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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-35895
THRYV HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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| Delaware |
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13-2740040 |
| (State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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2200 West Airfield Drive, P.O. Box 619810 D/FW Airport, TX |
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75261 |
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(Zip Code) |
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453-7000 |
(Registrant’s telephone number, including area code) |
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Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol(s) |
Name of each exchange on which registered |
| Common Stock, $0.01 par value per share |
THRY |
The Nasdaq Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o
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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The aggregate market value of common stock held by non-affiliates of the registrant, based on the closing price of the registrant’s common stock on June 30, 2023, as reported by the Nasdaq Capital Market on such date was approximately $800 million. Shares of the registrant’s common stock held by each executive officer, director and non-passive holders of 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.
As of February 20, 2024, there were 35,557,803 shares of the registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's definitive proxy statement for its annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant's fiscal year ended December 31, 2023, are incorporated herein by reference.
THRYV HOLDINGS, INC.
TABLE OF CONTENTS
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Item 1. |
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Item 1A. |
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Item 1B. |
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Item 1C. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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Item 8. |
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Item 9. |
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Item 9A. |
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Item 9B. |
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Item 9C. |
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Item 10. |
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Item 11. |
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Item 12. |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995 and include, without limitation, statements concerning the conditions of our industry and our operations, performance, and financial condition, including, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements include all statements that do not relate solely to historical or current facts and generally can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “could,” “estimates,” “expects,” “likely,” “may,” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Accordingly, we caution you against relying on forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market, and regulatory conditions and the following:
•significant competition for our Marketing Services solutions and SaaS offerings, including from companies that use components of our SaaS offerings provided by third parties;
•our ability to maintain profitability;
•our ability to manage our growth effectively;
•our ability to transition our Marketing Services clients to our Thryv platform, sell our platform into new markets or further penetrate existing markets;
•our ability to maintain our strategic relationships with third-party service providers;
•internet search engines and portals potentially terminating or materially altering their agreements with us;
•our ability to keep pace with rapid technological changes and evolving industry standards;
•our small to medium-sized businesses (“SMBs”) clients potentially opting not to renew their agreements with us or renewing at lower spend;
•potential system interruptions or failures, including cyber-security breaches, identity theft, data loss, unauthorized access to data or other disruptions that could compromise our information;
•our potential failure to identify suitable acquisition candidates and consummate such acquisitions;
•our ability to successfully integrate acquired businesses into our operations or recognize the benefits of acquisitions, including the failure of an acquired business to achieve its plans and objectives;
•the potential loss of one or more key employees or our inability to attract and to retain highly skilled employees;
•our ability to maintain the compatibility of our Thryv platform with third-party applications;
•our ability to successfully expand our operations and current offerings into new markets, including internationally, or further penetrate existing markets;
•our potential failure to provide new or enhanced functionality and features;
•our potential failure to comply with applicable privacy, security and data laws, regulations and standards;
•potential changes in regulations governing privacy concerns and laws or other domestic or foreign data protection regulations;
•our potential failure to meet service level commitments under our client contracts;
•our potential failure to offer high-quality or technical support services;
•our Thryv platform and add-ons potentially failing to perform properly;
•the potential impact of future labor negotiations;
•our ability to protect our intellectual property rights, proprietary technology, information, processes, and know-how;
•rising inflation and our ability to control costs, including operating expenses;
•general macro-economic conditions, including a recession or an economic slowdown in the U.S. or internationally;
•volatility and weakness in bank and capital markets; and
•costs, obligations and liabilities incurred as a result of and in connection with being a public company.
For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, see Part I. Item 1A. Risk Factors in this Annual Report. Readers are cautioned not to place undue reliance on forward-looking statements contained in this document, which speak only as of the date of this Annual Report. Except as required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements publicly after the date they are made, whether as a result of new information, future events, or otherwise.
In this Annual Report, the terms “our Company,” “we,” “us,” “our,” “Company” and “Thryv” refer to Thryv Holdings, Inc. and its subsidiaries, unless the context indicates otherwise.
PART I
Item 1. Business
Overview
We are dedicated to supporting local, independent service-based businesses and emerging franchises by providing a cloud-based software platform, and innovative marketing solutions to the entrepreneurs who run them. Our company is built upon a rich legacy in the marketing and advertising industry. We are one of the largest providers of print and digital marketing solutions to SMBs and SaaS all-in-one small business management software. Our solutions enable our SMB clients to generate new business leads, manage their customer relationships, and run their day-to-day operations. As of December 31, 2023, we serve approximately 350,000 SMB clients through four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS.
On April 3, 2023, Thryv New Zealand Limited, the Company’s wholly-owned subsidiary, acquired Yellow Holdings Limited, a New Zealand marketing services company (the “Yellow Acquisition”). In addition, on January 21, 2022, Thryv, Inc., the Company’s wholly-owned subsidiary, acquired Vivial Media Holdings, Inc., a marketing and advertising company with operations in the United States. Further, on March 1, 2021, the Company completed the acquisition of Sensis Holding Limited (“Thryv Australia”), a provider of marketing solutions serving SMBs in Australia (the “Thryv Australia Acquisition”).
The Company reports its results based on four reportable segments (see Note 17, Segment Information):
•Thryv U.S. Marketing Services, which includes the Company's print and digital solutions business in the United States;
•Thryv U.S. SaaS, which includes the Company's SaaS flagship all-in-one small business management platform in the United States;
•Thryv International Marketing Services, which is comprised of Thryv's print and digital solutions business outside of the United States; and
•Thryv International SaaS, which includes our SaaS flagship all-in-one small business management platform outside of the United States.
