights under this Agreement without the prior written consent of Agent and each Lender, and any prohibited assignment shall be void. No consent by Agent or any Lender to any assignment shall release any Loan Party Obligor from its liability for any of the Obligations. Each Lender shall have the right to assign all or any of its rights and obligations under the Loan Documents to one or more other Persons in accordance with Section 15.9. Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, a Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement and the other Loan Documents to secure any obligations of such Lender, including any pledge or grant to secure obligations to a Federal Reserve Bank.

 

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15.9. Assignments.

 

(a) Any Lender may at any time assign to one or more Persons (any such Person, an “Assignee”) all or any portion of such Lender’s Loans and Commitments, with the prior written consent of Agent and, so long as no Event of Default exists, Borrower Representative (which consents shall not be unreasonably withheld or delayed and shall not be required for an assignment by a Lender to a Lender (other than a Defaulting Lender) or an Affiliate of a Lender (other than an Affiliate of a Defaulting Lender) or an Approved Fund (other than an Approved Fund of a Defaulting Lender)). Except as Agent may otherwise agree, any such assignment shall be in a minimum aggregate amount equal to $1,000,000 or, if less, the remaining Commitment and Loans held by the assigning Lender (provided, that an assignment to a Lender, an Affiliate of a Lender or an Approved Fund shall not be subject to the foregoing minimum assignment limitations). The Loan Parties and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an Assignee until Agent shall have received and accepted an effective Assignment and Assumption executed, delivered and fully completed by the applicable parties thereto and a processing fee of $3,500. Notwithstanding anything herein to the contrary, no assignment may be made to any equity holder of a Loan Party, any Affiliate of any equity holder of a Loan Party, any Loan Party, any holder of Subordinated Debt of a Loan Party, any holder of any Debt that is secured by liens or security interests that have been contractually subordinated to the liens and security interests securing the Obligations, or any Affiliate of any of the foregoing Persons without the prior written consent of Agent, which consent may be withheld in Agent’s sole discretion and, in any event, if granted, may be conditioned on such terms and conditions as Agent shall require in its sole discretion, including, without limitation, a limitation on the aggregate amount of Loans and Commitments which may be held by such Person and/or its Affiliates and/or limitations on such Person’s and/or its Affiliates’ voting and consent rights and/or rights to attend Lender meetings or obtain information provided to other Lenders. Any attempted assignment not made in accordance with this Section 15.9 shall be null and void. Each Borrower shall be deemed to have granted its consent to any assignment requiring its consent hereunder unless Borrower Representative has expressly objected to such assignment within five (5) Business Days after receipt of written notice thereof.

 

(b) From and after the date on which the conditions described in Section 15.9(a) above have been met, (i) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned to such Assignee pursuant to the applicable Assignment and Assumption, shall have the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to the applicable Assignment and Assumption, shall be released from its rights (other than its indemnification rights) and obligations hereunder. Upon the request of the Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment and Assumption, Borrowers shall execute and deliver to Agent for delivery to the Assignee (and, as applicable, the assigning Lender) a promissory note in the principal amount of the Assignee’s Pro Rata Share of the aggregate Revolving Loan Commitment (and, as applicable, a promissory note in the principal amount of the Pro Rata Share of the aggregate Revolving Loan Commitment retained by the assigning Lender). Upon receipt by Agent of such promissory note(s), the assigning Lender shall return to Borrowers any prior promissory note held by it.

 

(c) Agent shall, as a non-fiduciary agent of Borrowers, maintain a copy of each Assignment and Assumption delivered and accepted by it and register (the “Register”) for the recordation of names and addresses of the Lenders and the Commitment of each Lender and principal and stated interest of each Loan owing to each Lender from time to time and whether such Lender is the original Lender or the Assignee. No assignment shall be effective unless and until the Assignment and Assumption is accepted and registered in the Register. All records of transfer of a Lender’s interest in the Register shall be conclusive, absent manifest error, as to the ownership of the interests in the Loans. Agent shall not incur any liability of any kind with respect to any Lender with respect to the maintenance of the Register. Each Lender granting a participation shall, as a non-fiduciary agent of the Borrowers, maintain a register containing information similar to that of the Register in a manner such that the loans hereunder are in “registered form” for the purposes of the Code. This Section shall be construed so that the Loans are at all times maintained in “registered form” for the purpose of the Code and any related regulations (and any successor provisions).

 

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15.10. Participations. Anything in this Agreement or any other Loan Document to the contrary notwithstanding, any Lender may, at any time and from time to time, without in any manner affecting or impairing the validity of any Obligations, sell to one or more Persons participating interests in its Loans, commitments or other interests hereunder or under any other Loan Document (any such Person, a “Participant). In the event of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder and under the other Loan Documents shall remain unchanged for all purposes, (b) Borrowers and such Lender shall continue to deal solely and directly with each other in connection with such Lender’s rights and obligations hereunder and under the other Loan Documents and (c) all amounts payable by Borrowers shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender; provided, that a Participant shall be entitled to the benefits of Section 13 as if it were a Lender if Borrower Representative is notified of the Participation and the Participant complies with Section 13. Each Borrower agrees that if amounts outstanding under this Agreement or any other Loan Document are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and the other Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided, that such right of set-off shall not be exercised without the prior written consent of such Lender and shall be subject to the obligation of each Participant to share with such Lender its share thereof. Each Borrower also agrees that each Participant shall be entitled to the benefits of Section 15.9 as if it were a Lender. Notwithstanding the granting of any such participating interests, (i) Borrowers shall look solely to the applicable Lender for all purposes of this Agreement, the Loan Documents and the transactions contemplated hereby, (ii) Borrowers shall at all times have the right to rely upon any amendments, waivers or consents signed by the applicable Lender as being binding upon all of the Participants and (iii) all communications in respect of this Agreement and such transactions shall remain solely between Borrowers and the applicable Lender (exclusive of Participants) hereunder. If a Lender grants a participation hereunder, such Lender shall maintain, as a non-fiduciary agent of Borrowers, a register as to the participations granted and transferred under this Section containing the same information specified in Section 15.9 on the Register as if each Participant were a Lender to the extent required to cause the Loans to be in registered form for the purposes of Sections 163(F), 165(J), 871, 881, and 4701 of the Code.

 

15.11. Headings; Construction. Section and subsection headings are used in this Agreement only for convenience and do not affect the meanings of the provisions that they precede.

 

15.12. USA PATRIOT Act Notification. Agent hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it may be required to obtain, verify and record certain information and documentation that identifies such Person, which information may include the name and address of each such Person and such other information that will allow Agent to identify such Persons in accordance with the USA PATRIOT Act.

 

15.13. Counterparts; Fax/Email Signatures. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same agreement. This Agreement may be executed by signatures delivered by facsimile or electronic mail, each of which shall be fully binding on the signing party.

 

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15.14. GOVERNING LAW. THIS AGREEMENT, ALONG WITH ALL OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE IN SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS AGREEMENT AND ALL SUCH OTHER LOAN DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

 

15.15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS IN THE COUNTY OF COOK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR IN ANY OTHER COURT (IN ANY JURISDICTION) SELECTED BY THE AGENT IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR BASED ON 28 U.S.C. § 1404, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, AMENDMENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER’S’ NOTICE ADDRESS (ON BEHALF OF BORROWERS OR SUCH LOAN PARTY OBLIGOR) SET FORTH IN SECTION 15.1 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAIL, OR, AT THE AGENT’S OPTION, BY SERVICE UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR IN ANY OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS.

 

15.16. Publication. Each Borrower and each other Loan Party Obligor consents to the publication by Agent of a tombstone, press releases or similar advertising material relating to the financing transactions contemplated by this Agreement, and Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 

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15.17. Confidentiality. Agent and each Lender agree to use commercially reasonable efforts not to disclose Confidential Information to any Person without the prior consent of Borrower Representative; provided, that nothing herein contained shall limit any disclosure of the tax structure of the transactions contemplated hereby, or the disclosure of any information (a) to the extent required by applicable law, statute, rule, regulation or judicial process or in connection with the exercise of any right or remedy under any Loan Document, or as may be required in connection with the examination, audit or similar investigation of Agent or any of its Affiliates, (b) to examiners, auditors, accountants or any regulatory authority, (c) to the officers, partners, managers, directors, employees, agents and advisors (including independent auditors, lawyers and counsel) of Agent and each Lender or any of their respective Affiliates, (d) in connection with any litigation or dispute which relates to this Agreement or any other Loan Document to which Agent or any Lender is a party or is otherwise subject, (e) to a subsidiary or Affiliate of Agent or any Lender, (f) to any Assignee or Participant (or prospective Assignee or Participant) which agrees to be bound by this Section 15.17 and (g) to any lender or other funding source of Agent or any Lender (each reference to Agent and Lender in the foregoing clauses shall be deemed to include (i) the actual and prospective Assignees and Participants referred to in clause (f) and the lenders and other funding sources referred to in clause (g), as applicable for purposes of this Section 15.17), and further provided, that in no event shall Agent or any Lender be obligated or required to return any materials furnished by or on behalf of any Borrower or any other Loan Party or Obligor. The obligations of Agent and Lenders under this Section 15.17 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter or provision in respect of this financing or any other financing previously signed and delivered by Agent or any Lender to any Borrower or any of its Affiliates.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, each Borrower, each other Loan Party Obligor party hereto, Agent and each Lender have signed this Agreement as of the date first set forth above.

 

  Agent:
       
  ECLIPSE BUSINESS CAPITAL LLC
       
  By:
    Name:  
    Its: Authorized Signatory
       
  Lenders:
       
  ECLIPSE BUSINESS CAPITAL SPV, LLC
       
  By:
    Name:  
    Its: Authorized Signatory

 

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  Borrowers:
       
  RUBICON GLOBAL, LLC
       
  By:
    Name:  
    Its:  
       
  RIVERROAD WASTE SOLUTIONS, INC.
       
  By:
    Name:  
    Its:  
       
  Loan Party Obligors:
     
  RUBICON TECHNOLOGIES, LLC
       
  By:
    Name:  
    Its:  
       
  CLEANCO LLC
       
  By:
    Name:  
    Its:  
       
  CHARTER WASTE MANAGEMENT, INC.
       
  By:
    Name:  
    Its:  

 

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Exhibit 14.1

 

RUBICON TECHNOLOGIES, INC.

 

Code of Business Conduct and Ethics

 

Effective Date: August 15, 2022

 

1. Overview

 

The Board of Directors (the “Board”) of Rubicon Technologies, Inc. (the “Company”) has adopted the following Code of Business Conduct and Ethics (the “Code”) for directors, officers and employees of the Company. Additionally, vendors and suppliers doing business with the Company are expected to adhere to the principles in this Code. This Code is intended to focus individuals on areas of ethical risk, provide guidance to individuals to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each individual must comply with the letter and spirit of this Code.

 

No code or policy can anticipate every situation that may arise. Accordingly, this Code is intended to serve as a source of guiding principles. This Code supplements, and is supplemented by, our additional policies and procedures, including the Company’s Insider Trading Policy, Guidelines for Public Disclosures and Communications with the Investment Community, Related Person Transaction Policies and Procedures, Audit Committee Procedures for Handling Reports of Potential Misconduct, and Principles of Corporate Governance as well as other policies and procedures that may be adopted by the Company from time to time (together, “Company Policies”).

 

Directors, officers and employees are responsible for adhering to the standards in this Code, for raising questions if they are in doubt about the best course of action and for reporting possible misconduct promptly after it comes to their attention. If an employee is in doubt about the propriety of any action, the employee should discuss it with his or her direct supervisor or the General Counsel. Directors and officers should contact the General Counsel or the Chairman of the Audit Committee.

 

2. Ethics

 

The Company, and each of its directors, officers and employees, wherever they may be located, must conduct their affairs with uncompromising honesty and integrity. Business ethics are no different than personal ethics. The same high standard applies to both. As a director, officer or employee of the Company, you are required to adhere to the highest ethical standards.

 

You are expected to be honest, ethical and fair and should endeavor to deal fairly with the Company’s stakeholders (such as customers, vendors, suppliers, business partners, service providers, competitors and employees). You should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. Doing the right thing means doing it right every time.

 

You must also respect the rights of your colleagues and third parties. Your actions must be free from discrimination, libel, slander, harassment or bullying behavior. Each person must be treated with dignity and respect and accorded equal opportunity, regardless of age, race, sex, sexual preference, gender identity, color, creed, religion, national origin, marital status, veteran’s status, handicap or disability or any other characteristic protected by law. Harassing or bullying behavior can include, but is not limited to: making offensive comments, slurs, gestures or jokes; displaying offensive photos, videos or drawings; sending or posting offensive emails, texts or social media messages; engaging in unwanted touching; pressuring a fellow employee to engage in a personal relationship; being verbally or physically threatening, intimidating or abusive; or stereotyping or otherwise disparaging someone based on a protected characteristic.

 

 

 

 

In addition, violence, threats of violence and intimidation are not allowed in our workplace. Further, no one is permitted to work while under the influence of alcohol or drugs. The use, possession or distribution of illegal drugs in our workplace is prohibited. No one is permitted to consume alcohol on Company property or at Company functions, with the exception that employees of legal drinking age may consume alcohol in moderation at authorized Company functions.

 

Violations of ethical conduct cannot be excused because they were directed or requested by another. In this regard, you are expected to alert your supervisor (or, in the case of directors, the Company’s Legal Department) whenever an illegal, dishonest or unethical act is discovered or suspected. You will not be penalized for reporting your discoveries or suspicions.

 

3. Conflicts of Interest

 

You should avoid any personal activity, investment or association that could interfere or appear to interfere with good judgment concerning the Company’s best interests. A “conflict of interest” can occur when your personal or business interests are adverse to – or may appear to be adverse to – the interests of the Company as a whole. You may not exploit your position or relationship with the Company for personal gain. You should avoid even the appearance of such a conflict. Therefore, if you are related in any way to a vendor, supplier or other provider, you should not be the one to decide whether the Company will do business with that person. Subject to the provisions included in the Company’s Certificate of Incorporation, as it may be amended and/or restated from time to time, some examples of situations that could create a conflict of interest (and, in some cases, violate applicable law) are set out below:

 

Working for a competitor or running a business that directly competes with the Company.

 

Doing other outside work, if it’s for a customer, supplier or vendor, or if it could adversely impact your responsibilities to the Company.

 

Having a financial interest in a customer, supplier, competitor, business partner, vendor or supplier (excluding an interest of less than 1% in the stock of a publicly-traded company) or a family relationship with someone who works for a customer, supplier or vendor.

 

Transacting business on behalf the Company with a company in which you or a family member has a substantial financial interest.

 

Accepting loans, guarantees, or gifts from persons or entities who deal with the Company in those cases where acceptance of a loan, guarantee, or gift could create the appearance of a conflict of interest. Business gifts with a customer, supplier or vendor are acceptable if: (a) intended to create goodwill and sound working relationships, and not to gain improper advantage; and (b) consistent with common and acceptable business practice.

 

There are other situations in which a conflict of interest may arise.

 

Employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. If you have concerns about any situation, follow the steps outlined in the section on “Procedures for Reporting Possible Violations.”

 

2

 

 

4. Corporate Opportunities

 

You owe a duty to the Company to advance its interests when the opportunity to do so arises and are prohibited from taking for yourself opportunities that are discovered through the use of Company property, information or position. You may not use Company property, information or position for personal gain. In addition, you may not compete with the Company. If you become aware of any actual or potential business opportunity that relates to the Company, you may not take advantage of the opportunity or share the opportunity with anyone outside the Company without first receiving the approval of the Legal Department or the Board, as applicable.

 

Notwithstanding the foregoing, the duties of directors with respect to corporate opportunities are subject to the terms of the Company’s Certificate of Incorporation, as it may be amended and/or restated from time to time.

 

5. Confidentiality

 

You should maintain the confidentiality of information entrusted to you by the Company or by our stakeholders, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information about the Company or a third party, like a customer, partner, vendor or supplier, that you learn in the course of your work for the Company, including financial information, business performance metrics, customer and associate data, trade secrets, product designs, inventions, strategic information, and other confidential information that our business partners and third parties share with us. If you are uncertain about whether information is confidential, you should treat the information as confidential until further guidance is obtained. Note that the loss, misuse or improper access or disclosure of our customer’s information not only violates this Code and our values but may also be against the law and can lead to significant civil or criminal penalties.

 

Additionally, you may be further subject to confidentiality obligations in connection with a separate confidentiality agreement, which obligations are in addition to the confidentiality obligations under this Code.

 

6. Compliance with Laws

 

It is the Company’s policy to comply with all applicable laws, including all laws and regulations relating to antitrust and competition, trading, etc., and Company Policies. It is your personal responsibility to adhere honestly and in good faith to the standards and restrictions imposed by those laws, rules, regulations and Company Policies. Although no employee or director is expected to know the details of all these laws, rules and regulations, it is important for you to have a general understanding of the specific laws, rules and regulations that are relevant to your areas of responsibility at the Company. You should contact the Legal Department if you have questions about particular legal requirements or what the law permits.

 

7. Insider Trading

 

It is illegal to buy or sell securities using “material non-public information.” “Material information” generally means information where there is a likelihood that a reasonable investor would consider such information important in deciding whether to buy, hold or sell securities. “Non-public information” is information that is not generally known or available to the public. Insider trading is a crime punishable by civil penalties, criminal fines and prison. Companies may also face civil penalties for insider trading violations by their employees and other agents. In addition to being against the law, insider trading or allegations of improper trading of securities by our employees or directors can cause negative publicity for the Company and significant damage to our reputation and business.

 

3

 

 

While providing services to the Company, you may learn material non-public information about our Company or one of our business partners or other third parties. Employees and directors (as well as their family members and controlled entities) may not trade in the securities of any company when they are aware of material non-public information about that company. This policy against “insider trading” applies to trading in Company securities, as well as to trading in the securities of other companies, such as the Company’s customers, vendors, business partners, distributors, suppliers and companies with which the Company may be negotiating a major transaction. In addition, employees and directors (as well as their family members and controlled entities) may not convey material non-public information about the Company or another company to others, or suggest that anyone purchase or sell any company’s securities while they are aware of material non-public information about that company. This practice, known as “tipping,” also violates the securities laws and can result in the same civil and criminal penalties that apply to engaging in insider trading directly, even if the employee does not receive any money or derive any benefit from trades made by persons to whom the employee passed material non-public information.

 

Please refer to the Company’s Insider Trading Policy for more information.

 

8. Avoiding Corruption & Bribery

 

We must never compromise our integrity or our reputation to achieve a business goal. As part of our commitment to acting honestly, ethically and in compliance with the law, you must never take or offer any form of bribe. In addition, you must never ask or allow a third party to make or accept a bribe on our behalf. Bribes not only violate this Code and our standards for ethical business practices but they are against the law and can lead to significant civil or criminal penalties. You must avoid situations where an item of value you are providing or accepting might appear to influence a business decision. Bribery issues can be complex, so please contact the Legal Department if you have any questions or need to report any issues.

 

9. Maintaining Books and Records and Public Reporting

 

To provide an adequate system of internal accounting and controls, the Company is required under U.S. federal securities laws and generally accepted accounting principles to keep books, records and accounts that accurately reflect all transactions. Also, the Company is required to provide full, fair, accurate, timely and understandable disclosure in reports and documents that it files with, or furnishes to, the Securities and Exchange Commission (“SEC”) and in all of its other public communications. The Company expects all personnel to ensure that those portions of its books, records and accounts for which they have responsibility are valid, complete, accurate and supported by appropriate documentation in verifiable form. Similarly, the Company expects all personnel to ensure that all reports and documents filed with the SEC and all other public communications for which they are responsible, provide full, fair, accurate, timely and understandable disclosure and that the same are filed on a timely basis.

 

The Company’s business records must be maintained for the periods specified in accordance with the Company’s document retention policies, as they may be amended from time to time. Records may be destroyed only at the expiration of the pertinent period. In no case may documents involved in a pending or threatened litigation or government inquiry or under subpoena or other information request be discarded or destroyed, regardless of the periods specified in the applicable policy. In addition, no one should ever destroy, alter, or conceal, with an improper purpose, any record or otherwise impede any official proceeding, either personally, in conjunction with, or by attempting to influence, another person.

 

4

 

 

10. Protection of Company, Customer, Vendor, Supplier and Business Partner Information and Company Assets

 

No one may use for his or her personal benefit, or reveal to others for their personal benefit, the Company’s confidential or proprietary information or that of its customers, vendors, suppliers and business partners. Additionally, all personnel must take appropriate steps, including securing documents, limiting access to computers and electronic media, and proper disposal methods, to prevent unauthorized access to such information.