Thryv U.S. and International Marketing Services
Thryv's Marketing Services segments provides both print and digital solutions. The U.S. and International segments generated $510.5 million and $142.7 million of revenue for the year ended December 31, 2023, respectively. Our primary Thryv Marketing Services offerings include:
Print
•Print Yellow and White Pages. Print marketing solutions through our owned and operated Print Yellow Pages (“PYPs”), which carry “The Real Yellow Pages” tagline in the U.S. Domestically, we primarily publish PYP titles on a 15 to 18-month publication cycle, with the majority on an 18-month cycle. Internationally, we publish PYP and Print White Page titles on a 12-month publication cycle. We generate revenue by charging for advertisements placed within these titles.
Digital
•Internet Yellow Pages. Digital marketing solutions through our proprietary Internet Yellow Pages (“IYPs”), including Yellowpages.com, Superpages.com, Dexknows.com, and Extended Search Solutions (“ESS”) in the U.S. and Yellowpages.com.au, Whitepages.com.au, Whereis.com, Truelocal.com.au, Yellow.co.nz, Whitepages.co.nz, Finda.co.nz and Tourism.net.nz internationally.
◦During the year ended December 31, 2023, traffic to the U.S. sites averaged over 19 million visits per month across the three properties. We generate IYP revenue by charging SMBs for advertisements and priority placement.
◦During the year ended December 31, 2023, traffic to these international sites averaged over 5 million visits per month across the eight properties. We generate IYP revenue by charging SMBs for advertisements and priority placement.
◦Our IYPs are efficient in delivering business leads. IYPs deliver leads at an attractive cost because consumers who search on IYPs are deep in the “purchase funnel” and are ready to buy.
◦We also offer ESS enabling SMBs to buy advertising on our network of owned and third-party directory websites, including Yelp, Nextdoor, and other popular sites. Our network delivers approximately 55 million visits per month. Our ESS network provides SMB clients expanded access to high-converting traffic at a low cost. We believe we are the only provider to offer this broad network of online directory sites with a single purchase.
•Search Engine Marketing. Search engine marketing (“SEM”) solutions that deliver business leads from Google, Yahoo!, Bing, Yelp, and other major engines and directories. Our SEM offerings leverage a mix of in-house and off-the-shelf technology to design ads, generate bids, and deliver reporting to advertisers. We track cost-per-click and cost-per-call metrics for our SMB clients, which gives them insights into the effectiveness of their ad campaigns.
•Other Digital Media Solutions. Other digital media solutions include online display and social advertising, online presence and video, and search engine optimization (“SEO”) tools.
Thryv U.S. and International SaaS
Thryv's SaaS segments are comprised of our SaaS offering Thryv®, our flagship all-in-one small business management platform (“Thryv Platform”), which consists of Command Center, Business Center, Marketing Center, ThryvPaySM, and Thryv Add-Ons.
•Command Center. Thryv Command Center, which launched in the third quarter of 2023, is an industry-first freemium offering that will be a core driver in the Company's product led growth initiative. Command Center enables SMBs to centralize all their communication through a modular, easily expandable, and customizable platform. Command Center allows an SMB to connect their pre-existing email accounts, Facebook and Instagram accounts along with installing Command Center’s WebChat client on their website, and using Voice over Internet Protocol (“VoIP”) in-platform telephony services along with Short Message Service (“SMS”) and video calls to provide a centralized inbox for all customer communication. Command Center uniquely not only combines all of these channels into a single inbox, but, through proprietary technology, stitches each of these channels into a single linear conversation per customer. So as a customer sends email, calls, and SMS to the business, utilization of Command Center means that the SMB sees all of these messages in a single conversation.
•Business Center. Thryv Business Center, formerly known as Thryv, is our flagship SMB end-to-end customer experience platform. Business Center is designed to allow a SMB everything necessary to streamline their day-to-day business, including customer relationship management (“CRM”), appointment scheduling, estimate and invoice creation, payments, document management, social media content, and online review management.
Our Business Center feature set mirrors the journey of a typical consumer, who begins on a search engine, reads business reviews, finds a company’s website and/or social media profiles, and clicks to set up an appointment or request information. After booking an appointment, the consumer typically expects an estimate and eventually an invoice, with the ability to pay online in an easy and efficient manner. This experience is then followed by prompts for reviews and referrals, along with periodic reminders and additional campaigns to generate repeat business.
Built on a customizable CRM database where businesses store customer information and then utilize a host of customer communication tools, Business Center helps SMBs communicate with their customers and manage day-to-day operations. It automatically updates and maintains client listings across the web so our SMBs’ online information is always correct.
We have a new, low cost and innovative engineering methodology. This methodology recognizes the large variety of bespoke SaaS solutions and back-end tools that are readily available. Thryv has chosen to utilize best-in-class systems and tools, to integrate them in unique ways that unlock value for the end customer. It is the combination of functionality from multiple platforms together that delivers value greater than each of the parts individually. Thryv maintains full control over the user experience, to deliver a modern and consistent user experience. When Thryv feels functionality is of strategic long-term importance, or it is not readily available in the marketplace, we leverage our internal engineering teams to create technology and innovation on top of the existing interoperable technology stack.
Applications and/or features developed by our third-party developers specifically for our platform are not available outside of our platform on a stand-alone basis in the U.S., Canada, Australia, or New Zealand.
Business Center is sold on a monthly auto-subscription basis, which generates a recurring revenue stream. Substantially all of our clients subscribe to contracts with a minimum six-month upfront commitment, after which clients continue on a month-to-month basis. Clients can upgrade their service to a more feature-rich solution at any time as their business grows. We offer a variety of tiers, which we believe enables SMBs to choose the optimal features for their business. We believe the platform represents an attractive value for our SMB clients as compared to competitor products, such as single solutions or complex enterprise software systems that are suited to larger companies.