 

You are also responsible for protecting the Company’s assets and ensuring their efficient use for legitimate purposes only, including our proprietary information and the proprietary information of any third party with respect to which the Company has incurred confidentiality obligations. You must protect these assets, including cash, company records, equipment and store merchandise, from theft and abuse. The Company allows its employees to make inconsequential, non-business use of its resources (such as use of Company phones to receive or make limited personal phone calls), as long as this use complies with legal and ethical requirements and with all applicable Company policies. You are expected to use good judgment and act in a professional manner when using these resources. You should be aware that any use of Company technology is not private, and the Company may access and review the information you send, receive or store for any business purpose.

 

11. External Communications and Political Contributions

 

The Company strives to maintain open, honest and consistent communications. To facilitate the accuracy and appropriateness of all information publicly disclosed, only authorized individuals are permitted to speak with or respond to inquiries from the media, shareholders, the investment community (such as securities analysts and investment advisors) and government entities. If you are not so explicitly authorized, you must make sure that whenever you communicate in public forums, online or otherwise, you make it clear that you do not represent or speak for the Company. In addition, if you are not so explicitly authorized, if you are contacted by a member of the media, a stockholder or a member of the investment community, you should decline to comment and should immediately refer all inquiries to the Company’s Chief Marketing & Communication Officer. Please refer to the Company’s Guidelines for Public Disclosures and Communications with the Investment Community for more information. Inquiries from a government entity should be referred to the General Counsel.

 

Further, you are not prohibited from participating in the political process and engaging in activities that improve our communities. If you do, however, you must never suggest that the Company endorses any political cause or candidate. No Company funds or services shall be paid or furnished to any political party or any candidate for, or incumbent in, any public office, regardless of whether the contributions are legal under the law of the state or country in which they are made.

 

12. Procedures for Reporting Possible Violations; No Retaliation

 

You are responsible for adhering to the standards in this Code, for raising questions if you are in doubt about the best course of action and for reporting possible misconduct promptly after it comes to your attention. The Company will take seriously any report regarding any possible violation of the federal securities laws, violations of any Company policy, including this Code, or other improper or illegal activity, and recognizes the importance of keeping the identity of the reporting person confidential, wherever possible, consistent with the law and the need to conduct an adequate investigation. Where you know or believe that a possible violation of the federal securities laws, Company policy, including this Code, or some other illegal or improper conduct, including questionable accounting, internal controls and auditing matters concerning the Company, has occurred or is ongoing, you should promptly report the matter to your supervisor, if applicable, or, if you feel uncomfortable speaking with the supervisor (for whatever reason), to the Legal Department or, in the case of directors, to the Chairman of the Audit Committee so that, as appropriate, the report can be investigated and follow-up action taken. You may also report anonymously to our whistleblower hotline at 844-598-1864 or online at Rubiconglobal.ethicspoint.com. Complaints regarding violations in relation to accounting, internal controls or auditing matters will be investigated in accordance with the Audit Committee Procedures for Handling Reports of Potential Misconduct.

 

5

 

 

The Company strictly prohibits any retaliation, unfavorable or adverse employment consequences, and any form of harassment against any person who has submitted a good-faith report to the Company or who cooperates in a Company investigation. Any person who, directly, indirectly or through a third party, retaliates against any person who has made a report or cooperated in a Company investigation, or discourages any person from making a report, shall be subject to disciplinary action, which may include termination of employment. Any person who believes he or she has been subject to retaliation or reprisal as a result of reporting a concern or making a complaint shall immediately report such action via any of the reporting channels described herein so that, as appropriate, the report can be investigated and follow-up action taken.

 

Nothing contained in this Code, nor in any agreement signed by you, prohibits you from voluntarily communicating with, reporting concerns to, filing a charge or complaint with, making lawful disclosures to, providing documents or other information to or participating in an investigation or hearing conducted by the Equal Employment Opportunity Commission, National Labor Relations Board, SEC or any other federal, state or local agency charged with the enforcement of any laws regarding possible violations of law or regulations or from recovering whistleblower awards from the SEC or any other agency.

 

13. Code Enforcement

 

The Company may take any action it deems necessary to remedy any breach or violation of this Code, including but not limited to, terminating an employee, or seeking the resignation of a director, and/or recommending that a director not be nominated for re-election to the Board.

 

14. Waivers

 

Waivers of this Code are considered on a case-by-case basis and are discouraged. Waivers for directors and executive officers require approval by the Board, and waivers involving any other employee require the written approval of the Legal Department. Any waiver for a director or an executive officer shall only be granted in exigent circumstances and shall be disclosed as required by the rules of the SEC and the applicable listing exchange.

 

15. No Employment Contract

 

This document is not an employment contract between the Company and any of its employees and does not alter the Company’s current at-will employment relationship with any employee.

 

6

 

Exhibit 99.1

 

 

 

Rubicon, a Leading Digital Marketplace for Waste and Recycling,

Completes Business Combination with Founder SPAC

 

Transaction accelerates Rubicon’s mission to end waste through digital transformation of the waste and recycling category

 

Rubicon raised approximately $196.8 million in gross proceeds, consisting of funds from Founder SPAC’s trust account and PIPE investments, after redemptions and prior to the payment of transaction fees and expenses and amounts payable under Founder’s previously-disclosed forward purchase agreement

 

Rubicon Class A common stock to begin trading on the NYSE tomorrow, August 16th, under ticker “RBT”

 

Lexington, Kentucky (August 15, 2022) – Rubicon Technologies, Inc. (“Rubicon”), a leading digital marketplace for waste and recycling and provider of innovative software-based products for businesses and governments worldwide, today announced that it has completed its business combination with Founder SPAC (“Founder”).

 

The combined company will operate under the name Rubicon Technologies, Inc., and will continue to be led by Nate Morris, Chairman and Chief Executive Officer. Commencing at the open of trading on August 16, 2022, Rubicon’s Class A common stock and warrants are expected to trade on the New York Stock Exchange (“NYSE”) under the symbols “RBT” and “RBT WS,” respectively.

 

The transaction was approved by Founder’s shareholders at an extraordinary general meeting held on August 2, 2022 (the “Extraordinary Meeting”). Over 97% of the votes cast on the business combination proposal at the Extraordinary Meeting were cast in favor of approving the business combination. Founder’s shareholders also voted to approve all other proposals presented at the Extraordinary Meeting.

 

“Becoming a public company is a tremendous step forward for Rubicon and will elevate our platform and products, while further accelerating our mission to end waste through the reimagining of the waste and recycling category,” said Nate Morris, Chairman and Chief Executive Officer of Rubicon. “I started Rubicon with a $10,000 line of credit and maxed out credit cards, and since that time our products have empowered our customers and hauler partners to make data-driven decisions that can lead to more efficient and effective operations as well as more sustainable waste outcomes. This value proposition has allowed Rubicon to scale our platform considerably and, as a well-capitalized public company, we are positioned to further scale our technology to transform the $2.1 trillion global waste and recycling market.”

 

Transaction Overview

As a result of the transaction, Rubicon raised $196.8 million in gross proceeds, consisting of funds from Founder’s trust account and PIPE investments, after redemptions and prior to the payment of transaction fees and expenses and amounts payable under Founder’s previously-disclosed forward purchase agreement. Rubicon intends to use the proceeds to capitalize on significant future growth from organic and inorganic opportunities, as well as continued investment in new software development.

 

Advisors

Moelis & Company LLC acted as exclusive financial advisor to Founder. Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC, acted as financial advisor to Rubicon. Cohen & Company Capital Markets and Moelis & Company LLC served as placement agents to Founder. Jefferies LLC served as capital markets advisor to Founder. Canaccord Genuity and MKM Partners served as capital markets advisors to Rubicon. Winston & Strawn, LLP served as legal advisor to Founder. Gibson, Dunn & Crutcher LLP served as legal advisor to Rubicon.

 

About Rubicon

Rubicon Technologies, Inc. (NYSE: RBT) is a digital marketplace for waste and recycling, and provider of innovative software-based products for businesses and governments worldwide. Creating a new industry standard by using technology to drive environmental innovation, the company helps turn businesses into more sustainable enterprises, and neighborhoods into greener and smarter places to live and work. Rubicon’s mission is to end waste. It helps its partners find economic value in their waste streams and confidently execute on their sustainability goals. To learn more, visit www.Rubicon.com.

 

 

 

 

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, are forward-looking statements. When used in this press release, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Rubicon and its management, are inherently uncertain; factors that may cause actual results to differ materially from current expectations include, but are not limited to: 1) the outcome of any legal proceedings that may be instituted against Rubicon or others following the closing of the business combination; 2) the ability to meet the NYSE’s listing standards following the consummation of the business combination; 3) the risk that the business combination disrupts current plans and operations of Rubicon as a result of consummation of the business combination; 4) the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; 5) costs related to the business combination; 6) changes in applicable laws or regulations; 7) the possibility that Rubicon may be adversely affected by other economic, business and/or competitive factors; and 8) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Founder’s Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission (“SEC”), and other documents of Founder filed, or of Rubicon, to be filed, with the SEC. Although Rubicon believes the expectations reflected in the forward-looking statements are reasonable, nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward looking statements will be achieved. There may be additional risks that Rubicon presently does not know of or that Rubicon currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Rubicon does not undertake, and expressly disclaims, any duty to update these forward-looking statements, except as otherwise required by applicable law.

 

Investor Contact:

Sioban Hickie, ICR, Inc.

RubiconIR@icrinc.com

 

Media Contact:

Dan Sampson

Chief Marketing & Corporate Communications Officer

dan.sampson@rubicon.com

RubiconPR@icrinc.com

 

 

 

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

RUBICON TECHNOLOGIES, LLC

AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED Financial Statements

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    
Condensed Consolidated Balance Sheets (unaudited)   1
Condensed Consolidated Statements of Operations (unaudited)   2
Condensed Consolidated Statements of Members’ (Deficit) Equity (unaudited)   3
Condensed Consolidated Statements of Cash Flows (unaudited)   4
Notes to the Condensed Consolidated Financial Statements (unaudited)   5-19

 

i

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands)

 

 

   June 30,   December 31, 
   2022   2021 
ASSETS          
Current Assets:          
Cash and cash equivalents  $6,882   $10,617 
Accounts receivable, net   47,598    42,660 
Contract assets   62,143    56,984 
Prepaid expenses   5,923    6,227 
Other current assets   1,909    1,769 
Total Current Assets   124,455    118,257 
           
Property and equipment, net   2,600    2,611 
Operating right-of-use assets   3,398    3,920 
Other noncurrent assets   7,151    4,558 
Goodwill   32,132    32,132 
Intangible assets, net   12,490    14,163 
Total Assets  $182,226   $175,641 
           
LIABILITIES AND MEMBERS’ (DEFICIT) EQUITY          
Current Liabilities:          
Accounts payable  $70,844   $47,531 
Line of credit   41,426    29,916 
Accrued expenses   80,048    65,538 
Deferred compensation   12,892    8,321 
Contract liabilities   4,690    4,603 
Operating lease liabilities, current   1,596    1,675 
Warrant liabilities   1,890    1,380 
Simple agreement for future equity (SAFE)   8,800    - 
Current portion of long-term debt, net of debt issuance costs   23,540    22,666 
Total Current Liabilities   245,726    181,630 
           
Long-Term Liabilities:          
Deferred income taxes   218    178 
Operating lease liabilities, noncurrent   2,838    3,770 
Long-term debt, net of debt issuance costs   46,710    51,000 
Other long-term liabilities   467    367 
Total Long-Term Liabilities   50,233    55,315 
Total Liabilities   295,959    236,945 
           
Commitments and Contingencies (Note 13)          
           
Members’ (Deficit) Equity   (113,733)   (61,304)
Total Liabilities and Members’ (Deficit) Equity  $182,226   $175,641 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

1

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

(in thousands, except unit data)

 

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
Revenue:                    
Service  $140,268   $118,680   $274,966   $238,255 
Recyclable commodity   24,338    18,904    49,446    32,299 
Total revenue   164,606    137,584    324,412   270,554 
Costs and Expenses:                    
Cost of revenue (exclusive of amortization and depreciation):                   
Service   136,185    114,323    265,878    228,516 
Recyclable commodity   22,386    17,924    45,622    30,758 
Total cost of revenue (exclusive of amortization and depreciation)   158,571    132,247    311,500   259,274 
Sales and marketing   4,546    3,720    8,496   6,796 
Product development   9,315    4,364    18,533   8,523 
General and administrative   13,253   13,684    25,880   23,407 
Amortization and depreciation   1,402   1,989    2,892    3,614 
Total Costs and Expenses   187,087    156,004    367,301   301,614 
Loss from Operations   (22,481)   (18,420)   (42,889)   (31,060)
                     
Other Income (Expense):                    
Interest earned   -    -    -   2
Gain on forgiveness of debt   -    9,892    -   10,900
Loss on change in fair value of warrants   (232)   -    (510)   - 
Excess fair value over the consideration received for SAFE   (800)   -    (800)   - 
Other income(expense)   (357)   (220)   (687)   (404)
Interest expense   (3,911)   (2,654)   (7,686)   (4,850)
Total Other Income (Expense)   (5,300)   7,018    (9,683)   5,648
Loss Before Income Taxes   (27,781)   (11,402)   (52,572)   (25,412)
                     
Income tax expense (benefit)   13    (560)   41    (709)
Net Loss  $(27,794)  $(10,842)  $(52,613)  $(24,703)
Net loss per unit, basic and diluted  $(0.83)  $(0.33)  $(1.57)  $(0.76)
Weighted-average units used in computing net loss per unit, basic and diluted   33,509,272    32,772,909    33,509,272    32,600,544 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

2

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ (DEFICIT) EQUITY (UNAUDITED)

 

(in thousands)

 

 

   Common   Preferred     
   Unit Holders   Unit Holders   Total 
Balance, March 31, 2021  $(137,435)  $102,508  $(34,927)
Compensation costs related to incentive units   -    244   244
Warrants exercised   -    30,496   30,496
Net loss   (3,139)   (7,703)   (10,842)
Balance, June 30, 2021  $(140,574)  $125,545  $(15,029)
                
Balance, March 31, 2022  $(161,308)  $75,243  $(86,065)
Compensation costs related to incentive units   -    126   126 
Net loss   (7,830)   (19,964)   (27,794)
Balance, June 30, 2022  $(169,138)  $55,405  $(113,733)

 

   Common   Preferred     
   Unit Holders   Unit Holders   Total 
Balance, December 31, 2020  $(133,421)  $112,235  $(21,186)
Compensation costs related to incentive units   -    364   364
Warrants exercised   -    30,496    30,496
Net loss   (7,153)   (17,550)   (24,703)
Balance, June 30, 2021  $(140,574)  $125,545  $(15,029)
                
Balance, December 31, 2021  $(154,316)  $93,012  $(61,304)
Compensation costs related to incentive units   -    184    184 
Net loss   (14,822)   (37,791)   (52,613)
Balance, June 30, 2022  $(169,138)  $55,405  $(113,733)

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

3

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(in thousands)

 

 

   Six Months Ended 
   June 30, 
   2022   2021 
Cash flows from operating activities:          
Net loss  $(52,613)  $(24,703)
Adjustments to reconcile net loss to net cash flows from operating activities:          
Loss on disposal of property and equipment   21    27 
Amortization and depreciation   2,899   3,654
Amortization of debt issuance costs   1,663   679
Bad debt reserve   (2,467)   2,567
Loss on change in fair value of warrants   510    - 
Excess fair value over the consideration received for SAFE   800    - 
Equity-based compensation   184   364
Phantom unit expense   4,570   2,266
Gain on forgiveness of debt   -    (10,900)
Deferred income taxes   40    (727)
Change in operating assets and liabilities:          
Accounts receivable   (2,471)   (6,374)
Contract assets   (5,159)   (3,207)
Prepaid expenses   225    (1,323)
Other current assets   (204)   (226)
Operating right-of-use assets   522    412
Other noncurrent assets   46    17
Accounts payable   21,476   659
Accrued expenses   14,510    (1,886)
Contract liabilities   87    (934)
Operating lease liabilities   (1,011)   (666)
Other liabilities   100   101
Net cash flows from operating activities   (16,272)   (40,200)
           
Cash flows from investing activities:          
Property and equipment purchases   (685)   (491)
Intangible asset purchases   -    (50)
Net cash flows from investing activities   (685)   (541)
           
Cash flows from financing activities:          
Net (payments) borrowings on line of credit   11,510    (4,331)
Proceeds from long-term debt   -    22,254
Repayments of long-term debt   (3,000)   - 
Financing costs paid   (2,000)   (800)
Warrants exercised   -    30,496
Proceeds from SAFE   8,000      
Payments of deferred offering costs   (1,288)   - 
Net cash flows from financing activities   13,222   47,619
           
Net change in cash and cash equivalents   (3,735)   6,878
Cash, beginning of period   10,617   6,021
Cash, end of period  $6,882  $12,899
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $5,940  $3,908
Deferred offering costs recognized in accounts payable   1,837    - 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

4

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 1—Nature of operations and summary of significant accounting policies

 

Description of Business – Rubicon Technologies, LLC is a digital marketplace for waste and recycling services and provides cloud-based waste and recycling solutions to businesses and governments. Rubicon’s sustainable waste and recycling solutions provide comprehensive management of customers’ waste streams through a platform that powers a modern, digital experience and delivers data-driven insights and transparency for the customers and hauling and recycling partners.

 

Rubicon provides consultation and management services to customers for waste removal, waste management, logistics, and recycling solutions. Consultation and management services include planning, consolidation of billing and administration, cost savings analyses, and vendor performance monitoring and management. The combination of Rubicon’s technology and services provides a holistic audit of customer waste streams. Rubicon also provides logistics services and markets and resells recyclable commodities.

 

Rubicon Technologies, LLC and all subsidiaries are hereafter referred to as “Rubicon” or the “Company.”

 

Basis of Presentation and Consolidation – The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

 

In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2021. These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The Company’s condensed consolidated financial statements include the accounts of Rubicon Technologies, LLC, and subsidiaries. The Company’s condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended December 31, 2021.

 

Segments – The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Company’s CODM role is fulfilled by the Executive Leadership Team (“ELT”), who allocates resources and assesses performance based upon consolidated financial information.

 

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition – The Company recognizes service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by the Company’s services. The Company recognizes recyclable commodity revenue point in time when the ownership, risks, and rewards transfer. The Company derives its revenue from waste removal, waste management and consultation services, software subscriptions, and the purchase and sale of recyclable commodities.

 

5

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Service Revenue:

 

Service revenues are primarily derived from long-term contracts with waste generator customers including multiple promises delivered through the Company’s digital marketplace platform. The promises include waste removal, consultation services, billing administration and consolidation, cost savings analyses, and vendor procurement and performance management, each of which constitutes an input to the combined service managed through the digital platform. The digital platform and services are highly interdependent, and accordingly, each contractual promise is not considered a distinct performance obligation in the context of the contract and is combined into a single performance obligation. In general, fees are invoiced, and revenue is recognized over time as control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing the service. The Company invoices for certain services prior to performance. These advance invoices are included in contract liabilities and recognized as revenue in the period service is provided.

 

Service revenues also include software-as-a service subscription, maintenance, equipment and other professional services, which represent separate performance obligations. Once the performance obligations and the transaction price are determined, including an estimate of any variable consideration, the Company then allocates the transaction price to each performance obligation in the contract using a relative standalone selling price method. The Company determines standalone selling price based on the price at which the good or service is sold separately.

 

Recyclable Commodity Revenue:

 

The Company recognizes recyclable commodity revenue through the purchase and sale of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets, and other recyclable materials at market prices. The Company purchases recyclable commodities from certain waste generator customers and sells the recyclable materials to recycling and processing facilities. Revenue recognized under these agreements is variable in nature based on the market, type and volume or weight of the materials sold. The amount of revenue recognized is based on commodity prices at the time of sale, which are unknown at contract inception. Fees are billed, and revenue is recognized at a point in time when control is transferred to the recycling and processing facilities.

 

Management reviews contracts and agreements the Company has with its waste generator customers and hauling and recycling partners, and performs an evaluation to consider the most appropriate manner in accordance with ASC 606-10, Revenue Recognition: Principal Agent Considerations, by which revenue is presented within the condensed consolidated statements of operations.

 

Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether the Company controls the service provided to the end-user and are the principal in the transaction (gross), or the Company arranges for other parties to provide the service to the end-user and are the agent in the transaction (net). Management has concluded that the Company is the principal in most arrangements as it controls the waste removal service and is the primary obligor in the transactions.

 

Cost of Revenue, exclusive of amortization and depreciation – Cost of service revenues primarily consists of expenses related to delivering the Company’s service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs such as salaries and benefits.

 

Cost of recyclable commodity revenues primarily consists of expenses related to purchase of old corrugated cardboard (OCC), old newsprint (ONP), aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.

 

The Company recognizes the cost of revenue exclusive of any amortization or depreciation expenses, which are recognized in operating expense on the condensed consolidated statements of operations.