•Marketing Center. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Thryv Marketing Center contains everything a small business owner needs to market and grow their business effectively, including easy to understand, artificial intelligence (“AI”) driven analytics. Marketing Center offers the following:
◦AutoID. Marketing Center connects prospects’ and customers’ digital interactions with the business and synchronizes these activities with the Thryv CRM records. This enables device level attribution so Thryv’s users know when and where a client found them for proper attribution on what works and what doesn’t;
◦Enhanced Online Presence. Marketing Center includes paid profiles on YP.com and Yelp.com, as well as a robust Google Business Profile Optimization service to ensure that the most viewed online profiles for the Marketing Center user stand out from the competition, get noticed, and drive results;
◦Omni-Channel Paid Campaigns. Marketing Center users can run paid advertising campaigns across Google, Facebook, Instagram, Yahoo Display, Connected TV, and Yelp all from a single interface. The user is able to allocate budget to their desire and increase, decrease, pause, or continue a campaign at anytime for any reason with full flexibility. All of the tagging, tracking and analytics are automatically configured to simplify the execution of these complex campaigns; and
◦Marketing Tools. Marketing Center includes additional marketing tools to help users optimize their online marketing efforts. These include a robust heat mapping tool to optimize and improve their website and landing pages based on visitor behavior, off-line call tracking phone numbers to track the efficacy of offline media efforts such as lawn signs or post cards. Marketing Center also includes a robust competitor watch to track the digital advertising activities of competitors to gleam ideas and work to achieve a competitive advantage.
Clients who also purchase Business Center can generate new business via Marketing Center and have these business opportunities automatically injected into their CRM system and enriched with additional data. These new business leads populate the client’s CRM database enabling our clients to email, text, call, or otherwise communicate with prospective customers via our Thryv platform.
•ThryvPay. ThryvPay, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. ThryvPay is available to any user of the Thryv Platform, free or paid. ThryvPay offers the following:
◦Competitive Credit Card Processing Rates. ThryvPay offers a flat rate per transaction with no set-up fees.
◦ACH Payments Processing. Small businesses save money on a per-transaction charge, with the security of knowing immediately if funds are available.
◦Scheduled Payments. Service-based businesses that offer ongoing services or memberships can utilize our scheduled payments feature. ThryvPay also allows customized installment plans for pre-set specific dates.
◦Convenience Fees, Surcharges and Tipping. Small businesses can pass on optional convenience fees and/or surcharges, where allowed, for consumers who want to pay by credit card when presented with multiple payment options, often driving customers to pay by ACH methods, which generates significant savings for SMBs. ThryvPay also allows consumers to leave a tip.
◦Credit Card and Bank Account on File. Consumer information is stored in the small business’s Thryv account for future transactions, reducing friction for repeat business.
◦Real-time Reporting and Assistance. Thryv and ThryvPay integrates and auto-syncs with QuickBooks Online, Quickbooks Desktop, MYOB, Freshbooks, and Xero for accounting reconciliation. Thryv provides dedicated support for dispute and chargeback assistance.
◦Consumer Financing. ThryvPay includes a fully integrated partnership with Wisetack, a consumer lending platform that specializes in larger ticket, service based lending. This enables consumers of Thryv’s clients to apply for and pay their service providers utilizing financing. Thryv clients enjoy additional revenue by enabling larger purchases with additional convenience.
•Thryv Add-Ons. Thryv Add-Ons include AI-assisted website development, SEO tools, Google Business Profile optimization, and Hub by Thryv. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.
Integration of Marketing Services and SaaS
Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. We have worked for decades in our local communities, providing marketing solutions to SMBs. We found that SMBs need technology solutions to communicate with consumers who now do business via their smartphones. We launched our SaaS business in 2015 to provide SMBs with the resources to compete for today’s mobile consumers. In 2023, SMB demand for integrated technology solutions continued to grow as SMBs adapt their business and service models to facilitate remote working and contactless customer interactions.
In 2023, domestically, we delivered approximately 26 million PYP directories to strategically targeted American homes whose demographics indicate a higher propensity to use print marketing solutions.
We reach our clients utilizing a multi-channel sales approach that allows us to meet market demand through an extensive inside and outside sales force, channel partners, and targeted digital campaigns. Our nationwide field sales force allows us to have local and virtual interactions with SMB clients, which differentiates us from our competitors.
We derive a competitive advantage from our industry experience, sizable sales force, and our Thryv platform. Existing and potential SMBs have choices when selecting SaaS solutions. Numerous niche cloud-based tools are available for SMBs to self-provision online, and other providers market competing end-to-end solutions. Because the cost of entry into the SaaS space is relatively low, new entrants continue to emerge. Although we believe many of these solutions lack a comprehensive set of features and offer less onboarding and customer support, SMBs may opt for less expensive solutions or a package of solutions provided by less experienced entrants at a lower cost.
Our Solutions
Comprehensive Marketing Services Offering
We have a full portfolio of marketing solutions for SMBs, including PYP, IYP, SEM, and online display and social advertising, online presence and video, and SEO tools. This enables SMBs to craft a comprehensive marketing strategy with us as the one-stop provider. For example, PYP provides value to SMBs seeking to reach consumers who prefer traditional forms of print media. IYP helps efficiently position a client’s business on well-trafficked online directories, and SEM allows SMBs to generate customer traffic directly with ads on Google and other search engines.
Leading Presence in Print Advertising
As the largest publisher of print directories in the United States, we provide clients with insights into how traditional media can reach and advertise to a large segment of the consumer population. In the United States, PYP users tend to be over 55 years of age, more affluent and more likely to own a single-family home, resulting in higher sales conversion rates for our SMB clients.
Dynamic Tracking and Access to Unparalleled SMB Data
The effectiveness of each of our solutions can be measured with tracking software that enables SMBs to easily analyze the performance of their ad campaigns. We examine operational measures from various sources that help us understand how a client’s marketing services program is working, and we use these to monitor their effectiveness and performance. As a result, we give SMBs actionable insights to attract and retain new customers.
Enable SMBs to Deliver Customer Experiences That We View as Best-in-Class and Optimize Advertising Budgets and Business Leads Generation within One Platform
Command Center enables SMBs to centralize all their communication through a modular, easily expandable, and customizable platform. By combing their pre-existing email accounts, Facebook and Instagram accounts, along with installing Command Center’s WebChat client on their website, and using VoIP in-platform telephony services along with SMS and video calls, Command Center provides a centralized inbox for all customer communication, vastly improving the customer communication experience.
Our Business Center solution delivers many features relevant to SMB needs, including CRM, omnichannel email and text marketing automation, scheduling and appointment management, estimating, invoicing, payments, social media management, reputation management, document management and centralized customer communication. Thryv provides SMBs with a real-time 360-degree view of their customers and every interaction that each customer has with their business throughout their lifecycle.
Marketing Center provides robust solutions for SMBs to market and grow their businesses using a variety of automated digital tools and capabilities. Some solutions use machine learning to automatically choose the optimal mix of advertising solutions for each SMB to generate a tailored solution for it. Marketing Center offers full control and transparency on daily spend, allocations and channel by channel performance to the business owner who seeks to run advertising campaigns without learning or supporting multiple bespoke platforms, or incurring the hefty costs of an advertising agency. Marketing Center then automatically injects resulting leads and prospects into Business Center while enriching the basic consumer information with additional data. SMBs are then able to contact and engage new and existing customers.
Our Strategy
Continuous Innovation Drives Retention and Growth
In our Marketing Services business, we continue to improve the value of our solutions and leverage our extensive sales force to drive the retention of clients. For example, in our PYP business, we have simplified ad pricing, added colorful new local covers, and modified book formatting to make the books more useful and readable. Additionally, we increasingly renew digital (non-print) accounts through an automated process. In our SEM business, we have improved our bidding process, launched new features and boosted traffic from distribution partner sites. In our SaaS business, we continue to improve our Thryv platform by analyzing user behavior and client requests to expand the feature set and interoperability with other popular cloud-based tools. Annually, our product and engineering teams release over 300 improvements into the Thryv platform that improves usability, adds new functionality, and often creates additional revenue opportunities.
Transition into SaaS
Our plan has been, and continues to be, to develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which serves as an efficient customer acquisition channel for our SaaS platform. As a result, SaaS has been able to achieve profitable growth, and for the year ended December 31, 2023, generated 28.8% of our total revenue. In 2023, we made a strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS solutions.
Leverage Our Nationwide Scale and Extensive Sales Force
We have one of the largest SMB-focused sales forces in the country within the marketing solutions and SaaS space, which we utilize to attract and manage our clients. We leverage our sales force to introduce our SaaS solutions to new prospects and existing Marketing Services clients through in-person, local as well as virtual, and online meetings to a dedicated SaaS demonstration and sales team.
As of December 31, 2023, our efforts led to approximately 62% of our new SaaS clients originating from our Marketing Services segment. SMB demand for SaaS solutions continues to grow as SMBs increase their remote working capabilities and contact-less customer interactions.
Actively Manage Shift in Marketing Services Revenue Mix to Maintain Profitability
We continue to manage our Marketing Services offerings, some of which are in secular decline, notably print, to maximize profitability and extend the life of these solutions. Our cost management strategy includes using third-party printers and cost-effective long-term paper, printing, and directory distribution contracts.
Continued Cash Flow Generation and Selected Capital Allocation
We remain highly focused on methodically managing our assets, maintaining a highly variable cost structure, and building our SaaS business in a way to generate significant cash flow. We believe that our cash flow generation and strategic capital allocation will enable us to continue to reduce debt and pursue acquisitions to create value for our stockholders. We will continue to employ a disciplined financial policy that maintains our financial strength and favorable cost structure.
Opportunistic Acquisitions to Drive Synergy
The Company has experience executing accretive acquisitions in the industry. We believe we are well-positioned to continue this strategy to leverage our platform and scale in our industry. Historically, as a result of our acquisitions, we have realized significant cost synergies and obtained new clients that also bought our SaaS solutions.
International Growth
We continue to expand into international markets, which we view as a large opportunity for growth. We intend to penetrate international markets through acquisition, re-seller agreements, or other commercial arrangements. For example, in 2023, we completed the Yellow Acquisition to enter the New Zealand market, and in 2022, we began operations in Canada with our own sales force combined with a re-seller agreement. Additionally, in 2021, we completed the Thryv Australia Acquisition to enter the Australian market. Internationally, there are approximately 35 million SMBs in our target market.
Our Competition
Our industry is highly fragmented, intensely competitive, and constantly evolving. With the introduction of new technologies and market entrants, we expect the competitive environment to remain intense going forward. We believe the principal competitive factors in our segments are the following:
•customized, integrated, and tailored solution strategies;
•flexible technology that is compatible with third-party applications and data sources;
•quality;
•pricing;
•ease of use;
•brand recognition and word-of-mouth referrals;
•availability of onboarding programs and customer support; and
•nationwide and extensive, inside and outside sales forces.
We believe we compete favorably with respect to all these factors and that we are well-positioned as a leading provider of marketing solutions and cloud-based end-to-end customer experience tools to SMBs across the United States.
We face competition from other companies that provide marketing solutions and cloud-based SaaS tools to SMBs.