 

6

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash in bank deposit accounts, which at times exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not experienced losses in such accounts and does not believe it is exposed to any significant credit risk.

 

Accounts Receivable – Accounts receivable consists of trade accounts receivable for services provided to customers. Accounts receivable are stated at the amount the Company expects to collect. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past-due balances and other higher-risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.

 

Contract Balances – In cases where our customers pay for services in arrears, the Company accrues for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset (unbilled receivable). As of June 30, 2022 and December 31, 2021, the Company had unbilled receivables of $62.1 million and $57.0 million, respectively. These unbilled balances were the result of services provided in period, but not yet billed to the customer. During the six months ended June 30, 2022, the Company invoiced its customers $49.6 million pertaining to contract assets for services delivered prior to December 31, 2021.

 

Contract liabilities (deferred revenue) consists of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring front load services in advance on a monthly basis. As of June 30, 2022 and December 31, 2021, the Company had deferred revenue balances of $4.7 million and $4.6 million, respectively. During the six months ended June 30, 2022, the Company recognized $3.7 million of revenue that was included in the contract liabilities balance as of December 31, 2021.

 

Accrued Hauler Expenses – The Company recognizes hauler costs and the cost of recyclable products when services are performed. Accounting for accrued hauler costs and the cost of recyclable products requires estimates and assumptions regarding the quantity of waste collected by their vendors. The Company estimates quantities using historical transaction and market data based on the waste stream composition, equipment type, and equipment size. Accrued hauler expenses are presented within accrued expenses on the condensed consolidated balance sheets.

 

Fair Value Measurements – U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items.

 

Deferred Offering Costs – Offering costs, consisting of legal, accounting, printer and filing fees related to the Mergers (as defined in Note 17), are deferred and will be offset against proceeds from the Mergers upon consummation of the transactions. In the event the transactions are terminated, all deferred offering costs would be expensed at that time. Deferred offering costs capitalized as of June 30, 2022 and December 31, 2021 were $4.2 million and $1.1 million, respectively, and included in other noncurrent assets on the condensed consolidated balance sheets.

 

Customer Acquisition Costs – The Company makes certain expenditures related to acquiring contracts for future services. These expenditures are capitalized and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the life of the customer. Amortization of these customer incentive costs is presented within amortization and depreciation on the condensed consolidated statements of operations.

 

7

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 2—Recent accounting pronouncements

 

Accounting pronouncements adopted during 2022

 

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and contracts in an Entity’s Own Equity, which reduced the number of models used to account for convertible instruments, amends the accounting for certain contracts in an entity’s own equity that would have been previously been accounted for as derivatives and modifies the diluted per share calculations for convertible instruments. The Company adopted this ASU as of January 1, 2022 using the modified retrospective method. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

Accounting pronouncements issued, but not adopted as of June 30, 2022

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. ASU 2016-13 is effective for the Company at the beginning of 2023, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on the Company’s consolidated financial statements.

 

In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 will be effective for the Company at the beginning of 2024 on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact of this ASU will have on the Company’s consolidated financial statements.

 

Note 3—Property and equipment

 

Property and equipment, net is comprised of the following as of June 30, 2022 and December 31, 2021 (in thousands):

 

  

June 30,

2022

   December 31,
2021
 
Computers, equipment and software  $3,378  $2,968
Customer equipment   1,230   1,122
Furniture and fixtures   1,689   1,570
Leasehold improvements   3,771   3,769
    10,068   9,429
Less accumulated depreciation and amortization   (7,468)   (6,818)
Property and equipment, net  $2,600  $2,611

 

Depreciation and amortization expense reflected in operating expense for the three months ended June 30, 2022 and 2021 was $0.3 million and $0.4 million, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $0.7 million and $0.8 million, respectively

 

8

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 4—Debt

 

Revolving Credit Facility – On December 14, 2018, the Company entered into a $60.0 million “Revolving Credit Facility” secured by all assets of the Company including accounts receivable, intellectual property, and general intangibles. The loan’s original maturity was December 31, 2021 and bore an interest rate of LIBOR plus 4.5% (6.0% at December 31, 2021).

 

On February 27, 2020, the Company amended the Revolving Credit Facility extending the maturity date to December 31, 2022.

 

On March 24, 2021, the Company amended the Revolving Credit Facility which modified the calculation of qualified billed and unbilled receivables. The amendment incrementally increased the qualified unbilled receivables resulting in additional availability on the Revolving Credit Facility. On October 15, 2021, the Company amended the Revolving Credit Facility, adding terms permitting the Company to enter into additional subordinated loan agreements.

 

On April 26, 2022, the Company amended the Revolving Credit Facility. The amendment replaced the benchmark interest of LIBOR with SOFR, and as a result, the Revolving Credit Facility bears SOFR plus 4.6% (6.1% at June 30, 2022). The fee on the average daily balance of unused loan commitments is 0.7%.

 

The borrowing capacity of the Revolving Credit Facility is calculated based on qualified billed and unbilled receivables. Interest and fees are payable monthly with principal due upon maturity. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, it was determined that the Revolving Credit Facility amendments were considered a debt modification.

 

The Revolving Credit Facility requires a lockbox arrangement, which provides for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender. This arrangement, combined with the existence of the subjective acceleration clause in the “Line of Credit” agreement, necessitates the Line of Credit be classified as a current liability on the consolidated balance sheets. The acceleration clause allows for amounts due under the facility to become immediately due in the event of a material adverse change in the Company’s business condition (financial or otherwise), operations, properties or prospects, change of management, or change in control. As of June 30, 2022, the Company’s total outstanding borrowings under the Line of Credit were $41.4 million and $18.6 million remained available to draw. As of December 31, 2021, the Company’s total outstanding borrowings under the Line of Credit were $29.9 million and $23.0 million remained available to draw. The Revolving Credit Facility is subject to certain financial covenants. As of June 30, 2022, the Company was in compliance with these financial covenants.

 

Term Loan Facilities – On March 29, 2019, the Company entered into a $20.0 million “Term Loan” agreement secured by a second lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Term Loan bore an interest rate of LIBOR plus 9.0% with the maturity date of the earlier of March 29, 2024 or the maturity date of the Revolving Credit Facility.

 

On February 27, 2020, the Company amended the Term Loan agreement, increasing the principal amount of the facility to $40.0 million. The amended term loan bears an interest rate of LIBOR plus 9.5% and includes covenants for minimum qualified billed and unbilled receivables. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, it was determined that this Term Loan amendment was considered a debt modification.

 

On March 24, 2021, the Company amended the Term Loan agreement, increasing the principal amount of the facility to $60.0 million and deferring principal payments to July 2021. The Company committed to minimum equity raise of $100.0 million, which if not completed by July 31, 2021, could require the use of available funds under the Line of Credit as term loan collateral by an amount up to $20.0 million. In accordance with ASC 470-50, Debt – Modifications and Extinguishments, it was determined that this Term Loan amendment was considered a debt modification.

 

9

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

On October 15, 2021, the Company amended the Term Loan agreement, adding terms permitting the Company to enter into additional subordinated loan agreements. The amendment also modified the qualified equity contributions requirement of $100.0 million by July 31, 2021 to $50.0 million during the period after October 15, 2021 and on or prior to February 28, 2022. The lender has waived the requirement to use the available funds under the Line of Credit as term loan collateral through June 30, 2022 with the term loan amendment executed on April 26, 2022. Since the Mergers (see Note 17) had not consummated on or prior to June 30, 2022, the Company did not meet the amended qualified equity contributions requirement. The Company does not believe that any term loan collateral reduction corresponding to the qualified equity contribution would impact the Company’s ability to meet its liquidity requirements over the next twelve months. Pursuant to the amended Term Loan agreement, on October 15, 2021, the Company entered into warrant agreements and issued common unit purchase warrants (see Note 8). In accordance with ASC 470-50, Debt – Modifications and Extinguishments, it was determined that this Term Loan amendment was considered a debt modification.

 

On December 22, 2021, the Company entered into a $20.0 million “Subordinated Term Loan” agreement secured by a third lien on all assets of the Company including accounts receivable, intellectual property and general intangibles. The Subordinated Term Loan matures on December 22, 2022 and bears an interest rate of 15.0%. Pursuant to the Subordinated Term Loan agreement, the Company entered into warrant agreements and issued common unit purchase warrants (see Note 8).

 

Amortization of deferred debt charges were $0.8 million and $0.2 million for the three months ended June 30, 2022 and 2021, respectively. Amortization of deferred debt charges were $1.6 million and $0.4 million for the six months ended June 30, 2022 and 2021, respectively.

 

Components of long-term debt were as follows (in thousands):

 

  

June 30,

2022

   December 31,
2021
 
Term loan balance  $74,000   $77,000 
Less unamortized loan origination costs   (3,750)   (3,334)
Total borrowed   70,250    76,666 
Less short-term loan balance   (23,540)   (22,666)
Long-term loan balance  $46,710   $51,000 

 

At June 30,2022, the aggregate maturities of long-term debt for the remainder of 2022 and subsequent years are as follows (in thousands):

 

Fiscal Years Ending December 31,     
2022  $23,000 
2023   6,000 
2024   45,000 
   $74,000 

 

10

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

PPP Loans – In 2020, the Company received loans under the Paycheck Protection Program (“PPP”) for an amount totaling $10.8 million, which was established under the Coronavirus Aid, Relief, and Economic Security Act approved by the U.S. Congress on March 27, 2020 (the “CARES Act”) and administered by the Small Business Administration (“SBA”). The PPP Loans had a maturity date of 2 years from the initial disbursement and carried an interest rate of 1% per year. The application for the PPP Loan required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operation of the Company. This certification further required the Company to consider current business activity and ability to access other sources of liquidity sufficient to support the ongoing operations in a manner that was not significantly detrimental to the business. The receipt of the funds from the PPP Loans and the forgiveness of the PPP Loans were dependent on the Company having initially qualified for the PPP Loans and qualifying for the forgiveness of such PPP Loans based on funds being used for certain expenditures such as payroll costs and rent, as required by the terms of the PPP Loans.

 

The PPP Loans were eligible for forgiveness as part of the CARES Act, if certain requirements were met. The Company applied for forgiveness with the SBA in December 2020, and on March 30, 2021, the SBA forgave the principal balance and associated accumulated interest of one of the two PPP Loans in full. As a result, the Company recognized $1.0 million to gain on forgiveness of debt in the condensed consolidated statements of operations in the three months ended March 31, 2021. On June 10, 2021, the SBA forgave the principal balance and associated accumulated interest of the second PPP Loans in full. As a result, the Company recognized $9.9 million to gain on forgiveness of debt in the condensed consolidated statements of operations in the three months ended March 31, 2021. Presently, the SBA and other government communications have indicated that all loans in excess of $2.0 million will be subject to audit and that those audits could take up to seven years to complete. If the SBA determines that the PPP Loan was not properly obtained and/or expenditures supporting forgiveness were not appropriate, the Company would be required to repay some or all of the PPP Loan and record additional expense which could have a material adverse effect on the Company business, financial condition and results of operations in a future period.

 

The Company elected to repay $2.3 million of the PPP Loans during 2020, which the SBA paid back to the Company upon forgiveness of the PPP loan on June 10, 2021. The PPP Loan balances were $-0- as of June 30, 2022 and December 31, 2021.

 

Interest expense related to the Revolving Credit Facility, Term Loan Facility, and PPP Loan was $3.9 million and $2.7 million for the three months ended June 30, 2022 and 2021, respectively. Interest expense was $7.7 million and $4.9 million for the six months ended June 30, 2022 and 2021, respectively.

 

Note 5—Accrued expenses

 

Accrued expenses consist of the following as of June 30, 2022 and December 31, 2021 (in thousands):

 

  

June 30,

2022

   December 31,
2021
 
Accrued hauler expenses  $57,019   $49,607 
Accrued compensation   13,636    9,656 
Accrued income taxes   -    3 
Other accrued expenses   9,393    6,272 
   $80,048   $65,538 

 

11

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 6—Goodwill and other intangibles

 

There were no additions to goodwill for the year ended December 31, 2021 or the six months ended June 30, 2022. No impairment of goodwill was identified for the year ended December 31, 2021 or the six months ended June 30, 2022.

 

Intangible assets consisted of the following (in thousands, except years):

 

   June 30, 2022  
   Useful Life
(in years)
   Gross
Carrying Amount
   Accumulated
Amortization
   Net Carrying
Amount
 
Trade Name  5   $728   $(728)  $- 
Customer and hauler relationships  2 to 8    20,976    (10,862)   10,114 
Non-competition agreements  3 to 4    550    (550)   - 
Technology  3    3,178    (1,637)   1,541 
        25,432    (13,777)   11,655 
Domain Name  Indefinite    835    -    835 
       $26,267   $(13,777)  $12,490 

 

   December 31, 2021  
   Useful Life
(in years)
   Gross
Carrying Amount
   Accumulated
Amortization
   Net Carrying
Amount
 
Trade Name  5   $728   $(728)  $- 
Customer and hauler relationships  2 to 8    20,976    (9,582)   11,394 
Non-competition agreements  3 to 4    550    (487)   63 
Technology  3    3,178    (1,307)   1,871 
        25,432    (12,104)   13,328 
Domain Name  Indefinite    835    -    835 
       $26,267   $(12,104)  $14,163 

 

Amortization expense for intangible assets was $0.8 million and $0.8 million for the three months ended June 30, 2022 and 2021, respectively. Amortization expense for intangible assets was $1.7 million and $1.6 million for the six months ended June 30, 2022 and 2021, respectively. Future amortization expense for the remainder of fiscal year 2021 and subsequent years is as follows (in thousands):

 

Fiscal Years Ending December 31,     
2022  $1,609 
2023   3,220 
2024   3,110 
2025   2,559 
2026   1,157 
   $11,655 

 

12

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 7—Members’ (deficit) equity

 

   Authorized as of   Held by Members as of 
   June 30,
2022
   December 31,
2021
   June 30,
2022
   December 31,
2021
 
Common units   34,438,298    34,438,298    9,440,108    9,440,108 
Series A Preferred   4,834,906    4,834,906    4,834,906    4,834,906 
Series B Preferred   6,820,450    6,820,450    6,774,923    6,774,923 
Series C Preferred   3,142,815    3,142,815    3,141,500    3,141,500 
Series D Preferred   2,816,403    2,816,403    2,787,707    2,787,707 
Series E Preferred   7,451,981    7,451,981    6,530,128    6,530,128 
    59,504,853    59,504,853    33,509,272    33,509,272 

 

The founding member holds 8,278,000 common units.

 

Under the terms of the LLC Operating Agreement (“Agreement”), allocations of profits, losses, capital gains, and distributions are in the following priorities:

 

Profits and Losses – After giving effect to any required regulatory allocations, net profits and net losses (and to the extent necessary, individual items of income, gain, loss, deduction, or credit) of the Company shall be allocated to and among the members in a manner such that, as of the end of each allocation period, the sum of (i) the capital account of each member, (ii) each member’s share of partnership minimum gain (as determined in accordance with Treasury Regulations Section 1.704-2(g)), and (iii) each member’s partner nonrecourse debt minimum gain, shall be equal, as nearly as possible, to the respective net amounts that would be distributed to such member if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their book value, all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the book value of the assets securing such liability), and the net assets of the Company were distributed in accordance with the Agreement to the members immediately after making such allocations.

 

Distributions – Distributable cash from operations shall be distributed to the members as follows:

 

First, to members for tax distributions based on the highest applicable individual income tax rate applied to the allocation of net taxable income.

 

Second, to preferred unit holders on a pro rata basis until each preferred unit holder has received aggregate distributions in full repayment of their capital contributions.

 

Last, to preferred and common unit holders pro rata according to the number of units held by each member.

 

The Agreement also contains provisions governing the sale of the founding member’s interest in certain circumstances. The Agreement also provides for certain limitations of liability of operating managers upon good faith distributions of funds in accordance with the Agreement and limits each member’s liability to their respective capital contribution.

 

13

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 8—Warrant Liabilities

 

Pursuant to the amended Term Loan agreement entered on October 15, 2021 (see Note 4), the Company concurrently entered into warrant agreements and issued common unit purchase warrants, which granted the lender the right to purchase up to 62,003 units of the Company’s common units at the exercise price of $0.01 any time prior to the earlier of the tenth anniversary of the issuance date of October 15, 2021, or certain triggering events, including a sale of the Company, the Company’s initial public offering and a merger between the Company and a special purpose acquisition company (“SPAC”), where the warrants are fully redeemed or exchanged. The Company determined that the warrants required liability classification pursuant to ASC 480 Distinguishing Liabilities from Equity. As such, the outstanding warrants are recognized as warrant liabilities on the consolidated balance sheets and were measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured the fair value of the warrants as of June 30, 2022 and December 31, 2021, and recognized $1.8 million and $1.3 million of warrant liabilities in the condensed consolidated balance sheets, respectively, with the difference of $0.5 million recorded as other expense on the condensed consolidated statement of operations for the six months ended June 30, 2022. For the three months ended June 30, 2022, $0.2 million was recorded as other expense on the condensed consolidated statement of operations as a result of the change in the fair value of the warrants during the period. During the six months ended June 30, 2022 and the year ended December 31, 2021, none of the warrants issued to the lender of the Term Loan were exercised.

 

Pursuant to the Subordinated Term Loan agreement entered on December 22, 2021 (see Note 4), the Company concurrently entered into warrant agreements and issued common unit purchase warrants under the condition that if the Company does not repay the term loans on or prior to the maturity date, the lender receives right to purchase up to (i) the number of the Company’s common units worth $2.0 million if the Company consummates a SPAC transaction on or before the maturity date or (ii) 54,600 units of the Company’s common units in case the SPAC transaction is not consummated on or before the maturity date, at the exercise price of $0.01 any time after the maturity date prior to the earlier of the date principal and interest on all outstanding term loans under this Subordinated Term Loan agreement are repaid or the tenth anniversary of the issuance date. If the Company repays the Subordinated Term Loan on or prior to the maturity date, the warrants will automatically terminate and be voided and no warrant will be exercisable. The Company determined that the warrants required liability classification pursuant to ASC 480 Distinguishing Liabilities from Equity. The Company measured the fair value of the warrants as of June 30, 2022 and December 31, 2021, and recognized $0.1 million and $0.1 million of warrant liabilities in the condensed consolidated balance sheets, respectively. The impact to the condensed consolidated statements of operations from the changes in the fair value of the warrants was insignificant for the three months and the six months ended June 30, 2022. During the six months ended June 30, 2022 and the year ended December 31, 2021, none of the warrants issued to the lender of the Subordinated Term Loan were exercisable.

 

Note 9—Equity investment agreement

 

On May 25, 2022, the Company and FOUN (as defined in Note 17) entered into the Rubicon Equity Investment Agreement with certain investors, whereby, the investors have agreed to advance to the Company up to $8,000,000 and, upon consummation of the Mergers (as defined in Note 17), and in exchange for the advancements, (a) New Rubicon (as defined in Note 17) will cause to be issued up to 880,000 Class B Units of the Company and 160,000 shares of Domestication Class A Common Stock to the investors and (b) Founder SPAC Sponsor LLC (“Sponsor”) will forfeit up to 160,000 shares of Domestication Class A Common Stock, in each case subject to actual amounts advanced by the investors. In accordance with the Rubicon Equity Investment Agreement, on May 25, 2022, the Company received $8,000,000 of cash from the investors. The Company determined that the Rubicon Equity Investment Agreement required liability classification pursuant to ASC 480 Distinguishing Liabilities from Equity. As such, the Rubicon Equity Investment Agreement was recognized as simple agreement for future equity (SAFE) under current liabilities on the consolidated balance sheets, measured at the agreement execution date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income (expense) on the consolidated statements of operations. The Company measured its fair value as of the agreement execution and recognized $8.8 million of simple agreement for future equity on the consolidated balance sheets, with the $0.8 million difference between the fair value and the amount of cash received recorded as other expense on the consolidated statements of operations. Between the agreement execution date and June 30, 2022, there was no change in the fair value of the Rubicon Equity Investment Agreement. On August 15, 2022, the Mergers closed (see Note 17), and New Rubicon issued 880,000 Class B Units of the Company and 160,000 shares of Domestication Class A Common Stock to the investors and FOUN forfeited 160,000 shares of Domestication Class A Common Stock.

 

14

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 10—Equity incentive plan

 

The 2014 Profits Participation Plan and Unit Appreciation Rights Plan (“2014 Plan”) is a Board-approved plan. Under the 2014 Plan, the Company has the authority to grant incentive and phantom units to acquire common units. Unit awards generally vest at 25% of the units on the one year anniversary of continued employment, with the remaining 75% vesting in equal monthly installments over the next three years, unless otherwise specified.