Marketing Services Competitors
In our Marketing Services business, we compete with numerous national companies that sell marketing campaigns on major national search engines and social media sites and build and host websites.
SaaS Competitors
In our SaaS business, we believe we compete with three general categories of competitors:
•Point Solution Providers. We compete with single-point solution providers across many features. Many of these products are low-cost and some have been in the market longer than Thryv.
•Vertical Solutions. Vertical solutions exist in many categories, including Home Services, Health & Wellness, Animal Services, Professional Services and Educational Services. Competitors have studied these categories and customized their products for the applicable category. These companies offer a tailored solution with a targeted appeal. Some also have consumer-facing apps that create demand for the SMB.
•All-In-One Competitors. Our most direct competitors are other all-in-one solutions. Several are priced above our price point or target larger companies with more employees.
Human Capital
Our key human capital management objectives are to attract the right talent, develop potential future and current talent for leadership positions, retain high performers and reward employees through competitive pay and employee benefits. We support these objectives with employee experience and culture initiatives aimed at making the workplace diverse, engaging and inclusive, while providing growth opportunities, internal leadership programs and diversity programs. In addition, we consistently monitor employee engagement through employee engagement studies and monthly surveys.
We employed 3,049 people as of December 31, 2023. Our workforce is comprised of approximately 98% full-time and 2% part-time employees. The majority of our employees are employed in our Outside and Inside Sales, Inbound Sales and Sales Operations, Client Experience, Operations, Information Technology, Billing and Print Directories departments.
Some examples of our key programs and initiatives intended to attract, develop and retain our diverse workforce include:
•Diversity and Inclusion (“D&I”). The Company’s Diversity Council provides a voice for our employees to leadership – to share insights, communicate with leadership, and generate ideas and actions to enhance and impact diversity and inclusion at Thryv. The Diversity Council plans and sponsors events to celebrate diversity and inclusion, educate and raise awareness, and create opportunities for networking and mentorship within diverse groups.
•Connecting the Dots Program: This is a new hire program where the Company shares information about Thryv’s culture, Company programs and discounts, communication tips within the Company, and more. The goal is to ease the new hire’s integration into the Thryv culture, right from the start, and make them immediately feel included in Thryv’s mission and programs.
•Accelerators Recognition Program. This program is designed to grow the connection and recognition of top performers who demonstrate our core values in their excellent performance. Our core values are:
•Client Devoted
•DONE3
•Act Like You Own the Place
•Invest in Our People
•Under Promise, Over Deliver
•Making Money is a By-Product of Helping People
•Think Long-Term; Act with Passion and Integrity
•Benefits. Among our benefit offerings, Virgin Pulse wellness programming has become a key motivator to good health and well-being. It is a user-friendly platform that encourages well-being, safety and performance, by providing friendly team-based competition, self-directed wellness journeys and incentives to build healthy habits and drive collaboration across Thryv. With 78% of employees enrolled on the platform and 61% of those enrolled actively engaged, the digital well-being platform has contributed meaningfully to our Work From Anywhere approach while creating connections and supporting a healthy lifestyle among our employees.
•Talent Development. We prioritize and invest in creating opportunities to help employees grow and build their careers through training and development programs. These include online and on-the-job learning formats.
•Our Emerging Leaders Program is designed to help identify and develop future leaders. Once identified, Emerging Leaders are provided focused leadership and management skill development programs – instructor-led, online and on-the-job. 42 employees successfully completed the Emerging Leader program in 2023, resulting in 2 promotions into management – representing 5% of participants. The program continues into 2024 as we continue to positively support and grow leadership bench strength.
•Our New Manager Training Program is provided to newly promoted managers to develop and enhance their soft skills in people management. This program aims to set up newly promoted people managers for success while developing a network of colleagues to draw support and counsel.
•The Mindful Manager Program is designed to provide people leaders the opportunity to invest in their own development through quarterly online coursework. Courses are focused on elevated employee matters such as Leading with Emotional Intelligence, Mastering the Art of Listening, and Navigating Cross-Cultural Differences. Following completion of the coursework, leaders are invited to attend a Leadership Roundtable to discuss the assigned content and share learnings.
•The Tuition Assistance Program (“TAP”) supports the lifelong learning of all employees. Through a generous reimbursement program, we encourage employees to seek continuous education and personal development to support their career aspirations while contributing to Thryv’s collective growth and success. Eligible coursework may be aimed at the achievement of an Associate’s, Bachelor or Master’s degree or may be specialized in various certificate/certification programs. In 2023, we added language learning resources through Berlitz which have been well-received by employees globally.
•Culture Team. “Invest in Our People” is one of our core values, which we support with various initiatives.
•Our Thryv Life Channel (facilitated by Microsoft Teams) serves as our internal social media platform. The platform provides a vehicle to highlight personal and professional successes, share inspirational stories, publicize social opportunities, run “fun” employee-centric virtual events and generally connect our people. Engagement is high and continues to enhance the promotion of core values and relationship-building as we continually learn and grow in a Work From Anywhere environment.
•Learning Opportunities. To ensure we provide learning opportunities that enable us to adapt, belong and connect, we launched monthly “Lunch and Learn” sessions featuring a wide variety of employee-centric topics such as building one’s personal brand, communication skills, and other specific skill-building subjects.
•Culture Clubs are designed to purposefully drive connection and relationship-building across diverse work teams and individuals. Recognizing that the virtual workplace can be challenging for new relationship-building, the Culture Clubs offer meaningful opportunities to a broad group of employees to identify and join groups of colleagues with similar hobbies and interests.
•Virtual Onboarding. We are focused on virtually onboarding new employees through an enhanced virtual onboarding program. Video engagements, networking, a buddy program and social interactions are all included in properly onboarding a virtual employee while weaving core values and key job learnings into the programming.