 

Incentive Units – Calculating incentive unit compensation expense requires the input of highly subjective assumptions pertaining to the fair value of its units. The Company utilized an independent valuation specialist to assist with the Company’s determination of the fair value per unit. The methods used to determine the fair value per unit included discounted cash flow analysis, comparable public company analysis, and comparable acquisition analysis. Starting in the first quarter of 2021, the probability-weighted expected return method was used and considered multiple exit scenarios. The assumptions used in calculating the fair value of incentive unit awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. The Company estimates volatility based on a comparable market index and has calculated the historical volatility for the index for a period of time that corresponds to the expected term of the option. The expected term is calculated based on the estimated time for which the option will be held by the awardee. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

 

Management uses the Black-Scholes-Merton option pricing model to determine the fair value of units issued. There were no incentive units granted during the six months ended June 30, 2022. Compensation expense for all incentive units awarded to date is recognized over the vesting term of the underlying incentive units. The Company recognized $0.1 million and $0.2 million in equity compensation costs during the three months ended June 30, 2022 and 2021, respectively. The Company recognized $0.2 million and $0.4 million in equity compensation costs during the six months ended June 30, 2022 and 2021, respectively.

 

The following represents a summary of the Company’s incentive unit activity and related information for the six months ended June 30, 2022:

 

   Units  
Outstanding - December 31, 2021   3,084,650 
Granted   - 
Forfeited/redeemed   - 
Outstanding – June 30, 2022   3,084,650 
Vested – June 30, 2022   2,921,918 

 

A summary of nonvested incentive units and changes for the six months ended June 30, 2022 follows:

 

   Units   Weighted Average Grant Date Fair Value 
Nonvested - December 31, 2021   198,210   $10.25 
Granted   -    - 
Vested   (35,479)   5.19 
Forfeited/redeemed   -    - 
Nonvested - June 30, 2022   162,731   $11.36 

 

As of June 30, 2022, there was $1.9 million of total unrecognized compensation cost related to incentive unit arrangements granted under the plan. That cost is expected to be recognized over a weighted-average period of 2.5 years.

 

15

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Additionally, the Company is authorized to issue phantom units to eligible employees under the terms of the Company’s Unit Appreciation Rights Plan. The Company estimates the fair value of the phantom units as of the end of each reporting period and expenses the vested fair market value of each award. The fair value of the phantom units is measured using the same independent valuation assessment as the incentive units.

 

The Company did not award any phantom units during the three and six months ended June 30, 2022. Compensation cost recognized during the three months ended June 30, 2022 and 2021 was $2.0 million and $1.4 million, respectively. Compensation cost recognized during the six months ended June 30, 2022 and 2021 was $4.6 million and $2.3 million, respectively.

 

Note 11—Net loss per preferred and common unit

 

Basic net loss per share is computed by dividing net loss by the weighted average number of units outstanding for the period. Diluted net loss per unit is computed by giving effect to all potential dilutive common unit equivalents for the period. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential units outstanding would have been anti-dilutive.

 

The following table sets forth the calculation of basic and diluted net loss per preferred and common unit during the periods presented:

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2022   2021   2022   2021 
Net loss attributable to unitholders (in thousands)  $(27,794)  $(10,842)  $(52,613)  $(24,703)
Weighted-average units used in computing net loss per unit, basic and diluted   33,509,272    32,772,909    33,509,272    32,600,544 
Net loss per preferred unit, basic and diluted  $(0.83)  $(0.33)  $(1.57)  $(0.76)
Net loss per common unit, basic and diluted  $(0.83)  $(0.33)  $(1.57)  $(0.76)

 

Due to their antidilutive effect, the warrants described in Note 8 and the Rubicon Equity Investment Agreement described in Note 9 have been excluded from the calculation of diluted net loss per common unit.

 

Note 12—Income taxes

 

The Company’s quarterly tax provision is based upon an estimated annual effective tax rate. The Company’s provision for income taxes has not been historically significant to the business as the Company has incurred operating losses to date. The provision for income taxes consists primarily of state taxes in jurisdictions in which the Company conducts business.

 

The Company’s income tax expense (benefit) was $-0- million and $(0.6) million for the three months ended June 30, 2022 and 2021, respectively, with an effective tax rate of (0.1)% and 4.9%, respectively. The Company’s income tax expense (benefit) was $-0- million and $(0.7) million for the six months ended June 30, 2022 and 2021, respectively, with an effective tax rate of (0.1)% and 2.8%, respectively. The provision for income taxes differs from the amount that would result from applying statutory rates because of differences in the deductibility of certain book and tax expenses. Significant book to tax temporary differences that result in taxable income to the Company for the six months ended June 30, 2022 include accrued bonuses and accounts receivable allowances not deductible for tax purposes and variations between both amortization and depreciation methods.

 

During the six months ended June 30, 2022, the Company recorded a full valuation allowance against its deferred tax assets. The Company intends to maintain this position until there is sufficient evidence to support the reversal of all or some portion of the allowance. The Company also has certain assets with indefinite lives for which the basis is different for book and tax. In accordance with ASC 740-10-30-18, the deferred tax liability related to these intangible assets cannot be used to offset deferred tax assets when determining the amount of the valuation allowance for deferred tax assets which are not more-likely-than-not to be realized. As a result, the Company is in a net deferred tax liability position of $0.2 million as of June 30, 2022.

 

16

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 13 – Commitments and contingencies

 

Legal Matters

 

In the ordinary course of business, the Company is or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims.

 

The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. At this time, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.

 

In management’s opinion, resolution of all current matters, including all those described below, is not expected to have a material adverse impact on the Company’s condensed consolidated results of operations, cash flows or financial position. However, depending on the nature and timing of any such dispute or other contingency, an unfavorable resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both.

 

Leases

 

The Company leases its office facilities under operating lease agreements expiring through 2031. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities as it is not reasonably certain to utilize the renewal options. The Company does not have any finance leases.

 

The following table presents information regarding the maturities of the undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented on the June 30, 2022 condensed consolidated balance sheet (in thousands).

 

Years Ending December 31,     
2022  $1,124 
2023   2,276 
2024   1,228 
2025   151 
2026   152 
Thereafter   732 
Total minimum lease payments  $5,663 
Less: Imputed interest   (1,229)
Total operating lease liabilities  $4,434 

 

Software subscription

 

The Company entered into a certain software subscription agreement with Palantir Technologies, Inc., including related support and update services on September 22, 2021. The Company subsequently amended the agreement on December 15, 2021. The term of the agreement is through December 31, 2024. Pursuant to the agreement, as of June 30, 2022, the Company is committed to pay $20.3 million in the next 12 months and $22.5 million thereafter through October 2024.

 

17

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 14—Related party transactions

 

Sales to related party investors in the amount of $0.4 million and $0.4 million were included in revenues in the condensed consolidated statements of operations for the three months ended June 30, 2022 and 2021, respectively. Sales to related party investors in the amount of $0.8 million and $0.8 million were included in revenues in the condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021, respectively. The billed and unbilled accounts receivable balance as of June 30, 2022 and December 31, 2021 was $0.3 million and $0.3 million, respectively. All outstanding balances with the related party were priced on an arms-length basis and are to be settled in cash. None of the balances is secured. No expense has been recognized in the current year or prior year for bad or doubtful debts in respect of amounts owed by related parties.

 

Note 15—Concentrations

 

During the three months ended June 30, 2022 and 2021, the Company had two significant customers that accounted for approximately 26% and 28% of total revenues, respectively. During the six months ended June 30, 2022 and 2021, the Company had two significant customers that accounted for approximately 29% and 28% of total revenues, respectively. As of June 30, 2022 and December 31, 2021, approximately 21% and 23%, respectively, of the Company’s accounts receivable and contract assets were due from these two customers.

 

Note 16—Liquidity and mergers

 

During the six months ended June 30, 2022, and in each fiscal year since the Company’s inception, it has incurred losses from operations and generated negative cash flows from operating activities. The Company also has negative working capital and is in member’s deficit as of June 30, 2022 and December 31, 2021 and debt that is maturing in 2022.

 

On August 15, 2022, the Company consummated the transaction pursuant to the Merger Agreement dated December 15, 2021 with Founder SPAC (“FOUN”), a Special Purpose Acquisition Company (the “Mergers”) (See Note 17). As a result of the Mergers, the Company received $73.8 million of additional cash on its consolidated balance sheet, after accounting for the related transaction costs and payments for the Forward Purchase Agreement (See Note 17).

 

Management believes that additional capital will be needed to support the Company’s debt and growth. Management plans to refinance its existing debt obligations and fund its future operations, product development, and acquisitions by raising additional capital through debt, equity and other financing arrangements. In management’s opinion, additional debt, equity and other financing arrangements, combined with extending the Company’s line of credit, will provide liquidity for the Company for at least one year. However, it is possible additional funding, if needed, may have terms that are less favorable to the Company than its existing terms.

 

18

 

 

RUBICON TECHNOLOGIES, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

Note 17—Subsequent events

 

Subsequent events have been evaluated through August 19, 2022. 

 

On August 4, 2022, FOUN and ACM ARRT F LLC (“ACM Seller”, together with such other parties to which obligations of ACM Seller were novated, the “FPA Sellers”) entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). Pursuant to the terms of the Forward Purchase Agreement, FPA Sellers intended, but were not obligated, to purchase Class A ordinary shares, par value $0.0001 per share, of FOUN (the “Shares”) after the date of the Forward Purchase Agreement from holders of Shares (other than FOUN or affiliates of FOUN) who have elected to redeem Shares (such purchased Shares, the “Recycled Shares”) pursuant to redemption rights set forth in FOUN’s amended and restated memorandum and articles of association (the “Governing Documents”) in connection with the Mergers (such holders, “Redeeming Holders”). The aggregate total Subject Shares (as defined in the Forward Purchase Agreement) will be 15 million shares (the “Maximum Number of Shares”). In addition, FPA Sellers have agreed to purchase one million shares from Redeeming Holders (the “Separate Shares”). FPA Sellers may not beneficially own greater than 9.9% of the Shares on a post-Mergers pro forma basis. Pursuant to the terms of the Forward Purchase Agreement, FPA Sellers purchased approximately 7.1 million Shares, including the Subject Shares and the Separate Shares, prior to the closing of the Mergers,

 

On August 15, 2022, the Company consummated the transaction pursuant to the Merger Agreement dated December 15, 2021 with Founder SPAC (“FOUN”), a Special Purpose Acquisition Company (the “Mergers”). Pursuant to the Merger Agreement, the newly-formed Ravenclaw Merger Sub LLC (“Merger Sub”), as a wholly-owned subsidiary of FOUN, merged with and into Rubicon, with Rubicon surviving as a wholly-owned subsidiary of FOUN (“New Rubicon”). Upon closing, FOUN changed its name to Rubicon Technologies, Inc. (“RBT”), and listed its Domestication Class A Common Stock on the New York Stock Exchange with trading symbol “RBT”.

 

The Mergers will be accounted for as a reverse recapitalization. The Company was deemed the accounting acquirer with Rubicon Technologies, Inc. as the successor registrant. As such, FOUN will be treated as the acquired company for financial reporting purposes, and financial statements for periods prior to the Mergers will be those of the Company.

 

19

 

Exhibit 99.3

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF RUBICON

 

Unless the context otherwise requires, all references in this section to “the Company”, “we”, “us” or “our” refer to the business and operations of Rubicon Technologies Holdings, LLC (formerly known as Rubicon Technologies, LLC) and its subsidiaries, including those periods prior to the consummation of the Business Combination. References to “Rubicon” refer to the business and operations of Rubicon Technologies, Inc., following the consummation of the business combination between Founder and the Company. You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes appearing elsewhere in the Form 8-K (as defined below). Certain statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. Capitalized terms used but not defined herein have the same meaning as terms defined and included elsewhere in the Current Report on Form 8-K to which this Management’s Discussion and Analysis of Financial Condition and Results of Operations of Rubicon is attached as an exhibit (the “Form 8-K”) and, if not defined in the Form 8-K, the definitive proxy statement/consent solicitation statement/prospectus filed by Founder with the U.S. Securities and Exchange Commission (the “SEC”) on July 6, 2022.

 

Overview

 

We are a digital marketplace for waste and recycling services. Underpinning this marketplace is a cutting-edge, modular platform that powers a modern, digital experience and delivers data-driven insights and transparency for our customers and hauling and recycling partners. We provide our waste generator customers with a platform that delivers pricing transparency, self-service capabilities, and a seamless customer experience while helping them achieve their environmental goals; we enhance our hauling and recycling partners’ economic opportunities and help them optimize their businesses; and we help governments provide more advanced waste and recycling services that allow them to serve their local communities more effectively.

 

Over the past decade, this value proposition has allowed us to scale our platform considerably. Our digital marketplace now services over 8,000 customers, including numerous large, blue-chip customers such as Apple, Dollar General, Starbucks, Walmart, Chipotle, and FedEx, and encompasses over 8,000 hauling and recycling partners across North America. We have also deployed our technology in over 70 municipalities within the United States and operate in 20 countries. Furthermore, we have secured a robust portfolio of intellectual property, having been awarded more than 50 patents, with over 70 pending, and 20 trademarks.

 

We operate as one segment. See Note 1, Nature of operations and summary of significant accounting policies, to our consolidated financial statements included elsewhere in the Form 8-K for our discussion about segments.

 

COVID-19 Update

 

On January 30, 2020, the World Health Organization declared the coronavirus “COVID-19” outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared it to be a pandemic. COVID-19 and actions taken to mitigate it such as travel bans and restrictions, limitations on business activity, quarantines, work-from-home directives and shelter-in-place orders have had and are expected to continue to have an adverse impact on certain businesses and industries and the economies and financial markets regionally and globally, including the geographical areas in which we operate. The COVID-19 pandemic has created significant global economic uncertainty, adversely impacted the business of our customers and partners, impacted our business, results of operations and cash flows and could further impact our business, results of operations and our cash flows in the future.

 

In response to the COVID-19 pandemic, we have proactively taken steps to put our employees’, customers’ and partners’ needs first to ensure that we can provide our services safely and efficiently. Since the beginning of the outbreak, we took actions in response to the pandemic that focused on maintaining business continuity, supporting our employees, helping our customers and communities and preparing for the future and the long-term success of our business.

 

 

 

 

As a result of the pandemic, we experienced customer attrition during the second half of 2020 which caused a decline in service revenue during the first half of 2021 as compared to the same prior-year period; however, our revenues subsequently began to recover and for the second half of 2021, our service revenue increased by $21.7 million as compared to the second half of 2020. This trend has continued into 2022 with our service revenue increasing by $36.7 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Additionally, our sales and marketing activities and spend decreased during 2021 and 2020 as a result of pandemic-related cost-saving initiatives. Some sales and marketing activities, including hiring in the sales and marketing teams and team members’ attendance at business development conferences and meetings, resumed beginning in the first quarter of 2022, resulting in a $1.7 million increase in sales and marketing cost for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. In addition, several customers filed for bankruptcy during 2020 which resulted in $3.6 million of bad debt expenses related to these customers in 2020. Furthermore, we received loans under the Paycheck Protection Program (“PPP”), which was established under the CARES Act and is administered by the Small Business Administration (“SBA”), for an amount totaling $10.8 million, the full amount of which, along with associated accumulated interest, was forgiven during 2021.

 

The ultimate extent of the impact of the COVID-19 pandemic on our operational and financial performance depends on certain developments, including the duration of the pandemic and any resurgences, the severity of the disease, responsive actions taken by public health officials, the development, efficacy, distribution and public acceptance of treatments and vaccines, and the impacts on our customers, employees, partners, sales cycles and industry, all of which are uncertain and currently cannot be predicted with any degree of certainty. In addition, the global macroeconomic effects of the COVID-19 pandemic and related impacts on our customers’ business operations and their demand for our products and services may persist for an indefinite period, even after the COVID-19 pandemic has subsided. While it is unknown how long pandemic conditions will last and what the complete financial impact will be, we are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and are unable at this time to predict the impact that COVID-19 will have on our business, financial position, and operating results in future periods due to numerous uncertainties.

 

Mergers

 

On August 15, 2022, we consummated the Mergers. Pursuant to the Merger Agreement, the Merger Sub merged with and into the Company, with the Company surviving as a wholly-owned subsidiary of Founder. In connection with the Closing, Founder changed its name to Rubicon Technologies, Inc. and the Company changed its name to Rubicon Technologies Holdings, LLC (“Holdings LLC”).

 

The Mergers were accounted for akin to a reverse recapitalization. We were deemed the accounting predecessor and Rubicon is the successor SEC registrant to Founder, meaning that our financial statements for previous periods are included in the Form 8-K and will be disclosed in Rubicon’s future periodic reports and registration statements filed with the SEC. Under this method of accounting, Rubicon is treated as the acquired company for financial statement reporting purposes. As a result of consummation of the Mergers, the most significant changes in our future reported financial position and results was a net increase in cash (as compared to our consolidated balance sheet at June 30, 2022) of approximately $73.8 million after accounting for transaction costs ($25.4 million), payments under the Forward Purchase Agreement ($68.7 million), the PIPE Investment ($121.0 million), Founder shareholder redemptions in connection with the Merger ($246.0 million), and the Cash Transaction Bonuses ($28.9 million). See “Unaudited Pro Forma Condensed Combined Financial Information” filed as an exhibit to the Form 8-K.

 

As a result of the Mergers, Rubicon became the successor to Founder as a publicly traded company and is listed on NYSE, which requires us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company, particularly as compared to the expenses reflected in our financial statements prior to the Mergers, for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative resources.

 

 2 

 

 

In connection with the Mergers, we entered into a Tax Receivable Agreement with certain of our legacy investors. We may be required to make significant payments in the future under this agreement depending on the extent of certain tax benefits and other factors and these payments could have a material impact on our results of operations and liquidity. See “—Tax Receivable Agreement” below for additional information.

 

Forward Purchase Agreement

 

On August 4, 2022, Founder, the Company and ACM ARRT F LLC, a Delaware limited liability company (“ACM Seller”, together with such other parties to which obligations of ACM Seller were novated, the “FPA Sellers”), entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the Forward Purchase Agreement, prior to the Closing, the FPA Sellers purchased an aggregate of 7,082,616 shares of Class A Common Stock from Founder shareholders who, pursuant to the governing documents of Founder, elected to redeem such shares in connection with the Closing, and upon such purchase, the FPA Sellers waived their redemption rights to such securities, resulting in additional net proceeds to Rubicon of approximately $4.0 million at Closing. In addition to proceeds received at Closing, Rubicon is entitled to certain additional payments from the FPA Sellers upon certain sales made by the FPA Sellers with respect to certain of the shares of Class A Common Stock purchased by the FPA Sellers pursuant to the Forward Purchase Agreement. In addition, Rubicon may be obligated to issue certain additional shares of Class A Common Stock to the FPA Sellers upon certain of the sales of Class A Common Stock made by the FPA Sellers. See “—Liquidity and Capital ResourcesOther Financing Arrangements” below for additional information.

 

Key Factors Affecting Our Performance

 

Financial results from our operations and the growth and future success of our business are dependent upon many factors. While each of these factors presents significant opportunities for us, these factors also pose challenges that we must successfully address to sustain and grow our business. See also “—Key Metrics and Non-GAAP Financial Measures” below for a discussion of key business and non-GAAP metrics that we use to help manage and evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

 

Industry trends and customers preference

 

The waste and recycling industry is highly regulated and complex, and public policy is increasingly focused on improving diversion from landfills and reducing emissions. Current policies tend to encourage and reward reductions in carbon dioxide emissions, and many major cities in the United States have promulgated climate action plans committing to achieve emissions reductions in line with the Paris Climate Accords. Additionally, the waste generators’ awareness of benefits achieved by improved diversion from landfills has been increasing which we believe is and will continue driving preference for recycling over landfills. We view these trends as an opportunity to accelerate the growth of our business, including our revenue and profitability.

 

Commodity nature of our recycling program

 

Through our recycling program, we market a variety of materials, including fibers such as old corrugated cardboard, old newsprint, aluminum, glass, pallets and other materials. Currently, old corrugated cardboard is the most significant material in our recycling program. Our recyclable commodity revenue is influenced by fluctuations in prices of the recyclable commodities. Periods of increasing prices generally provide the opportunity for higher revenue while periods of declining prices may result in declines in sales. For the reporting periods, the trend of the recyclable commodity prices was generally upward and contributed to higher recyclable commodity revenue in more recent periods. For the six months ended June 30, 2022 and 2021, our recyclable commodity revenue was $49.4 million and $32.3 million, respectively. For the years ended December 31, 2021 and 2020, our recyclable commodity revenue was $82.1 million and $49.3 million, respectively.

 

See the sections titled “Qualitative and Quantitative Disclosures About Market Risk” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Risk Factors” included elsewhere in the Form 8-K for further discussion regarding recyclable commodity price risk.

 

 3 

 

 

Investment in growth

 

We are actively investing in our business to support future growth and we expect this investment to continue. We have built a leading cloud-based digital marketplace that provides a transformational customer experience through an easy-to-use interface, where customers can manage services, track invoices, and view environmental outcomes. We believe that our platform is highly differentiated, and we expect to continue to invest in product development to further develop and enhance our platform’s features and functionality to further extend the adoption of our platform. For the six months ended June 30, 2022 and 2021, our product development cost was $18.5 million and $8.5 million, respectively. For the years ended December 31, 2021 and 2020, our product development cost was $22.5 million and $14.9 million, respectively. We expect the product development cost to increase as a percentage of revenue in the next twelve months as we anticipate continued investment in growth.

 

We also anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts and expand our employee base. In addition, we intend to continue to grow our platform by using acquisitions and strategic partnerships. From time to time, we acquire and invest in companies with teams and technologies that enable us to strengthen our offerings and expand our growth.

 

While we continue to make investments to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments including in response to the known and potential impacts of COVID-19 on our business.

 

Components of Results of Operations

 

Revenue

 

We generate our revenue from waste removal, waste management and consultation services, platform subscriptions, and the purchase and sale of recyclable commodities.

 

Service revenue:

 

Service revenues are comprised of waste removal and consultation services provided to customers for waste, recycling and logistics solutions. Services include planning, consolidation of billing and administration, cost savings analyses, vendor procurement and performance management, and a suite of solutions providing insights into the customers’ waste streams.

 

Recyclable commodity revenue:

 

We recognize recyclable commodity revenue through the purchase and sale of old corrugated cardboard, old newsprint, aluminum, glass, pallets and other recyclable materials.

 

Cost of revenue, exclusive of amortization and depreciation

 

Cost of service revenues primarily consist of expenses related to delivering our service and providing support, including third-party hauler costs, costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and employee-related costs such as salaries and benefits.

 

Cost of recyclable commodity revenues primarily consist of expenses related to purchase of old corrugated cardboard, old newsprint, aluminum, glass, pallets and other recyclable materials, and any associated transportation fees.

 

Sales and marketing

 

Sales and marketing expenses consist primarily of compensation costs, including salaries, bonuses, benefits and other incentives to our sales and marketing personnel, advertising expenses, digital marketing expenses, sales commissions and other promotional expenditures.

 

 4 

 

 

Product development

 

Product development expenses consist primarily of compensation costs, including salaries, bonuses and other benefits to our product development team, contract labor expenses and fees for software licenses, consulting, legal, and other services.

 

General and administrative

 

General and administrative expenses consist primarily of compensation and benefits related costs, including equity-based compensation expense for our general corporate functions. General and administrative costs also consist of third-party professional service fees for external legal, accounting, and other consulting services, insurance charges, hosting fees and overhead costs.

 

We expect that general and administrative expenses will increase substantially over the next several years as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange and expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. Following the consummation of the Mergers, we also expect to incur significant additional general and administrative expenses related to hiring of additional personnel, equity-based compensation, general and director and officer insurance premiums, investor relations, and professional services (e.g., audit, legal, regulatory and tax-related services).

 

Equity-based compensation expense in the six months ended June 30, 2022 was approximately $4.8 million, an increase of $2.1 million compared to the six months ended June 30, 2021. This increase was primarily attributable to a $2.3 million increase in value of the liability classified “Legacy Rubicon Phantom Units,” which are those phantom units we granted pursuant to the Holdings LLC Unit Appreciation Rights Plan, dated December 11, 2014. At the consummation of the Mergers, we incurred approximately $77.5 million of equity-based compensation expense due to the modification and vesting of the “Legacy Rubicon Incentive Units,” which are those units we granted pursuant to the Holdings LLC Profits Participation Plan, dated December 11, 2014. This expense will be recognized in our condensed consolidated financial statements for the three and nine-month periods ended September 30, 2022.

 

Following the Closing and the effectiveness of a Form S-8 registration statement to be filed no sooner than 60 days from the date of the Form 8-K, it is expected that Rubicon will make certain RSU awards pursuant to the Merger Agreement as replacement awards for the Legacy Rubicon Phantom Units and as Management Rollover Consideration. The number of RSUs issuable in exchange of Legacy Rubicon Phantom Units and as Management Rollover Consideration is expected to be approximately 1,510,424 RSUs and 8,325,594 RSUs, respectively. These RSUs would be subject to six-month vesting from the Closing Date and will vest into an equivalent number of shares of Class A Common Stock. The anticipated equity-based compensation expense for RSUs issued in connection with the Legacy Rubicon Phantom Units (as expensed over the vesting period) will be approximately $2.3 million. The anticipated equity-based compensation expense for RSUs issued as Management Rollover Consideration (as expensed over the vesting period) will be approximately $83.3 million.

 

In addition, following the effectiveness of a Form S-8 registration statement, it is expected that Rubicon will make certain RSU awards pursuant to the Morris Employment Agreement. Pursuant to the Morris Employment Agreement, we expect to issue Mr. Morris three one-time RSU awards: (a) 4,821,357 RSUs subject to certain time-based vesting requirements, (b) 2,410,679 RSUs subject to certain performance-based vesting requirements, and (c) RSUs subject to time-based vesting requirements in such an amount equal to $5,000,000 based on the fair market value of shares of Class A Common Stock at the time of the award. While the terms of these awards have not yet been finalized, assuming achievement of the performance based metrics and continued employment, the anticipated aggregate equity-based compensation expense for these RSUs will be approximately $77.3 million (in each case, assuming a $10.00 RSU fair value) and will be recognized over the requisite vesting period.

 

We expect that equity-based compensation (expensed in a similar manner as set forth above) will continue to be a substantial component of employee compensation practices of Rubicon. It is anticipated that such equity-based compensation expenses will likely increase our general and administrative expenses, dilute existing Rubicon stockholders, and reduce our earnings per share.

 

 5 

 

 

Additionally, certain of our employees received a one-time incentive cash payment upon closing of the Mergers (the “Cash Transaction Bonuses”). The aggregate Cash Transaction Bonuses paid by us in connection with the Mergers was approximately $28.9 million, as well as additional discretionary bonuses in the amount of $3.0 million to be paid following the closing. Historically, we have paid annual cash-based bonuses to our employees. For the years ended December 31, 2021 and 2020, the annual cash-based bonuses we incurred were $6.8 million and $6.0 million, respectively. We expect that annual cash-based bonuses will continue to be a component of our employee compensation practices, with annual cash based-bonuses payable by us expected to increase in the ordinary course of business to accommodate growth of our business and to ensure that we are able to attract and retain employee talent; however, we do not expect that additional cash-based bonuses of a size comparable to the Cash Transaction Bonuses will be awarded or payable in the ordinary course, outside of a change of control or similar significant transaction. Accordingly, our general and administrative expenses will increase by the actual payment amounts of the Cash Transaction Bonuses during the three- and nine-month periods ended September 30, 2022 (the periods in which the Mergers were consummated).

 

Amortization and depreciation

 

Amortization and depreciation consist of all depreciation and amortization expenses associated with our property and equipment, acquired intangible assets and customer acquisition costs.

 

Interest expense

 

Interest expense consists primarily of interest expense associated with our outstanding debt, including accretion of debt issuance costs.

 

Results of Operations

 

The following tables show our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

 

Comparison of the three months ended June 30, 2022 and 2021

 

   Three Months Ended
June 30,
    
   2022   2021   Change $   Change %
   (in thousands, except changes in percentage)
Revenue                
Service  $140,268   $118,680   $21,588    18.2%
Recyclable commodity   24,338    18,904    5,434    28.7%
Total revenue   164,606    137,584    27,022    19.6%
Costs and expenses:                    
Cost of revenue (exclusive of amortization and depreciation)                    
Service   136,185    114,323    21,862    19.1%
Recyclable commodity   22,386    17,924    4,462    24.9%
Total cost of revenue (exclusive of amortization and depreciation)   158,571    132,247    26,324    19.9%
Sales and marketing   4,546    3,720    826    22.2%
Product development   9,315    4,364    4,951    113.5%
General and administrative   13,253    13,684    (431)   (3.1)%
Amortization and depreciation   1,402    1,989    (587)   (29.5)%
Total costs and expenses   187,087    156,004    31,083    19.9%
Loss from operations   (22,481)   (18,420)   (4,061)   22.0%
Other income (expense):                    
Gain on forgiveness of debt   -    9,892    (9,892)   (100.00)%
Loss on change in fair value of warrants   (232)   -    (232)   NM%
Excess fair value over the consideration received for SAFE   (800)   -    (800)   NM%
Other expense   (357)   (220)   (137)   62.3%
Interest expense   (3,911)   (2,654)   (1,257)   47.4%
Total other income (expense)   (5,300)   7,018    (12,318)   (175.5)%
Loss before income taxes   (27,781)   (11,402)   (16,379)   143.7%
Income tax expense (benefit)   13    (560)   573    (102.3)%
Net loss   (27,794)   (10,842)   (16,952)   156.4%

NM – not meaningful

 

 6 

 

 

Revenue

 

Total revenue increased by $27.0 million, or 19.6%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

 

Service revenue increased by $21.6 million, or 18.2%, primarily due to a combination of sales to new customers in the amount of $13.1 million and changes to service levels for existing customers that contributed to a $8.2 million increase.

 

Revenues from sales of recyclable commodities increased by $5.4 million, or 28.7%, primarily due to an increase in the sales prices for recyclable commodities which attributed to a $7.6 million revenue increase, especially old corrugated cardboard, whose average price per ton increased by 65%, and pallets, whose average price per unit increased by 43%, in each case as compared to the average price in the prior year quarter. This increase was partially offset by a $1.9 million decrease due to reduced sales volume of recyclable commodities.

 

Cost of revenue, exclusive of amortization and depreciation

 

Total cost of revenue increased by $26.3 million, or 19.9%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

 

Cost of service revenue increased by $21.9 million or 19.1%, primarily attributable to an increase in hauling-related costs driven by the service level increase to new and existing customers.

 

Cost of recyclable commodity revenue increased by $4.5 million or 24.9% primarily due to a $6.2 million cost increase driven by higher prices of recyclable commodities sold, especially old corrugated cardboard and pallets, partially offset by a $1.6 million decrease in sales volume.

 

Sales and marketing

 

Sales and marketing expenses increased by $0.8 million or 22.2% for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily attributable to higher costs of $0.5 million for sales and marketing activities that we recommenced in 2022 following a temporary suspension as a result of the pandemic, including meetings, conferences and other business development activities and higher payroll related costs of $0.3 million due to headcount increases.

 

 7 

 

 

Product development

 

Product development expenses increased by $5.0 million, or 113.5%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily attributable to higher product development support costs of $4.0 million, which was mainly driven by higher software subscription costs to support our product development team, and higher payroll related costs of $0.5 million, which increased primarily due to the headcount increase in our product development team to support our growth.

 

We expect the product development cost to continue to be higher for next twelve months. The increase is expected to be driven by the Palantir Technologies, Inc. software services subscription, which provides advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform. See “Liquidity and Capital Resources.

 

General and administrative

 

General and administrative expenses decreased by $0.4 million, or 3.1%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The decrease was primarily attributable to a decrease in bad debt expense in the amount of $2.7 million mainly driven by improved cash collection of amounts for which reserves had previously been established, partially offset by higher employee-related costs that increased by $1.5 million due to headcount increases and higher deferred compensation costs that increased by $0.5 million.

 

Amortization and depreciation

 

Amortization and depreciation expenses for the three months ended June 30, 2022 were relatively unchanged compared to the three months ended June 30, 2021.

 

Other income (expense)

 

Other expense increased by $12.3 million, or 175.5%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily attributable to a $9.9 million forgiveness of the PPP loans in June 2021 which did not repeat in 2022, a $1.3 million increase in interest expense due to the borrowing under the Subordinated Term Loan Facility entered into in December 2021, and a $0.8 million excess fair value over the consideration received for the SAFE executed in May 2022. See “—Liquidity and Capital Resources—Other Financing Arrangements” below.

 

Income tax expense (benefit)

 

Income tax expense for the three months ended June 30, 2022 increased by $0.6 million or 102.4% compared to the three months ended June 30, 2021. The increase was primarily attributable to the deferred tax expenses related to book and tax basis difference in intangible assets and the current state tax expenses.

 

 8 

 

 

Comparison of the six months ended June 30, 2022 and 2021

 

   Six Months Ended
June 30,
    
   2022   2021   Change $   Change %
   (in thousands, except changes in percentage)
Revenue                
Service  $274,966   $238,255   $36,711    15.4%
Recyclable commodity   49,446    32,299    17,147    53.1%
Total revenue   324,412    270,554    53,858    19.9%
Costs and expenses:                    
Cost of revenue (exclusive of amortization and depreciation)                    
Service   265,878    228,516    37,362    16.3%
Recyclable commodity   45,622    30,758    14,864    48.3%
Total cost of revenue (exclusive of amortization and depreciation)   311,500    259,274    52,226    20.1%
Sales and marketing   8,496    6,796    1,700    25.0%
Product development   18,533    8,523    10,010    117.4%
General and administrative   25,880    23,407    2,473    10.6%
Amortization and depreciation   2,892    3,614    (722)   (20.0)%
Total costs and expenses   367,301    301,614    65,687    21.8%
Loss from operations   (42,889)   (31,060)   (11,829)   38.1%
Other income (expense):                    
Interest earned   -    2    (2)   (100.0)%
Gain on forgiveness of debt   -    10,900    (10,900)   (100.0)%
Loss on change in fair value of warrants   (510)   -    (510)   NM%
Excess fair value over the consideration received for SAFE   (800)   -    (800)   NM%
Other expense   (687)   (404)   (283)   70.0%
Interest expense   (7,686)   (4,850)   (2,836)   58.5%
Total other income (expense)   (9,683)   5,648    (15,331)   (271.4)%
Loss before income taxes   (52,572)   (25,412)   (27,160)   106.9%
Income tax expense (benefit)   41    (709)   750    (105.8)%
Net loss   (52,613)   (24,703)   (27,910)   113.0%

NM – not meaningful

 

 9 

 

 

Revenue

 

Total revenue increased by $53.9 million, or 19.9%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

 

Service revenue increased by $36.7 million, or 15.4%, primarily due to a combination of sales to new customers in the amount of $22.3 million and changes to service levels for existing customers that contributed to a $14.4 million increase.

 

Revenues from sales of recyclable commodities increased by $17.1 million, or 53.1%, primarily due to an increase in the sales prices for recyclable commodities, especially old corrugated cardboard, whose average price per ton increased by 72%, and pallet, whose average price per unit increased by 32%, in each case as compared to the average price in the prior year period.

 

Cost of revenue, exclusive of amortization and depreciation

 

Total cost of revenue increased by $52.2 million, or 20.1%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

 

Cost of service revenue increased by $37.4 million or 16.3%, primarily attributable to an increase in hauling-related costs, $27.0 million of which was driven by the service level increase to new and existing customers and $8.3 million was due to price increase by our hauling and recycling partners. In addition, customer operations cost was higher by $2.2 million primarily driven by headcount increases.

 

Cost of recyclable commodity revenue increased by $14.9 million or 48.3% primarily attributable to a $14.7 million cost increase driven by higher prices of recyclable commodities sold, especially old corrugated cardboard and pallet.

 

Sales and marketing

 

Sales and marketing expenses increased by $1.7 million or 25.0% for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily attributable to higher costs for sales and marketing activities that we recommenced in 2022 following a temporary suspension as a result of the pandemic, including meetings, conferences and other business development activities in the amount of $0.9 million and higher payroll related costs of $0.6 million due to headcount increases.

 

Product development

 

Product development expenses increased by $10.0 million, or 117.4%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily attributable to higher product development support costs of $8.5 million, which was mainly driven by higher software subscription costs to support our product development team, and higher payroll related costs of $1.2 million, which increased primarily due to the headcount increase in our product development team to support our growth.

 

We expect the product development cost to continue to be higher for next twelve months. The increase is expected to be driven by the Palantir Technologies, Inc. software services subscription, which provides advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform. See “Liquidity and Capital Resources.

 

General and administrative

 

General and administrative expenses increased by $2.5 million, or 10.6%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily attributable to higher employee-related costs that increased by $3.3 million due to headcount increases, higher deferred compensation costs that increased by $2.1 million, and higher professional services costs that increased by $1.9 million mainly to support our growth and preparation to operate as a publicly traded company. The increase was partially offset by decrease in bad debt expense in the amount of $4.7 million which was primarily attributable to improved cash collections of amounts for which reserves had previously been established.

 

 10 

 

 

Amortization and depreciation

 

Amortization and depreciation expenses for the six months ended June 30, 2022 were relatively unchanged compared to the six months ended June 30, 2021.

 

Other income (expense)

 

Other expense increased by $15.3 million, or 271.4%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily attributable to a $10.9 million forgiveness of the PPP loans in June 2021 which did not repeat in 2022, a $2.8 million increase in interest expense due to higher borrowings under the Term Loan Facility since the amendment executed in March 2021 and the Subordinated Term Loan Facility entered into in December 2021, a $0.8 million excess fair value over the consideration received for the SAFE executed in May 2022, and a $0.5 million loss on the change in fair value of warrants during the first half of 2022 for the warrants issued in the fourth quarter of 2021. See “—Liquidity and Capital Resources—Other Financing Arrangements” below.

 

Income tax expense (benefit)

 

Income tax expense for the six months ended June 30, 2022 increased by $0.8 million or 105.8% compared to the six months ended June 30, 2021. The increase was primarily attributable to the deferred tax expenses related to book and tax basis difference in intangible assets and the current state tax expenses.

 

Comparison of years ended December 31, 2021 and 2020

 

  Year Ended
December 31,
    
  2021   2020   Change $   Change %
  (in thousands, except changes in percentage)
Revenue               
Service $500,911   $490,122   $10,789    2.2%
Recyclable commodity  82,139    49,251    32,888    66.8%
Total revenue  583,050    539,373    43,677    8.1%
Costs and expenses:                   
Cost of revenue (exclusive of amortization and depreciation)                   
Service  481,642    471,039    10,603    2.3%
Recyclable commodity  77,030    45,892    31,138    67.9%
Total cost of revenue (exclusive of amortization and depreciation)  558,672    516,931    41,741    8.1%
Sales and marketing  14,457    14,782    (325)   (2.2)%
Product development  22,485    14,857    7,628    51.3%
General and administrative  52,915    37,754    15,161    40.2%
Amortization and depreciation  7,128    6,450    678    10.5%
Total costs and expenses  655,657    590,774    64,883    11.0%
Loss from operations  (72,607)   (51,401)   (21,206)   41.3%
Other income (expense):                   
Interest earned  2    8    (6)   (75.0)%
Gain on forgiveness of debt  10,900    -    10,900    NM%
Loss on change in fair value of warrants  (606)   -    (606)   NM%
Other expense  (1,055)   (427)   (628)   147.1%
Interest expense  (11,455)   (8,217)   (3,238)   39.4%
Total other income (expense)  (2,214)   (8,636)   6,422    (74.4)%
Loss before income taxes  (74,821)   (60,037)   (14,784)   24.6%
Income tax expense (benefit)  (1,670)   (1,454)   (216)   14.9%
Net loss  (73,151)   (58,583)   (14,568)   24.9%

NM – not meaningful

 

 11 

 

 

Revenue

 

Total revenue increased by $43.7 million, or 8.1%, for the year ended December 31, 2021, compared to the year ended December 31, 2020.

 

Service revenue increased by $10.8 million, or 2.2%, primarily due to a combination of sales to new customers in the amount of $6.5 million and increased service levels for existing customers in the amount of $4.3 million. During the first half of 2021, the service revenue decreased by $10.9 million as compared to the same prior-year period primarily due to the impact of decreased service levels from customer attrition in the second half of 2020, including in connection with customer bankruptcies. During the second half of 2021, service revenues began to recover and increased by $21.7 million as compared to the same prior-year period.

 

Revenues from sales of recyclable commodities increased by $32.9 million, or 66.8%, primarily due to an increase in the sales prices for recyclable commodities, especially old corrugated cardboard, whose average price per ton increased by 91.8%.

 

Cost of revenue, exclusive of amortization and depreciation

 

Total cost of revenue increased by $41.7 million, or 8.1%, for the year ended December 31, 2021, compared to the year ended December 31, 2020.

 

Cost of service revenue increased by $10.6 million or 2.3%, primarily due to an increase in hauling-related costs corresponding to the service revenue increase as a result of service level increases to new and existing customers.

 

Cost of recyclable commodity revenue increased by $31.1 million or 67.9% primarily due to an increase in the cost of recyclable commodities sold mainly driven by the increase in the recyclable commodity prices.

 

Sales and marketing

 

Sales and marketing expenses for the year ended December 31, 2021 were relatively unchanged compared to the year ended December 31, 2020.