Our Intellectual Property
The protection of our technology and intellectual property is an important component of our success. We rely on intellectual property laws, including trade secrets, copyright, patent, and trademark laws in the United States and abroad and use contracts, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements, and other contractual rights to protect our intellectual property. We possess certain intellectual property relating to Thryv®, Thryv Leads®, and our Marketing Services offerings, including but not limited to the following:
•trademark protection on brands, taglines, and products;
•proprietary roadmap and product stack with proprietary code;
•machine-learning algorithms and techniques;
•notice of allowance on a patent related to systems and methods underlying Thryv Leads, which processes include the coordination among our lead estimator tool, lead scoring systems, budget allocation systems, and the SMB’s CRM system;
•strategic alliances;
•branding via proprietary print and online assets; and
•copyright protections on work product.
We maintain a library of high-quality, proprietary communications, including:
•product features;
•customer FAQ's;
•our ideal client profile;
•website images and content;
•vertical industry templates and taxonomy;
•how-to-videos; and
•articles, blogs, and guides on using and competing with digital marketing.
In addition to the foregoing, we have established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements and assignment of inventions agreements with employees, independent contractors, consultants, and companies with which we conduct business.
Our industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patents and other intellectual property rights. In particular, leading companies in the technology industry have extensive patent portfolios. From time to time, third parties have asserted copyright, trademark, and other intellectual property rights against us or our clients. Litigation and associated expenses may be necessary to enforce our proprietary rights.
Our Use of Technology
In Marketing Services, our print directories are published using a customized platform supported by our in-house engineering team. Our IYPs are managed by our in-house engineering team using proprietary software that we build and maintain. Other digital Marketing Services offerings are fulfilled in-house using third-party cloud-based software.
Our Thryv platform is comprised of unique integrations and solutions either built by Thryv or built for Thryv, and to Thryv’s specifications. In addition, we integrate with select third-party vendors who are managed by our in-house product and development teams. Thryv has chosen to utilize best-in-class systems and tools, to integrate them in unique ways that unlock value for the end customer. SaaS order processing and tracking, client engagement, client communications, and many other aspects of running the day-to-day SaaS business are performed using subscription-based third-party tools. When Thryv feels functionality is of strategic long-term importance, or it is not readily available in the marketplace, we leverage our internal engineering teams to create technology and innovation on top of the existing interoperable technology stack. We ensure that we retain intellectual property for the critical elements of the Thryv platform.
Government Regulation
We are subject to many U.S. federal and state and other foreign laws and regulations, including those related to privacy, data protection, content regulation, intellectual property, consumer protection, rights of publicity, health and safety, employment and labor and taxation.
Compliance with government regulations, including environmental regulations, has not had and is not expected to have a material effect upon the capital expenditures, earnings, or competitive position of our company. However, these laws and regulations are constantly evolving and may be interpreted, applied, created, or amended in a manner that could harm our business. See “Risk Factors — Legal, Tax, Regulatory and Compliance Risks” for additional information.
Item 1A. Risk Factors
Risk Factor Summary
Our business and owning our common stock are subject to numerous risks and uncertainties, including those highlighted in “Risk Factors.” As a summary, these risks include, but are not limited to, the following:
•significant competition for our Marketing Services solutions and SaaS offerings, which include companies who use components of our SaaS offerings provided by third parties;
•our ability to transition our Marketing Services clients to our Thryv platform, sell our platform into new markets or further penetrate existing markets;
•variability in our operating results due to directory publication cycles;
•our ability to manage our growth effectively;
•our potential failure to successfully expand our current offerings into new markets or further penetrate existing markets;
•our clients potentially opting not to renew their agreements with us or renewing at lower spend;
•our ability to maintain profitability;
•our potential failure to provide new or enhanced functionality and features;
•our potential failure to identify and acquire suitable acquisition candidates;
•recognition of impairment losses;
•internet search engines and portals potentially terminating or materially altering their agreements with us;
•our reliance on third-party service providers for many aspects of our business and our potential inability to maintain our strategic relationships with such third-party service providers;
•our, or our third-party providers', potential inability to keep pace with rapid technological changes and evolving industry standards;
•our potential failure to maintain the compatibility of our Thryv platform with third-party applications;
•our inability to recover should we experience a disaster or other business-continuity problems;
•the potential loss of one or more key employees or our inability to attract and to retain highly skilled employees;
•the potential impact of future labor negotiations;
•our potential failure to comply with applicable privacy, security and data laws, regulations and standards;
•potential changes in regulations governing privacy concerns and laws or other domestic or foreign data protection regulations;
•potential system interruptions or failures, including cyber-security breaches, identity theft, data loss, unauthorized access to data or other disruptions that could compromise our information or our client information;
•our potential failure to protect our intellectual property rights, proprietary technology, information, processes, and know-how;
•reduced demand for our products due to epidemics or other public health emergencies;
•litigation and regulatory investigations aimed at us or resulting from our actions or the actions of our predecessors;
•adverse tax laws or regulations or potential changes to existing tax laws or regulations;
•our potential failure to meet service level commitments under our client contracts;
•our potential failure to offer high-quality or technical support services;
•aging software and hardware infrastructure;
•our, or our third-party service providers', failure to manage our technical operations infrastructure;
•our Thryv platform and add-ons potential failure to perform properly;
•our outstanding indebtedness and our potential inability to generate sufficient cash flows to meet our debt service obligations;
•the potential restriction of our future operations by restrictive covenants in the agreements governing our Senior Credit Facilities (as defined below);
•volatility and weakness in bank and capital markets;
•potential volatility in the public price of our shares of common stock; and
•anti-takeover provisions in our governing documents may prevent a change or control.