 

Product development

 

Product development expenses increased by $7.6 million, or 51.3%, for the year ended December 31, 2021, compared to the year ended December 31, 2020. The increase was primarily attributable to higher product development support costs of $5.0 million, which was mainly driven by higher software subscription costs to support our product development team, and higher payroll related costs of $2.1 million, which increased primarily due to the headcount increase in our product development team to support our growth.

 

 12 

 

 

We expect the product development cost to continue to increase over the next twelve months. The increase is expected to be driven by the Palantir Technologies, Inc. software services subscription, which provides advanced data analytics capabilities to enhance the data security, visibility, models, and algorithms of our digital platform. See “Liquidity and Capital Resources.

 

General and administrative

 

General and administrative expenses increased by $15.2 million, or 40.2%, for the year ended December 31, 2021, compared to the year ended December 31, 2020. The increase was primarily attributable to higher equity compensation costs by $7.0 million, employee-related costs by $3.3 million, professional services costs by $3.0 million, and software license costs by $1.3 million, mainly to support our growth and preparation to operate as a publicly traded company.

 

Amortization and depreciation

 

Amortization and depreciation expenses for the year ended December 31, 2021 were relatively unchanged compared to the year ended December 31, 2020.

 

Other income (expense)

 

Other expense decreased by $6.4 million, or 74.4%, for the year ended December 31, 2021, compared to the year ended December 31, 2020. The decrease was primarily attributable to forgiveness of the PPP loans in the amount of $10.9 million during 2021 which was partially offset by an $3.2 million increase in interest expense due to higher borrowings under the Term Loan Facility (as defined in the “Debt” section) as compared to the prior year. In March 2021, the Company amended the Term Loan agreement, increasing the principal amount of the facility from $40.0 million to $60.0 million. See Note 4, Debt, to our consolidated financial statements included elsewhere in the Form 8-K.

 

Income tax expense (benefit)

 

Income tax benefit for the year ended December 31, 2021, was relatively unchanged compared to the year ended December 31, 2020.

 

Key Metrics and Non-GAAP Financial Measures

 

In addition to the measures presented in our consolidated financial statements, we use the following key business and non-GAAP metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

 

Revenue net retention

 

We believe our ability to retain customers is an indicator of the stability of our revenue base and the long-term value of our customer relationships. We calculate revenue net retention as a year-over-year comparison that measures the percentage of revenue recognized in the current quarter from customers retained from the corresponding quarter in the prior year. We believe that our revenue net retention rate is an important metric to measure overall client satisfaction and the general quality of our service offerings as it is a composition of revenue expansion or contraction within our customer accounts.

 

Our revenue net retention rate was 113.4% and 100.8% as of June 30, 2022 and 2021, respectively, 125.0% and 96.7% as of December 31, 2021 and 2020, respectively.

 

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Adjusted gross profit and adjusted gross profit margin

 

Adjusted gross profit is a non-GAAP financial measure which is calculated by adding back amortization and depreciation for revenue generating activities and platform support costs to GAAP gross profit, the most comparable GAAP measurement. Adjusted gross profit margin is calculated as adjusted gross profit divided by total GAAP revenue.

 

We believe adjusted gross profit and adjusted gross profit margin are important measures and useful to investors because they show the progress in scaling our digital platform by quantifying the markup and margin we charge our customers that are incremental to our marketplace vendor costs. These measures demonstrate this progress because changes in these measures are driven primarily by our ability to optimize services for our customers, improve our hauling and recycling partners’ efficiency and achieve economies of scale on both sides of the marketplace. Our management team uses these non-GAAP measures as one of the means to evaluate the profitability of our customer accounts, exclusive of certain costs that are generally fixed in nature, and to assess how successful we are in achieving our pricing strategies. However, it is important to note that other companies, including companies in our industry, may calculate and use these measures differently or not at all, which may reduce their usefulness as a comparative measure. Further, these measures should not be read in isolation from or without reference to our results prepared in accordance with GAAP.

 

The following table shows the calculation of GAAP gross profit and a reconciliation of (i) GAAP gross profit to non-GAAP adjusted gross profit and GAAP gross profit margin to non-GAAP adjusted gross profit margin, (ii) amortization and depreciation for revenue generating activities to total amortization and depreciation and (iii) platform support costs to total cost of revenue (exclusive of amortization and depreciation) for each of the periods presented:

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
   Year Ended
December 31,
 
   2022   2021   2022   2021   2021   2020 
           (in thousands, except percentages) 
Total revenue  $164,606   $137,584   $324,412   $270,554   $583,050   $539,373 
Less: total cost of revenue (exclusive of amortization and depreciation)   158,571    132,247    311,500    259,274    558,672    516,931 
Less: amortization and depreciation for revenue generating activities   579    997    1,229    1,562    2,947    1,826 
Gross profit  $5,456   $4,340   $11,683   $9,718   $21,431   $20,616 
Gross profit margin   3.3%   3.2%   3.6%   3.6%   3.7%   3.8%
                               
Gross profit  $5,456   $4,340   $11,683   $9,718   $21,431   $20,616 
Add: amortization and depreciation for revenue generating activities   579    997    1,229    1,562    2,947    1,826 
Add: platform support costs   6,657    5,343    12,877    10,239    22,556    19,844 
Adjusted gross profit  $12,692   $10,680   $25,789   $21,519   $46,934   $42,286 
Adjusted gross profit margin   7.7%   7.8%   7.9%   8.0%   8.0%   7.8%
                               
Amortization and depreciation for revenue generating activities  $579   $997   $1,229   $1,562   $2,947   $1,826 
Amortization and depreciation for sales, marketing, general and administrative activities   823    992    1,663    2,052    4,181    4,624 
Total amortization and depreciation  $1,402   $1,989   $2,892   $3,614   $7,128   $6,450 
                               
Platform support costs (1)  $6,657   $5,343   $12,877   $10,239   $22,556   $19,844 
Marketplace vendor costs (2)   151,914    126,904    298,623    249,035    536,116    497,087 
Total cost of revenue (exclusive of amortization and depreciation)  $158,571   $132,247   $311,500   $259,274   $558,672   $516,931 

 

  (1) We define platform support costs as costs to operate our revenue generating platforms that do not directly correlate with volume of sales transactions procured through our digital marketplace. Such costs include employee costs, data costs, platform hosting costs and other overhead costs.

 

  (2) We define marketplace vendor costs as direct costs charged by our hauling and recycling partners for services procured through our digital marketplace.

 

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Adjusted EBITDA

 

Adjusted EBITDA is a non-GAAP financial measure and GAAP net loss is its most comparable GAAP measurement. We define adjusted EBITDA as GAAP net loss adjusted to exclude interest expense and income, income tax benefit, amortization and depreciation, equity-based compensation, phantom unit expense, gain or loss on change in fair value of warrants, excess fair value over the consideration received for SAFE, other non-operating income and expenses, and unique non-recurring income and expenses.

 

We have included adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses. Further, we believe it is helpful in highlighting trends in our operating results because it allows for more consistent comparisons of financial performance between periods by excluding gains and losses that are non-operational in nature or outside the control of management, as well as items that may differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. It is also often used by analysts, investors and other interested parties in evaluating and comparing our results to other companies within our industry. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

 

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of net loss or our other results as reported under GAAP. Some of these limitations are:

 

  adjusted EBITDA does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments;

 

  adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 

  adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;

 

  although amortization and depreciation are non-cash charges, the assets being amortized and depreciated will often have to be replaced in the future and adjusted EBITDA does not reflect any cash requirements for such replacements;

 

  adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items for which we may make adjustments in historical periods; and

 

  other companies in our industry may calculate adjusted EBITDA differently than we do, limiting its usefulness as comparative measures.

 

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The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to adjusted EBITDA for each of the periods presented:

  

   Three Months Ended
June 30,
   Six Months Ended
June 30,
   Year Ended
December 31,
 
   2022   2021   2022   2021   2021   2020 
Total revenue  $164,606   $137,584   $324,412   $270,554   $583,050   $539,373 
                               
Net loss  $(27,794)  $(10,842)  $(52,613)  $(24,703)  $(73,151)  $(58,583)
Adjustments:                              
Interest expense   3,911    2,654    7,686    4,850    11,455    8,217 
Interest earned   -    -    -    (2)   (2)   (8)
Income tax expense (benefit)   13    (560)   41    (709)   (1,670)   (1,454)
Amortization and depreciation   1,402    1,989    2,892    3,614    7,128    6,450 
Equity-based compensation   126    224    184    364    543    468 
Phantom unit expense   2,021    1,407    4,570    2,266    7,242    271 
Loss on change in fair value of warrants   232    -    510    -    606    - 
Excess fair value over the consideration received for SAFE   800    -    800    -    -    - 
Other expenses(3)   357    220    687    404    1,055    427 
Gain on forgiveness of debt   -    (9,892)   -    (10,900)   (10,900)   - 
Adjusted EBITDA  $(18,932)  $(14,780)  $(35,243)  $(24,816)  $(57,694)  $(44,212)
Net loss as a percentage of total revenue   (16.9)%   (7.9)%   (16.2)%   (9.13)%   (12.5)%   (10.9)%
Adjusted EBITDA as a percentage of total revenue   (11.5)%   (10.7)%   (10.9)%   (9.17)%   (9.9)%   (8.2)%

 

  (3) Other expenses primarily consist of foreign currency exchange gains and losses, taxes, penalties, settlements and gains and losses on sale of property and equipment.

 

Liquidity and Capital Resources

 

Liquidity describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, including availability under our credit facility, and their sufficiency to fund our operating and investing activities. Our principal sources of liquidity have been borrowings under our current and prior credit facilities and other financing arrangements, proceeds from the issuance of equity and warrant exercises and cash generated by operating activities and, more recently, including the cash proceeds from the Mergers, PIPE Investment, and the Forward Purchase Agreement (see “—Liquidity and Capital ResourcesOther Financing Arrangements” below). Historically, we have financed our operations and acquisitions from a combination of cash generated from operations and periodic borrowings under senior secured credit facilities and other financing arrangements. Our primary cash needs are for day-to-day operations, to fund working capital requirements, to fund our growth strategy, including acquisitions, and to pay interest and principal on our indebtedness. Our acquisition strategy and our interest expense in particular may require that we seek additional sources of equity or debt financing in future periods. Funding payments under the Tax Receivable Agreement, discussed further below, may also require that we seek additional funding in future periods. Cash flows from operations could continue to be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in the section titled “Risk Factors” included elsewhere in the Form 8-K.

 

At June 30, 2022, cash and cash equivalents totaled $6.9 million, accounts receivable totaled $47.6 million and unbilled accounts receivable totaled $62.1 million. Availability under our Revolving Credit Facility, which provides the ability to borrow up to $60.0 million, was $18.6 million. Immediately subsequent to the Closing on August 15, 2022, the balance of cash and cash equivalents was $81.8 million and availability under our Revolving Credit Facility was $9.0 million.

 

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In September 2021, we entered into a software subscription agreement with Palantir Technologies, Inc., including related support and update services. The agreement was subsequently amended in December 2021. The term of the amended agreement is through December 31, 2024. Pursuant to the agreement, as of June 30, 2022, we are to pay $20.3 million in the next 12 months and $22.5 million thereafter through October 2024, with payments scheduled on a quarterly basis. We expect the Palantir services will support, improve, and strengthen our platform, which increases its value to our customers and partners for the continued growth of our business.

 

We believe that additional capital will be needed to support our debt and growth, and additional debt, equity or other financing arrangements, including the financings effected in connection with the Mergers, combined with extending the Company’s revolving line of credit and potential proceeds under the Forward Purchase Agreement (see “—Liquidity and Capital ResourcesOther Financing Arrangements” below), will provide sufficient liquidity for the Company for the next year and beyond. However, it is possible additional funding, if needed, may have terms that are less favorable to the company than its existing terms.

 

Cash Flows

 

The following table summarizes our cash flows for the periods indicated:

 

   Six Months Ended
June 30,
   Year Ended
December 31,
 
   2022   2021   2021   2020 
   (in thousands) 
Net cash used in operating activities  $(16,272)  $(40,200)  $(59,861)  $(31,482)
Net cash used in investing activities   (685)   (541)   (4,002)   (1,506)
Net cash provided by financing activities   13,222    47,619    68,459    21,343 
Net increase (decrease) in cash and cash equivalents  $(3,735)  $6,878   $4,596   $(11,645)

 

Cash flows used in operating activities

 

Net cash used in operating activities decreased by $23.9 million to $16.3 million for the six months ended June 30, 2022 compared to $40.2 million for the six months ended June 30, 2021. The decrease in cash used in operating activities was driven by:

 

  a $41.5 million favorable impact attributable to changes in operating assets and liabilities, primarily driven by an increase in favorable impact from accounts payable by $20.8 million, accrued expenses by $16.4 million and accounts receivable by $3.9 million.

 

  a $10.3 million increase in non-cash charges which was primarily attributable to a $10.9 million decrease in gain on forgiveness of the PPP loans, an increase of $2.3 million in phantom unit expense, a $1.0 million increase of amortization of debt issuance costs and a $0.8 million increase of excess fair value over the consideration received for SAFE, partially offset by a $5.0 million decrease in bad debt reserve.

 

  partially offset by a $27.9 million increase in net loss.

 

 Net cash used in operating activities increased by $28.4 million to $59.9 million for the year ended December 31, 2021, compared to $31.5 million for the year ended December 31, 2020. The increase in cash used in operating activities was driven by:

 

  a $14.6 million increase in net loss.

 

  a $11.1 million unfavorable impact attributable to changes in operating assets and liabilities, primarily driven by an increase in unfavorable impact from contract assets by $25.4 million, accounts payable by $9.5 million and prepaid expenses by 3.2 million, partially offset by an increase in favorable impact from accrued expenses by $17.5 million, accounts receivable by $7.7 million and other current assets by $1.7 million.

 

  a $2.8 million decrease in non-cash charges which was primarily attributable to a $10.9 million gain on forgiveness of the PPP loans during 2021, offset by a $7.0 million increase in phantom unit expense, a $0.7 million increase in amortization and depreciation and a $0.6 million increase in loss on change in fair value of warrants.

 

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Cash flows used in investing activities

 

Cash flows used in investing activities generally include property, equipment and intangible asset purchases.

 

Net cash used in investing activities was relatively unchanged for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

 

Net cash used in investing activities increased by $2.5 million for the year ended December 31, 2021, compared to the year ended December 31, 2020. The increase was primarily attributable to purchases of technology assets during 2021.

 

Cash flows from financing activities

 

Net cash provided by financing activities was $13.2 million for the six months ended June 30, 2022, compared to $47.6 million for the six months ended June 30, 2021. Net cash provided by financing activities for the six months ended June 30, 2022 resulted primarily from net borrowing on line of credit of $11.5 million and proceeds of $8.0 million from the SAFE, offset in part by $3.0 million repayments of long-term debt, $2.0 million payments of financing costs and $1.3 million payments of deferred offering costs. Net cash provided by financing activities for the six months ended June 30, 2021 resulted primarily from proceeds of $30.5 million from warrants exercised and $22.3 million from long-term debt, offset in part by net payment on line of credit of $4.3 million and $0.8 million payments of financing costs.

 

Net cash provided by financing activities was $68.5 million for the year ended December 31, 2021 and $21.3 million for the year ended December 31, 2020. Net cash provided by financing activities for the year ended December 31, 2021 resulted primarily from proceeds of $42.3 million from long-term debt and proceeds of $32.5 million from exercise of warrants, offset in part by repayments of $3.0 million of long-term debt and payments of $2.8 million of financing costs and $1.1 million of deferred offering costs. Net cash provided by financing activities for the year ended December 31, 2020 resulted primarily from proceeds of $30.8 million from long-term debt, offset in part by net payments of $6.6 million of borrowings on the line of credit and repayments of $2.3 million of long-term debt.

 

Tax Receivable Agreement

 

In connection with the consummation of the Mergers, Rubicon entered into the Tax Receivable Agreement with the common and preferred unitholders of the Company (“TRA Holders”), whereby following the Mergers Rubicon is obligated to make payments under the Tax Receivable Agreement equal to 85% of certain of Rubicon’s realized (or in certain cases, deemed realized) tax savings as a result of certain tax benefits related to the transactions contemplated by the Merger Agreement and future exchanges of Class B Units for Class A Common Stock or cash. Rubicon will benefit from the remaining 15% of such tax savings.

 

The actual future payments to the TRA Holders will vary, and estimating the amount of payments that may be made under the Tax Receivable Agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors and future events. We cannot reasonably estimate the actual future annual payments under the Tax Receivable Agreement given the difficulty in determining those estimates as they are dependent on a number of factors, including the tax assets or tax attributes (i) arising in connection with any exchange of Class B Units for shares of Class A Common Stock or cash in the future and (ii) the amount, character, and timing of the recognition of income by Rubicon.

 

A significant portion of any potential future payments under the Tax Receivable Agreement is anticipated to be payable over 15 years, consistent with the period over which the associated tax deductions would be realized by Rubicon, assuming Holdings LLC generates sufficient income to utilize the deductions. If sufficient income is not generated by Holdings LLC, the associated taxable income of Rubicon will be affected and the associated tax benefits to be realized will be limited, thereby similarly reducing the associated Tax Receivable Agreement payments to be made. We may however still need to seek additional sources of financing depending on the given circumstances at the time any payments will be made.

 

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While many of the factors that will determine the amount of payments that Rubicon will make under the Tax Receivable Agreement are outside of its control, Rubicon expects that the payments it will make under the Tax Receivable Agreement will be substantial. Rubicon generally expects to fund such distributions out of available cash of Holdings LLC, and as a result, such payments will reduce the cash provided by the tax savings generated from the relevant transactions that would otherwise have been available to Rubicon and Holdings LLC for other uses, including repayment of debt, funding day-to-day operations, reinvestment in the business or returning capital to holders of Class A Common Stock in the form of dividends or otherwise.

 

Rubicon may incur significant costs in addition to the due course obligations arising under the Tax Receivable Agreement described above. In particular, in the event that (a) Rubicon undergoes certain change of control events (e.g., certain mergers, dispositions and other similar transactions), (b) there is a material uncured breach under the Tax Receivable Agreement, or (c) Rubicon elects to terminate the Tax Receivable Agreement early, in each case, Rubicon’s obligations under the Tax Receivable Agreement would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax savings calculated based on certain assumptions, as set forth in the Tax Receivable Agreement. In addition, the interest on the payments made pursuant to the Tax Receivable Agreement may significantly exceed Rubicon’s other costs of capital. In certain situations, including upon the occurrence of the events described above, Rubicon could be required to make payments under the Tax Receivable Agreement that exceed its actual cash savings, requiring it to seek funding from other sources, including incurring additional debt. Thus, Rubicon’s obligations under the Tax Receivable Agreement could have a substantial negative effect on its financial condition and liquidity.

 

Despite these potential costs, we do not believe that that the Tax Receivable Agreement will be a material detriment to Rubicon’s and Holding LLC’s future results of operations and liquidity, as any payments required under the Tax Receivable Agreement will arise directly from realized (or in certain cases, deemed realized) tax savings of Rubicon as a result of certain tax benefits related to the Mergers and future exchanges of Class B Units for Class A Common Stock or cash and are expected to be made in lieu of income taxes otherwise payable by Rubicon. Additionally, Rubicon will receive the benefit of 15% of any such tax savings.

 

Debt

 

On December 14, 2018, we entered into a Revolving Credit Facility, which was subsequently amended, and which provides for borrowings of up to $60.0 million and matures in December 2022. As of June 30, 2022, we had approximately $41.4 million of borrowings under the Revolving Credit Facility, resulting in an unused borrowing capacity of approximately $18.6 million. We may use the proceeds of future borrowings under the Revolving Credit Facility to finance our acquisition strategy and for other general corporate purposes. The Revolving Credit Facility bore interest at LIBOR plus 4.5% until the amended agreement entered on April 26, 2022, and since the amendment, it bears interest at SOFR plus 4.6%. Our Revolving Credit Facility also includes a lockbox arrangement, which provides for receipts to be swept daily to reduce borrowings outstanding at the discretion of the lender.

 

On March 29, 2019, we entered into a Term Loan agreement, which was subsequently amended, and which provides for $60.0 million of term loan secured by a second lien on all of our assets of at an interest rate of LIBOR plus 9.5% (the “Term Loan Facility”). The Term Loan matures on the earlier of March 2024 or the maturity date under the Revolving Credit Facility. The Term Loan agreement required us to raise $50.0 million of qualified equity contributions during the period after April 26, 2022 and on or prior to June 30, 2022. Failure to raise qualified equity contributions could require the use of available funds under the Revolving Credit Facility as collateral for the Term Loan agreement by an amount up to $20.0 million. Since the Mergers had not consummated on or prior to June 30, 2022, we did not meet the qualified equity contributions requirement. We do not believe that any term loan collateral reduction corresponding to the qualified equity contribution would impact our ability to meet its liquidity requirements over the next twelve months. As of June 30, 2022, we had Term Loan outstanding under the Term Loan agreement with a total carrying value of $51.0 million.

 

On December 22, 2021, we entered into a Subordinated Term Loan agreement which provides for $20.0 million of term loan secured by a third lien on all of our assets at an interest rate of 15.0% (the “Subordinated Term Loan Facility”). The Subordinated Term Loan matures on December 22, 2022. As of June 30, 2022, we had term loans outstanding under the Subordinated Term Loan agreement with a total carrying value of $19.2 million.

 

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In addition, we received loans under the PPP, which was established under the CARES Act and is administered by the SBA, for an amount totaling $10.8 million. We elected to repay $2.3 million of the PPP loans during the year ended December 31, 2020. The SBA forgave the PPP loans in the full amount of $10.8 million along with associated accumulated interest during the year ended December 31, 2021, resulting in a refund of the $2.3 million of the PPP loans repaid. As of June 30, 2022 and December 31, 2021, we had no outstanding PPP loan balances. The SBA and other government communications have however indicated that all loans in excess of $2.0 million will be subject to audit and that those audits could take up to seven years to complete.

 

See Note 4, Debt, to our consolidated financial statements included elsewhere in the Form 8-K for a more detailed description of our indebtedness.

 

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

 

Other Financing Arrangements

 

On May 25, 2022, we entered into the Rubicon Equity Investment Agreement (Simple Agreement for Future Equity or “SAFE”) with Founder and certain investors, whereby, the investors advanced us $8,000,000 and, in connection with the consummation of the Mergers and in exchange for the advancements, (a) Holdings LLC issued 880,000 of its Class B Units to such investors, (b) Rubicon issued 160,000 shares of Class A Common Stock to such investors, and (c) Founder SPAC Sponsor LLC forfeited 160,000 shares of Class A Common Stock. All the obligations thereunder were satisfied upon the Closing and the exchanges for the advancements discussed above.

 

On August 4, 2022, Founder entered into the Forward Purchase Agreement for an OTC Equity Prepaid Forward Transaction with the FPA Sellers. The Forward Purchase Agreement resulted in an additional $4.0 million of cash at the Closing. Pursuant to the terms therein, we are entitled to receive certain additional payments in the future periods in connection with certain sales of Class A Common Stock by the FPA Sellers, if any. In addition, we may be required to issue additional shares of Class A Common Stock pursuant to the FPA Agreement. For more information regarding the Forward Purchase Agreement, see Founder’s Current Report on Form 8-K, filed with the SEC on August 4, 2022 and Exhibit 10.18 attached to the Form 8-K.

 

Contractual Obligations

 

Our principal commitments consist of obligations under debt agreements and leases for office facilities. We have a substantial level of debt. For more information regarding our debt service obligations, see Note 4, Debt, to our consolidated financial statements included elsewhere in the Form 8-K. For more information regarding our lease obligations, see Note 8, Leases, to our consolidated financial statements included elsewhere in the Form 8-K. Our agreement with Palantir Technologies, Inc. requires us to pay $42.8 million as of June 30, 2022 through October 2024. We will also be required to make certain significant payments under the Tax Receivables Agreement discussed above.

 

Critical Accounting Policies and Estimates

 

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

 

We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

 

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Revenue recognition

 

We derive our revenue principally from waste removal, waste management and consultation services, platform subscriptions, and the purchase and sale of recyclable commodities. We recognize service revenue over time, consistent with efforts performed and when the customer simultaneously receives and consumes the benefits provided by our services. We recognize recyclable commodity revenue at the point in time when the ownership, risks and rewards are transferred.

 

Further, judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether we control the service provided to the end-user and are the principal in the transaction (gross), or we arrange for other parties to provide the service to the end-user and are the agent in the transaction (net). We have concluded that we are the principal in most arrangements as we control the waste removal service and are the primary obligor in the transactions. The assessment of whether we are considered the principal or the agent in a transaction could impact the timing and amount of revenue recognized.

 

Customer acquisition costs

 

We make certain expenditures related to acquiring contracts for future services. These expenditures are capitalized as customer acquisition costs and amortized in proportion to the expected future revenue from the customer, which in most cases results in straight-line amortization over the life of the customer. Amortization of these customer acquisition costs is presented within amortization and depreciation on our consolidated statements of operations. Subsequent adjustments to customer acquisition costs estimates are possible because actual results may differ from these estimates if conditions dictate the need to enhance or reduce customer acquisition costs.

 

Equity-based compensation

 

We account for equity-based compensation under the fair value recognition and measurement provisions, in accordance with applicable accounting standards, which require compensation expense for the grant-date fair value of equity-based awards to be recognized over the requisite service period.

 

We have elected to use the Black-Scholes-Merton option pricing model to determine the fair value of incentive units on the grant date. The Black-Scholes-Merton option pricing model requires certain subjective inputs and assumptions, including the fair value of our common units, the expected term, risk-free interest rates, expected volatility of the price of our common units, and expected dividend yield.

 

These assumptions used in the Black-Scholes-Merton option-pricing model, other than the fair value of our common stock (see the section titled “— Valuation of Common Units” below), are estimated as follows:

 

  Expected term. We estimate the expected term based on the estimated time for which the award will be held by the awardee.

 

  Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.

 

  Expected volatility. We estimate the volatility based on a comparable market index. We have calculated the historical volatility for the index for a period of time that corresponds to the expected term of the award.

 

  Expected dividend yield. Expected dividend yield is zero percent, as we have not paid and do not anticipate paying dividends on our common units.

 

We continue to use judgment in evaluating the expected volatility and expected term utilized in our equity-based compensation expense calculation on a prospective basis. As we continue to accumulate additional data related to our common units, we may refine our estimates of expected volatility and expected term, which could materially impact our future equity-based compensation expense.

 

 21 

 

 

Valuation of common units

 

The fair value of the common units underlying our equity-based awards has historically been determined by our board of directors, with input from management and corroboration from contemporaneous third-party valuations. We believe that our board of directors has the relevant experience and expertise to determine the fair value of our common units. Given the absence of a public trading market of our common units, and in accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common units at each grant date. These factors include:

 

  contemporaneous valuations of our common units performed by independent third-party specialists;

 

  the prices of the recent preferred units sales by us to investors in arm’s-length transactions;

 

  the price of sales of our common units and preferred units in recent secondary sales by existing unitholders to investors;

  

  the rights, preferences, and privileges of our preferred units relative to those of our common units;

 

  our capital resources and financial condition;

 

  our historical operating and financial performance as well as our estimates of future financial performance;

 

  the operational and financial performance and valuations of comparable publicly traded companies;

 

  the hiring of key personnel and the experience of our management;

 

  the relative lack of marketability inherent in our common units;

 

  the general economic conditions and our industry outlook;

 

  industry information such as market growth and volume and macro-economic events; and

 

  additional objective and subjective factors relating to our business.

 

In valuing our common units, our board of directors determined the fair value of our common units using both the income and market approach valuation methods. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on our weighted-average cost of capital and is adjusted to reflect the risks inherent in our cash flows. The market approach estimates value based on a comparison of the subject company to comparable guideline public companies in a similar line of business. From the comparable companies, a representative market value multiple is determined and then applied to the subject company’s financial forecasts to estimate the value of the subject company.

 

Following the consummation of the Mergers on August 15, 2022, it is not necessary to determine the fair value of our common units, as Class A Common Stock received in consideration thereof is traded in the public market.

 

Warrants

 

We have issued warrants to purchase shares of our Series E preferred units and common units. Warrants may be accounted for as either liability or equity instruments depending on the terms of the warrant agreements. We determine whether each of the warrants issued require liability or equity classification at their issuance dates. Warrants classified as equity are recorded at fair value as of the date of the issuance on our consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as liability are recorded at fair value as of the date of the issuance on our consolidated balance sheets and subsequently re-measured at each reporting period with changes being recorded as a component of other income (expense) on our consolidated statements of operations.

 

 22 

 

 

Following the consummation of the Mergers on August 15, 2022, all such warrants were converted into a right to receive merger consideration or voided in accordance with the terms in each of the related agreements and none are outstanding.

 

Income taxes

 

As a limited liability company, we are a non-taxpaying entity for federal income tax purposes. Accordingly, its taxable income or losses are allocated to members based on the provisions of the operating agreement and are included in the members’ income tax returns. Similar provisions apply for state income tax purposes.

 

The consolidated financial statements include a provision for income taxes related to RiverRoad Waste Solutions, Inc. (“RiverRoad”), one of our subsidiaries and a C-Corporation. RiverRoad is subject to both state and federal income tax, and both the state and federal tax obligations associated with RiverRoad are reflected on the accompanying consolidated balance sheets as a component of accrued expenses.

 

We account for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.

 

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute our business plans and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

 

We recognize the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. The tax positions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretation of tax laws, developments in case law and closing of statutes of limitations. At June 30, 2022 or December 31, 2021, we have no tax positions that meet this threshold and, therefore, have not recognized any adjustments. While we believe our tax positions are fully supportable, they may be challenged by various tax authorities. If actual results were to be materially different than estimated, it could result in a material impact on our consolidated financial statements in future periods.

 

The provision for income taxes includes the impact of reserve provisions and changes to reserves as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our income tax returns by the tax authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes.

 

 23 

 

 

Loss contingencies

 

In the ordinary course of business, we are or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims. We record a provision for a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements.

 

We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Significant judgment is required to determine both the probability and the estimated amount of loss. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events.

 

The outcomes of litigation and other disputes are inherently uncertain and subject to significant uncertainties. Therefore, if one or more of these matters were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

 

Leases

 

Leases with a term greater than one year are recognized on the consolidated balance sheet as right-of-use (“ROU”) assets and lease liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. As the interest rate implicit in lease contracts is typically not readily determinable, we utilize the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

 

Recent Accounting Pronouncements

 

For information regarding recently issued accounting pronouncements and recently adopted accounting pronouncements, please see Note 2, Recent accounting pronouncements, to our consolidated financial statements included elsewhere in the Form 8-K.

 

The following are recently issued accounting pronouncements that would apply to us, but have not been adopted as of June 30, 2022:

 

  In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. Rubicon is an emerging growth company that will take advantage of the extended transition period under the JOBS Act for complying with new or revised accounting standards. ASU 2016-13 will be effective for Rubicon for its 2023 fiscal year. ASU 2016-13 is currently in effect for non-emerging growth companies that are public business entities.

 

  In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. Rubicon is an emerging growth company that will take advantage of the extended transition period under the JOBS Act for complying with new or revised accounting standards. ASU 2021-08 will be effective for Rubicon for its 2024 fiscal year. ASU 2021-08 will be effective for non-emerging growth companies that are public business entities with fiscal years beginning after December 15, 2022.

 

 24 

 

 

Qualitative and Quantitative Disclosures About Market Risk

 

In the normal course of business, we are exposed to market risks, including changes in interest rates, certain commodity prices and foreign currency rates. Information relating to quantitative and qualitative disclosures about these market risks is described below.

 

Interest rate risk

 

Our exposures to market risk for changes in interest rates relate primarily to our Term Loan Facility and our Revolving Credit Facility. The Term Loan Facility and Revolving Credit Facility are floating rate loans and bear interest subject to LIBOR or SOFR. Therefore, fluctuations in interest rates will impact our consolidated financial statements. A rising interest rate environment will increase the amount of interest paid on these loans. A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on the results of our operations.

 

Recyclable commodity price risk

 

Through our recycling program, we market a variety of materials, including fibers such as old corrugated cardboard, old newsprint, aluminum, glass, pallets and other recyclable materials. We may use a number of strategies to mitigate impacts from recyclable commodity price fluctuations including, entering into purchase contracts indexed to the recyclable commodity price such that we mitigate the variability in cash flows generated from the sales of recycled materials at floating prices. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. As of June 30, 2022, we were not a party to any recyclable commodity hedging agreements. In the event of a decline in recyclable commodity prices, a 10% decrease in average recyclable commodity prices from the average prices in effect would have impacted our revenues by $4.9 million and $3.2 million for the six months ended June 30, 2022 and 2021, respectively, and $8.2 million and $3.4 million for the years ended December 31, 2021 and 2020, respectively. A 10% decrease in average recyclable commodity prices from the average prices in effect would have impacted our operating loss by $0.4 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively, and $0.5 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively.

 

Foreign currency risk

 

To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements as the majority of our revenue has been generated in the United States. As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the US dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates.

 

Inflation

 

To date, the impact of inflation on our business results has been primarily limited to increases of revenue and cost of revenue, such that the net effect has been immaterial to our gross profit, adjusted gross profit and net loss. We expect this trend to continue as most contracts with our waste generator customers allow us to adjust the applicable prices without any significant advanced notice requirement based on the economic environment where fees charged by our hauling and recycling partners are increasing, and recyclable commodity price fluctuations tend to impact both selling and purchasing sides in a similar manner. However, we may not be able to adjust prices quickly enough or sufficiently to offset the effect of certain other cost increases, such as labor costs, without negatively impacting customer demand.

 

 25 

 

 

 

Exhibit 99.4

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Current Report on Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached (the “Form 8-K”) or, if such terms are not defined in the Form 8-K, then such terms shall have the meanings ascribed to them in the definitive proxy statement/consent solicitation statement/prospectus filed with the Securities and Exchange Commission (the “SEC”) by Founder on July 6, 2022 (the “Proxy Statement”).

 

We are providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Mergers. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes.

 

The unaudited pro forma condensed combined balance sheet as of June 30, 2022 combines the historical unaudited balance sheet of Founder as of June 30, 2022 with the historical unaudited consolidated balance sheet of Rubicon as of June 30, 2022, giving effect to the Mergers as if they had been consummated on that date.

 

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 combines the historical unaudited statement of operations of Founder for the six months ended June 30, 2022 with the historical unaudited consolidated statement of operations of Rubicon for the six months ended June 30, 2022. The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2021 combines the historical audited statement of operations of Founder for the period from April 26, 2021 (inception) through December 31, 2021 with the historical audited consolidated statement of operations of Rubicon for the fiscal year ended December 31, 2021. The unaudited pro forma statements of operations give effect to the Mergers as if they had been consummated on January 1, 2021.

 

The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in and/or incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached:

 

  The historical unaudited financial statements of Founder as of and for the six months ended June 30, 2022, and the historical audited consolidated financial statements of Founder as of and for the period from April 26, 2021 (inception) through December 31, 2021; and

 

  The historical unaudited condensed financial statements of Rubicon as of and for the six months ended June 30, 2022, and the historical audited condensed financial statements of Rubicon as of and for the fiscal year ended December 31, 2021.

 

The foregoing historical financial statements have been prepared in accordance with GAAP.

 

The unaudited pro forma condensed combined financial information should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Founder” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Rubicon”, and other financial information included elsewhere in and/or incorporated by reference into the Form 8-K.

 

Description of the Mergers

 

On December 15, 2021, Founder entered into the Merger Agreement with Merger Sub, Rubicon, and the other parties thereto, a copy of which is attached to the Form 8-K, whereby, among other things, (i) Founder, a Cayman Islands exempted company, redomesticated as a Delaware corporation, and in connection therewith was renamed “Rubicon Technologies, Inc.” and (ii) Merger Sub merged with and into Rubicon, with Rubicon surviving the merger as a wholly owned subsidiary of New Rubicon. Immediately prior to the redomestication, Rubicon changed its name to “Rubicon Technologies Holdings, LLC.”

 

 

 

 

Pursuant to the Merger Agreement, in consideration of the transactions set forth above, Rubicon equity holders received Domestication Class A Common Stock, Domestication Class V Common Stock and/or Class B Units of Rubicon, in each case as set forth in the Merger Agreement and as further described in the Form 8-K. The aggregate merger consideration issued to Rubicon equity holders at Closing was 19,846,915 shares of Domestication Class A Common Stock at a deemed value of $10.00 per share and 118,677,877 contingently redeemable Class B Units of Rubicon (and an equivalent number of Domestication Class V Common Stock) at a deemed value of $10.00 per share for an aggregate Merger Consideration of $1,385.3 million. Of these, 4,265,971 contingently redeemable Class B Units (and an equivalent number of Domestication Class V Common Stock) are held in reserve by New Rubicon to be issued to certain former Rubicon equity holders as merger consideration upon completion of the requisite letters of transmittal and related documentation, in each case, as required by the Merger Agreement.

 

In connection with Closing, New Rubicon issued 160,000 shares of Class A Common Stock to certain investors pursuant to the Rubicon Equity Investment Agreement, and 160,000 Founder Class B Shares were forfeited by Sponsor immediately prior to the Closing. In addition, pursuant to the Sponsor Forfeiture Agreement, Sponsor forfeited an additional 1,000,000 Founder Class B Shares immediately prior to the Closing. After giving effect to this forfeiture and the forfeiture under the Rubicon Equity Investment Agreement, Sponsor held 6,746,250 Founder Class B Shares, which converted to 6,746,250 shares of Domestication Class A Common Stock at the time of the Domestication. In connection with the Closing, New Rubicon issued to the PIPE Investors an additional 12,100,000 shares of Domestication Class A Common Stock (at a price of $10.00 per share), for a total aggregate purchase price of $121.0 million.

 

Accounting for the Mergers

 

The Mergers will be accounted for akin to a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. The Mergers will not be treated as a change in control of Rubicon as RGH, Inc. controlled (x) Rubicon through its rights to nominate the majority of the members of the board of managers of Rubicon under Rubicon’s existing operating agreement and (y) New Rubicon through its control of the board of managers of Rubicon and, pursuant to Section 8.7(a)(i) of the Merger Agreement, such board’s right prior to Closing to nominate seven of the nine initial directors to be appointed to the board of directors of New Rubicon effective upon the Closing (the “Rubicon Nominees”). Pursuant to Section 8.7(a)(i) of the Merger Agreement, effective at the Closing, one of the Rubicon Nominees serves as the chairman of the New Rubicon Board of Directors and all Rubicon Nominees continue to control and serve on the New Rubicon Board of Directors until at least the 2023 annual shareholder meeting of New Rubicon. Under the guidance in ASC 805 for transactions between entities under common control, the assets, liabilities, and noncontrolling interests of Rubicon and Founder are recognized at their carrying amounts on the date of the Mergers.

 

Under this method of accounting, Founder will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Mergers will be treated as the equivalent of Rubicon issuing stock for the net assets of Founder, accompanied by a recapitalization. The net assets of Founder will be stated at their historical value within the pro formas with no goodwill or other intangible assets recorded.

 

Basis of Pro Forma Presentation

 

The historical financial information has been adjusted to give pro forma effect to the transaction accounting required for the Mergers and the PIPE Financing. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined entity upon the Closing.