For a discussion of these and other risks you should consider before making an investment in our common stock, review the below Risk Factors.
Risks Related to Our Business and Industry
Strategic, Market and Competition Risks
We face significant competition for our Marketing Services solutions and SaaS offerings, which may harm our ability to add new clients, retain existing clients and grow our business. Competitors include companies who use components of our SaaS offerings provided by third parties.
We face intense competition from other companies that offer marketing solutions and business management tools for the SMB market. Competition could significantly impede our ability to sell marketing solutions or subscriptions to our Thryv platform and add-ons on terms favorable to us. Our current and potential competitors may develop and market new technologies that render our existing or future products less competitive or obsolete. In addition, if these competitors develop products with similar or superior functionality to our Thryv platform, we may need to decrease prices or accept less favorable terms for our platform subscriptions in order to remain competitive. If we are unable to maintain our pricing due to competitive pressures, our operating results will be adversely affected.
Our competitors include:
•other print media companies;
•cloud-based business automation providers;
•email marketing software vendors;
•sales force automation and CRM software vendors;
•website builders and providers of other digital tools, including low cost, less experienced do-it-yourself providers;
•marketing agencies and other providers of SEM, online display and social advertising, online presence and video, and other digital marketing services including SEO tools; and
•large-scale SaaS enterprise suites who are moving down market and targeting SMBs.
In addition, instead of using our platform, some prospective clients may elect to combine disparate point applications, such as content management systems (“CMS”), marketing automation, CRM, billing and payments management, analytics and social media management. We also face competition from third parties who provide us components of our SaaS offerings. We may also face competition from others who reoffer or use such components in their SaaS solutions. There are lower barriers to entry for SaaS solutions, and we expect that new competitors, such as SaaS vendors that have traditionally focused on back-office functions, will develop and introduce applications serving customer-facing and other front-office functions. This development could have an adverse effect on our business, operating results and financial condition. In addition, sales force automation and CRM system vendors could acquire or develop applications that compete with our software offerings. Some of these companies have acquired social media marketing and other marketing software providers to integrate with their broader offerings.
We also face competition from search engines and portals as well as online directories, other business search sites and social media networks, some of which have entered into commercial agreements with us to provide support for our solutions. Our digital strategy may be adversely affected if major search engines or social media networks with which we currently have commercial agreements decide to more directly market advertising and SaaS business solutions to SMBs. Competing search engines also have the ability to alter their search algorithms, which could change the current flow of commercial search traffic away from our sites and our customers. If this occurs, we may not be able to compete effectively with these other companies, some of which have greater resources than we do.
Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, and they may be able to devote greater resources to the development, promotion, sale and support of their products and services. Additionally, they may have more extensive customer bases, broader customer relationships, and greater name recognition. As a result, these competitors may respond faster to new technologies and undertake more extensive marketing campaigns for their products. In a few cases, these competitors may also be able to offer marketing and sales software at little or no additional cost by bundling it with their existing suite of applications. To the extent any of our competitors have existing relationships with potential clients for either business software or marketing solutions, those clients may be unwilling to purchase our platform because of their existing relationships with our competitor. If we are unable to compete effectively with such companies, the demand for our Marketing Services solutions and SaaS offerings could decline substantially.
In addition, if one or more of our competitors were to merge or partner with another of our competitors, our ability to compete effectively could be adversely affected. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic distribution and technology partners or other parties with whom we have relationships, thereby limiting our ability to promote and implement our Thryv platform.
We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our business, operating results and financial condition.
Our Marketing Services business revenue, which comprises a significant portion of our revenue, may decline at a rate faster than we anticipate, and we may not be able to successfully transition our Marketing Services clients to our Thryv platform in order to offset the decline in Marketing Services revenue with SaaS revenue.
Our growth strategy is focused on the growth and expansion of our SaaS offerings; however, during 2023, 71.2% of our revenue was derived from our Marketing Services offerings.
Maintenance of our Marketing Services business requires investment, specifically with respect to compliance updates and security controls. If our investments are not sufficient to adequately update our Marketing Services business, such solutions may lose market acceptance, and we may face security vulnerabilities. In recent years, overall industry demand for print services has declined significantly, and we expect this trend to continue. In addition, we have marketed our SaaS offerings to our Marketing Services clients, and some of our Marketing Services clients have transitioned to our Thryv platform, but there is no guarantee that remaining Marketing Services clients will transition to our Thryv platform. If such Marketing Services clients do not transition, we may lose them in the future, or we may be required to make ongoing investments to serve a smaller pool of clients. If our revenue from our Marketing Services declines at a rate faster than anticipated, our necessary investments in Marketing Services may not be offset by revenue generated. Also, if we are not able to successfully convert a sufficient number of our Marketing Services clients to our SaaS offerings, or if the decline in our Marketing Services revenue continues to outpace our SaaS revenue growth, this could have a material adverse effect on our business, financial condition and results of operations.
We recognize revenue for our print services upon delivery of the print directories to the intended market, which can result in variability in the amount of revenue recognized each quarter due to the publication cycle of each print directory.
We recognize revenue for print services at a point in time upon delivery of the published print directories containing customer advertisements to the intended market. Our print directories typically have 12-month publication cycles in Australia and New Zealand and 15 to 18-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 18 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our print directories is therefore directly related to the number of print directories we deliver to the intended market each quarter, which can vary dramatically based on the timing of the publication cycles. The timing of our print publication cycles may result in increased variability in the amount of revenue recognized each quarter, which could have a material adverse effect on our results of operations.
If our SEO strategies fail to help our IYPs get discovered or our clients’ websites to get discovered in unpaid search results, our business could be adversely affected.