 

The unaudited pro forma condensed combined financial information is for illustrative purposes only and does not necessarily reflect what the New Rubicon’s financial condition or results of operations would have been had the Mergers occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of New Rubicon. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed. Founder and Rubicon have not had any historical relationship prior to the Mergers. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

 2 

 

 

Unaudited Pro Forma Condensed Balance Sheet

As of June 30, 2022

(In thousands)

 

   Founder SPAC
(as reported)
   Rubicon
Technologies, LLC
(as reported)
   Transaction
Adjustments
      Pro Forma
Combined
 
                    
ASSETS                       
Current assets                       
Cash and cash equivalents  9   6,882   (1,124)  (c)  79,039 
              321,264   (d)     
              121,000   (e)     
              (246,032)  (f)     
              (25,353)  (g)     
              (28,892)  (i)     
              (68,715)  (m)     
Accounts receivable, net   -    47,598            47,598 
Contract assets   -    62,143            62,143 
Prepaid expenses   512    5,923            6,435 
Other current assets   -    1,909            1,909 
Total current assets   521    124,455    72,148       197,124 
                        
Property and Equipment, net   -    2,600            2,600 
                        
Other Assets                       
Operating right-of-use assets   -    3,398            3,398 
Other noncurrent assets (b)   146    7,151    (4,183)  (g)   3,114 
Goodwill   -    32,132            32,132 
Intangible assets, net   -    12,490            12,490 
Derivative asset   -    -    16,615   (m)   16,615 
Marketable securities held in Trust Account   321,264    -    (321,264)  (d)   - 
                        
Total assets   321,931    182,226    (236,684)      267,473 
                        
LIABILITIES AND SHAREHOLDERS' EQUITY                       
Current liabilities:                       
Accounts payable   -    70,844    (1,919)  (g)   68,925 
Line of credit   -    41,426            41,426 
Accrued expenses and other current liabilities   146    80,048    46,617   (g)   129,811 
              3,000   (i)     
Deferred compensation   -    12,892    (12,892)   (j)   - 
Contract liabilities   -    4,690            4,690 
Operating lease liabilities, current   -    1,596            1,596 
Warrant liabilities   -    1,890            1,890 
Simple agreement for future equity (SAFE)   -    8,800            8,800 
Current portion of long-term debt, net of debt issuance costs   -    23,540            23,540 
Due to Sponsor   103    -            103 
Total current liabilities   249    245,726    34,806       280,781 
                        
Long-Term Liabilities                       
Deferred income taxes   -    218            218 
Operating lease liabilities, noncurrent   -    2,838            2,838 
Long-term debt, net of issuance costs   -    46,710            46,710 
Other long-term liabilities   -    467    45,200    (h)   36,867 
              (8,800)   (n)     
Deferred underwriting commissions   11,069    -    (11,069)   (g)   - 
Total Long-Term Liabilities   11,069    50,233    25,331       86,633 
Total Liabilities   11,318    295,959    60,137       367,414 
                        
Commitments and Contingencies                       
Class A common stock; 31,625,000 shares subject to possible redemption at $10.15 per share   320,994    -    (320,994)   (f)   - 
                        
Members / Shareholders' equity:                       
Class A common stock   -    -    2    (a)   5 
              1    (e)     
              1    (f)     
              1    (l)     
Class V Common Stock, $0.0001 par value; 118,593,980 issued and outstanding   -    -    12    (a)   12 
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 7,906,250 shares issued and outstanding   1    -    (1)   (l)   - 
Additional Paid-in capital   -    -    (14)   (a)   400,759 
              77,524    (c)     
              120,999    (e)     
              74,961    (f)     
              (63,165)   (g)     
              15,175    (j)     
              88,256    (k)     
              8,800    (n)     
              78,223    (o)     
Accumulated deficit   (10,382)   (113,733)   (77,524)   (c)   (422,494)
              (1,124)   (c)     
              (2,283)   (j)     
              (45,200)   (h)     
              (31,892)   (i)     
              (88,256)   (k)     
              (52,100)   (m)     
Total members / shareholders' equity attributable to Rubicon Technologies, LLC / Rubicon Technologies, Inc.   (10,381)   (113,733)   102,396       (21,718)
Non-Controlling Interests             (78,223)   (o)   (78,223)
                        
Total members' / stockholders' equity   (10,381)   (113,733)   24,173       (99,941)
                        
Total liabilities, preferred units, and shareholders' equity   321,931    182,226    (236,684)      267,473 

 

 3 

 

 

Unaudited Pro Forma Condensed Statement of Operations

For the Six Months Ended June 30, 2022

(In thousands, except share and per share amounts)

 

   Founder SPAC
(as reported)
   Rubicon
Technologies, LLC
(as reported)
   Transaction
Adjustments
      Pro Forma
Combined
 
                    
Revenue                       
Service   -    274,966            274,966 
Recyclable commodity   -    49,446            49,446 
Total Revenue   -    324,412    -       324,412 
                        
Costs and Expenses                       
Cost of revenue (exclusive of amortization and depreciation)                       
Service   -    265,878            265,878 
Recyclable commodity   -    45,622            45,622 
Total cost of revenue (exclusive of amortization and depreciation)   -    311,500    -       311,500 
Sales and marketing   -    8,496            8,496 
Product development   -    18,533            18,533 
General and administrative   -    25,880    8,036    (jj)   33,916 
Amortization and depreciation   -    2,892            2,892 
Formation and operating costs   1,059    -            1,059 
Total Costs and Expenses   1,059    367,301    8,036       376,396 
Loss from operations   (1,059)   (42,889)   (8,036)      (51,984)
                        
Other Income (Expense):                       
Interest earned   248    -    (248)   (hh)   - 
Gain on forgiveness of debt   -    -            - 
Change in fair value of warrant liabilities   -    (510)           (510)
Excess fair value over the consideration received for SAFE   -    (800)           (800)
Other expense   -    (687)           (687)
Interest expense   -    (7,686)           (7,686)
Total Other Expense   248    (9,683)   (248)      (9,683)
                        
Income before income taxes   (811)   (52,572)   (8,284)      (61,667)
                        
Income tax expense (benefit)   -    41    41    (bb)   82 
                        
Net income (loss)   (811)   (52,613)   (8,325)      (61,749)
Net income (loss) attributable to non-controlling interests, net of tax   -    -    (44,420)   (dd)   (44,420)
                        
Net Income attributable to Rubicon Technologies Inc.   (811)   (52,613)   36,095       (17,329)
                        
Basic and diluted loss per share - Class A redeemable common stock   (0.02)                  
Weighted average shares outstanding of Class A redeemable common stock   31,625,000                   
Basic and diluted loss per share - Class B common stock   (0.02)                  
Weighted average shares outstanding of Class B common stock   7,906,250                   
Basic and diluted loss per share, non-redeemable Class A common stock        (1.57)           (0.37)(kk)
Weighted average shares outstanding, Class A common stock        33,509,272            46,300,005(kk)

 

 4 

 

 

Unaudited Pro Forma Condensed Statement of Operations

For the Year Ended December 31, 2021

(In thousands, except share and per share amounts)

 

   Founder SPAC   Rubicon
Technologies, LLC
(as reported)
   Transaction
Adjustments
      Pro Forma
Combined
 
                    
Revenue                       
Service   -    500,911            500,911 
Recyclable commodity   -    82,139            82,139 
Total Revenue   -    583,050    -       583,050 
                        
Costs and Expenses                       
Cost of revenue (exclusive of amortization and depreciation)                       
Service   -    481,642            481,642 
Recyclable commodity   -    77,030            77,030 
Total cost of revenue (exclusive of amortization and depreciation)   -    558,672    -       558,672 
Sales and marketing   -    14,457            14,457 
Product development   -    22,485            22,485 
General and administrative   -    52,915    2,283    (aa)   315,265 
              77,524    (ee)     
              1,124    (ee)     
              31,892    (ff)     
              45,200    (gg)     
              88,256    (ii)     
              16,071    (jj)     
Amortization and depreciation   -    7,128            7,128 
Formation and operating costs   938    -            938 
Total Costs and Expenses   938    655,657    262,350       918,945 
Loss from operations   (938)   (72,607)   (262,350)      (335,895)
                        
Other Income (Expense):                       
Interest earned   22    2    (22)   (hh)   2 
Gain on forgiveness of debt   -    10,900            10,900 
Change in fair value of warrants   -    (606)           (606)
Other expense   -    (1,055)   (52,100)  (cc)   (53,155)
Interest expense   -    (11,455)           (11,455)
Total Other Expense   22    (2,214)   (52,122)      (54,314)
                        
Income before income taxes   (916)   (74,821)   (314,472)      (390,209)
                        
Income tax expense (benefit)   -    (1,670)   76    (bb)   (1,594)
                        
Net income (loss)   (916)   (73,151)   (314,548)      (388,615)
Net income (loss) attributable to non-controlling interests, net of tax   -    -    (279,553)   (dd)   (279,553)
                        
Net Income attributable to Rubicon Technologies Inc.   (916)   (73,151)   (34,995)      (109,062)
Basic and diluted loss per share - Class A redeemable common stock   0.02                   
Weighted average shares outstanding of Class A redeemable common stock   9,271,586                   
Basic and diluted loss per share - Class B common stock   (0.14)                  
Weighted average shares outstanding of Class B common stock   7,906,250                   
Basic and diluted loss per share, non-redeemable Class A common stock        (2.21)           (2.36)(kk)
Weighted average shares outstanding, Class A common stock        33,048,809            46,300,005(kk)

 

 5 

 

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1. Basis of Presentation

 

The pro forma adjustments have been prepared as if the Mergers had been consummated on June 30, 2022, in the case of the unaudited pro forma condensed combined balance sheet, and as if the Mergers had been consummated on January 1, 2021, in the case of the unaudited pro forma condensed combined statement of operations, as this is the beginning of the earliest period presented in the unaudited pro forma condensed combined statements of operations.

 

The unaudited pro forma condensed combined financial information has been prepared assuming the following methods of accounting in accordance with GAAP.

 

The Mergers will be accounted for as a common control transaction, with no goodwill or other intangible assets recorded, in accordance with GAAP. As the Mergers represent a common control transaction from an accounting perspective, the Mergers will be treated similar to a reverse recapitalization. Rubicon has been determined to be the predecessor to the combined entity.

 

Under this method of accounting, Founder will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Mergers will be treated as the equivalent of Rubicon issuing stock for the net assets of Founder, accompanied by a recapitalization. The net assets of Founder will be stated at their historical value within the pro formas with no goodwill or other intangible assets recorded.

 

The pro forma adjustments represent management’s estimates based on information available as of the date of the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached and are subject to change as additional information becomes available and additional analyses are performed. Management considers this basis of presentation to be reasonable under the circumstances.

 

The unaudited pro forma condensed combined financial information does not give effect to any tax impacts associated with the pro forma adjustments. There is no expectation that the related tax benefit would be realizable, and Rubicon currently records a full valuation allowance.

 

One-time direct and incremental transaction costs anticipated to be incurred prior to, or concurrent with, the Closing are reflected in the unaudited pro forma condensed combined balance sheet as a direct reduction to the combined entity’s additional paid-in capital and are assumed to be cash settled.

 

2. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet

 

The adjustments included in the unaudited pro forma condensed consolidated combined balance sheet as of June 30, 2022 are as follows:

 

  (a)

Represents issuance of 19.8 million shares of Domestication Class A Common Stock and 118.7 million shares of Domestication Class V Common Stock to Rubicon equity holders as consideration for the Mergers.

 

An accounting analysis was performed, and it was determined that Domestication Class V Common Stock should be classified as permanent equity. This is primarily due to the fact that, in accordance with Article 11 of the A&R LLCA, the holders of Class B Units will have the right, at quarterly exchange dates set by Rubicon or prior to certain extraordinary transactions, to cause Rubicon to redeem these units, together with an equal number of Domestication Class V Common Stock, in exchange for an equal number of shares of Domestication Class A Common Stock or cash. New Rubicon has the option to satisfy any redemption either through exchanging cash or Domestication Class A Common Stock; however, any cash redemption is limited to the cash proceeds to be received from a new permanent equity offering through concurrent issuance of Domestication Class A Common Stock.

 

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  (b)

Pursuant to the Merger Agreement, in consideration of the transactions set forth above, Founder acquired various unit interests of Rubicon, and will succeed to their aggregate historical tax basis. The total tax benefit from such historical tax basis, including any increases thereto as a result of the transactions and the existing tax attributes, will be amortized over 15 years pursuant to IRC section 197. It is more likely than not that we will not realize the tax benefit of any deferred tax assets resulting from the transactions, and therefore we have recorded a full valuation allowance. As a result, the pro forma consolidated balance sheet does not reflect an adjustment for deferred taxes.

 

In addition, prior to the completion of this offering, we entered into a Tax Receivable Agreement with certain of our pre-Closing owners that provides for the payment by New Rubicon to such pre-Closing owners of 85% of the benefits, if any, that New Rubicon actually realizes, or is deemed to realize. Amounts contingently payable under the Tax Receivable Agreement are contingent upon, among other things, generation of sufficient future taxable income during the term of the Tax Receivable Agreement. As such, we determined there is no resulting liability related to the Tax Receivable Agreement arising from the transactions as the associated deferred tax assets are fully offset by a valuation allowance.

 

However, if all of the pre-Closing owners were to exchange or sell us all of their Class B Units, we would recognize a deferred tax asset of approximately $394.7 million and a liability under the Tax Receivable Agreement of approximately $335.5 million, assuming: (i) all exchanges or purchases occurred on the same day; (ii) a price of $10 per share; (iii) a constant corporate tax rate of 24.017%; (iv) that we will have sufficient taxable income to fully utilize the tax benefits; and (v) no material changes in tax law. These amounts are estimates and have been prepared for illustrative purposes only. The actual amount of deferred tax assets and related liabilities that we will recognize will differ based on, among other things, the timing of the exchanges, the price per share of our Domestication Class A Common Stock at the time of the exchange, and the tax rates then in effect.

 

  (c) In connection with the Mergers, those incentive units issued pursuant to the Rubicon Global Holdings, LLC Profits Participation Plan, dated December 11, 2014 prior to the Closing (“Legacy Rubicon Incentive Units”) were amended to permit acceleration. An assessment was performed, and it was determined that this amendment should be treated as a modification under ASC 718 for accounting purposes and that the award should be equity classified. As such, the modification resulted in the recognition of additional paid in capital and compensation expense, presented herein as an impact to accumulated deficit, related to the modification of the Legacy Rubicon Incentive Units in the amount of $78.2 million. The related nonrecurring expense incurred from grant date to Closing for these awards was recorded via adjustment (ee).

 

The pro forma adjustment of $1.1 million represents the employer portion of payroll taxes of the vested Legacy Rubicon Incentive Units incurred in connection with the consummation of this offering and the modification of the Legacy Rubicon Incentive Units, discussed above.

 

  (d) Reflects the reclassification of cash and marketable securities held in short-term investments that became available in conjunction with the Mergers.

 

  (e) Represents the pro forma adjustment to record the proceeds of $121.0 million from the PIPE Financing and the issuance of 12.1 million shares of Domestication Class A Common Stock to the PIPE Investors.

 

  (f) Reflects the reclassification of Founder Class A Shares subject to possible redemption from temporary equity into permanent equity and issuance of related shares of Domestication Class A Common Stock, after reflecting cash redemptions by Founder shareholders in connection with the Closing.

 

  (g) Represents the pro forma adjustment to record transaction costs of $63.2 million. Rubicon had incurred $4.2 million in transaction costs, including legal, accounting and other related costs, which have been recorded in other non-current assets on the balance sheet as of June 30, 2022; of this amount, $1.9 million was unpaid and remained in accounts payable as of June 30, 2022. Founder had incurred and accrued for $11.1 million in deferred underwriting commissions on the balance sheet as of June 30, 2022. Of the total transaction costs, $46.6 million of deferred underwriting fees and other transaction costs will be settled following the Closing in the form of either cash or Domestication Class A Common Stock at the option of the post-combination company.

 

 7 

 

 

  (h) Represents the pro forma adjustment to record the earnout of Domestication Class A Common Stock, as contemplated by the Merger Agreement. An accounting analysis was performed, and it was determined that the earnout should be classified as a liability.

 

  (i) Represents the pro forma adjustment to record $28.9 million of management incentive compensation related to the transaction, which was paid to employees in cash at the Closing, as well as additional discretionary bonuses in the amount of $3.0 million to be paid to employees following the Closing. Both of these payments were determined to represent compensation expense under ASC 718; however, only management incentive compensation was determined to represent consideration associated with the Mergers.

 

  (j) In connection with the Mergers, Legacy Rubicon Phantom Units were amended to permit acceleration. An assessment was performed, and it was determined that this amendment should be treated as a modification under ASC 718 for accounting purposes and that the awards should be equity classified. As such, the deferred compensation liability previously recorded associated with the awards in the amount of $12.9 million is reclassified to equity. Additionally, the modification resulted in the recognition of additional paid in capital and compensation expense, presented herein as an impact to accumulated deficit, related to the modification of Legacy Rubicon Phantom Units held by current employees in the amount of $2.3 million. These awards vest over the six months following Closing. As the only condition for these awards to vest is the passage of time, they are considered outstanding from an accounting perspective. The related nonrecurring expense incurred from grant date to Closing for these awards was recorded via adjustment (aa).

 

  (k) In connection with the Mergers, certain Rubicon current and former employees received a future right to new RSU awards to be issued following the filing of an effective Form S-8 registration statement, which will vest over a period of six months following the Closing of the Mergers. As the only condition for these awards to vest is the passage of time, they are considered outstanding from an accounting perspective. The related nonrecurring expense incurred from grant date to Closing for these awards was recorded via adjustment (ii).

 

  (l) Represents the pro forma adjustment to record the issuance by New Rubicon of 6.8 million shares of Domestication Class A Common Stock to Sponsor.

 

  (m) Represents the recognition of a reduction of cash for the Prepayment Amount, a derivative asset preliminarily valued using a Monte Carlo simulation, and related expenses, recorded pursuant to the Forward Purchase Agreement. The difference between the cash paid back to Atalaya and the derivative asset was recorded as a nonrecurring expense via adjustment (cc).

   

  (n) Represents the reclassification of the amount recorded pursuant to the Rubicon Equity Investment Agreement from liability to equity.

 

  (o)

Immediately following the Mergers, the economic interests held by the noncontrolling interest (comprising the Class B Units issued at Closing) were approximately 71.9% upon Closing. The percentage representing the noncontrolling interest was calculated as 118,677,877 Class B Units issued at Closing divided by 164,977,882, which is the sum of the shares of Domestication Class A Common Stock and Class B Units that were outstanding following the Mergers.

 

Net assets attributable to the contingently redeemable noncontrolling interest were ($78.2) million (i.e., 71.9% of net assets of ($108.7) million).

 

 8 

 

 

 3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Operations

 

The adjustments included in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 and for the fiscal year ended December 31, 2021 are related to the Mergers:

 

  (aa) Reflects the pro forma adjustment to record nonrecurring stock based compensation expense related to Legacy Rubicon Phantom Units that were held by Rubicon employees immediately prior to the Mergers and will be exchanged for RSUs following the Closing and will vest over a period of six months following the Closing of the Mergers.  Such RSUs are issuable by New Rubicon following an effective Form S-8 registration statement.  

 

  (bb) Reflects the adjustment for the income tax provision related to the six months ended June 30, 2022 and for the year ended December 31, 2021 of $0.0 million expense and $0.1 million expense, respectively, for the combined entities on a pro forma basis. The proforma effective tax rate for the same periods of (0.19)% and 0.66%, respectively, differs from the statutory rate due primarily to the full valuation allowance at New Rubicon, the allocation of income taxes to the noncontrolling interest, and additional entity level state taxes at the Rubicon partnership level. Additionally, for the year ended December 31, 2021, a majority of the proforma adjustments related to additional compensation did not result in a tax benefit due to the limitation under IRC section 162(m).

 

  (cc) Reflects the nonrecurring expense associated with the forward purchase option recorded pursuant to the Forward Purchase Agreement. The balance sheet impacts related to this agreement are presented as part of adjustment (m).

 

  (dd)

Immediately following the Mergers, the economic interests held by the noncontrolling interest (comprising the Class B Units issued at Closing) were approximately 71.9% upon Closing. The percentage representing the noncontrolling interest was calculated as 118,677,877 Class B Units issued at Closing divided by 164,977,882, which is the sum of the shares of Domestication Class A Common Stock and Class B Units that were outstanding following the Mergers.

 

For the six months ended June 30, 2022, net losses attributable to the contingently redeemable noncontrolling interest were $44.4 million (i.e., 71.9% of net losses of $61.7 million).

 

For the year ended December 31, 2021, net losses attributable to the contingently redeemable noncontrolling interest were $279.6 million (i.e., 71.9% of net losses of $388.6 million).

 

  (ee) Reflects the pro forma adjustment to record nonrecurring stock based compensation expense as of Closing related to Legacy Rubicon Incentive Units that are vested as of the Mergers. Compensation related to these awards will be recognized over a period beginning at the grant date and extending through Closing. The equity impact related to the vested amount of these awards is presented at adjustment (c).

 

  (ff) Reflects the pro forma adjustment to record nonrecurring management incentive compensation expense as of Closing related to the transaction. The equity impact related to this compensation is presented as part of adjustment (i).

 

  (gg)

Reflects the pro forma adjustment to record nonrecurring earnout expense as of Closing related to the transaction. The equity impact related to the earnout is presented as part of adjustment (h).

 

  (hh) Reflects the elimination of interest income earned on the Founder Trust Account.
     
  (ii) Reflects the pro forma adjustment to record nonrecurring stock based compensation expense related to new RSU awards to be granted to both Rubicon current and former employees following the Closing, which will vest over a period of six months following the Closing. Such RSUs are issuable by New Rubicon following an effective Form S-8 registration statement.

 

 9 

 

 

  (jj) Reflects the pro forma adjustment to record recurring stock based compensation expense related to a new award to be granted to the CEO of New Rubicon following the Closing upon effectiveness of a Form S-8 registration statement, which will vest over a period of three years following the Closing of the Mergers. This results in stock based compensation expense of $8.0 million and $16.1 million for the six months ended June 30, 2022 and the year ended December 31, 2021, respectively.

 

  (kk) Pro forma basic earnings per share is computed by dividing the net income (loss) available to holders of Domestication Class A Common Stock by the weighted-average shares of Domestication Class A Common Stock outstanding during the period. Shares of our Domestication Class V Common Stock do not share in the earnings or losses of New Rubicon and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Domestication Class V Common Stock under the two-class method has not been presented. Potentially dilutive shares have been excluded from the computations of diluted earnings per share of Domestication Class A Common Stock because the effect would have been anti-dilutive under the if-converted method.

 

 10