Our success depends in part on our ability to help our IYPs and our clients’ websites and contact information get discovered more easily in unpaid internet search results on search engines, such as Google, Yahoo! and Bing, among others. Algorithms are used by these search engines to determine search result listings and the order of such listings displayed in response to specific searches. Accordingly, our SEO efforts help our IYPs and our clients’ websites to be discovered more easily in organic search engine results, making it more likely that search engine users will visit these websites. However, our SEO efforts on behalf of our IYPs or our clients’ websites may not succeed in improving the discoverability of this content. Google in particular is the most significant source of traffic to our IYPs and to our clients’ websites. Therefore, it is important for us to maintain an effective SEO strategy so that our IYPs, where our clients’ business profiles are found, and our SMB clients’ websites, maintain a prominent presence in results from Google search queries. If we fail to do so, our business, financial condition and results of operations may be materially adversely affected.
In addition, search engines frequently change the criteria that determine the order in which their search results are displayed, and our SEO efforts on behalf of our own sites and our clients’ sites will be unsuccessful if we do not effectively respond to those changes on a timely basis, or if the algorithm changes made by Google and other search engines make it harder for our IYPs or our clients’ websites to rank, reducing traffic flow. Therefore, if we are unable to respond effectively to changes made by search engine providers in their algorithms and other processes, our clients may experience substantial decreases in traffic to their profile pages on our IYPs and to their own websites. This may lead to a decrease in the perceived value of our products, which could result in our inability to acquire new clients, the loss of existing clients, a decrease in revenues and a material adverse effect on our results of operations.
Our growth strategy has focused on developing our SaaS segment, which has experienced recent revenue growth. If we fail to manage our growth effectively or if our strategy is not successful, we may be unable to execute our business plan, to maintain high levels of service, or to adequately address competitive challenges.
We have recently experienced growth in our operations related to our SaaS segment. While we have been successful in transitioning and cross-selling our SaaS solutions to our Marketing Services clients in the past, this success may not continue.
We plan to continue to invest in the infrastructure and support for our SaaS solutions while maintaining profitability in our U.S. and international Marketing Services segments. The growth of our SaaS solutions placed, and future growth will place, a significant strain on our management, administrative, operational and financial infrastructure. In order to manage this growth effectively, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. Failure to effectively manage growth, or failure to achieve our growth strategy, could result in difficulty or delays in maintaining clients, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties; and any of these difficulties could have a material adverse effect on our business, financial condition and results of operations.
Our reliance on, and extension of credit to, small and medium sized local businesses could adversely affect our business.
In the ordinary course of our business, we extend credit to SMBs in the form of a trade receivable for advertising purchases. Local businesses, however, tend to have fewer financial resources and higher failure rates than large businesses, especially during a downturn in the general economy. Also, the proliferation of very large retail stores may continue to adversely affect local businesses. We believe these limitations contribute significantly toward clients not renewing their subscriptions. If clients fail to pay within specified credit terms, we may cancel their advertising in future directories, which could further impact our ability to collect past due amounts, as well as adversely impact our advertising sales and revenue trends. In addition, full or partial collection of delinquent accounts can take an extended period of time. Consequently, we could be adversely affected by our dependence on, and our extension of credit to, local businesses in the form of trade receivables.
If we are unable to develop or to sell our Thryv platform into new markets or to further penetrate existing markets, our revenue may not grow as expected.
Our ability to increase revenue will depend, in large part, on our ability to increase sales from existing clients who do not utilize our Thryv platform and to sell our existing platform into new domestic and international markets. The success of our Thryv platform depends on several factors, including the introduction and market acceptance of our Thryv platform, the ability to maintain and to develop relationships with third-party service providers, and the ability to attract, to retain and to effectively train sales and marketing personnel. Any new solutions we develop or acquire may not be introduced in a timely or cost-effective manner and may not achieve the market acceptance necessary to generate significant revenue. Any new markets in which we attempt to sell our Thryv platform and add-ons, including new countries or regions, may not be receptive. Additionally, any expansion into new markets will require commensurate ongoing expansion of our monitoring of local laws and regulations, which increases our costs as well as the risk of the product not incorporating in a timely fashion or all the necessary changes to enable a client to be compliant with such laws. Our ability to further penetrate our existing markets depends on the quality of our Thryv platform and add-ons and our ability to design our solutions to meet consumer demand. Furthermore, our ability to increase sales from existing clients depends on our clients’ satisfaction with our services and our clients’ desire for additional solutions and to expand from single-point solutions to our comprehensive Thryv platform. If we are unable to sell solutions into new markets or to further penetrate existing markets, or to increase sales from existing clients, our revenue may not grow as expected, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, the success of any geographic expansion depends on our ability to customize products to integrate with third-party applications in that region and other market specific customizations, translate products for non-English speaking markets and provide customer service and training in local languages, which we may be unable to do successfully.
We are dependent upon client renewals, the addition of new clients, increased revenue from existing clients and the continued growth of the market for our Thryv platform and any impact on these factors could materially adversely affect our operating results.
We expect to derive a substantial portion of our future revenue from the sale of subscriptions to our Thryv platform. The market for small business management solutions is still evolving, and competitive dynamics may cause pricing levels to change as the market matures and as existing and new market participants introduce new types of point applications and different approaches to enable businesses to address their respective needs. As a result, we may be forced to reduce the prices we charge for our Thryv platform and may be unable to renew existing client agreements or enter into new client agreements at the same prices and upon the same terms that we have historically. In addition, our growth strategy involves cross-selling to existing U.S. and international Marketing Services clients to increase the value of our client relationships over time as we expand their use of our services, onboard other parts of their organizations and upsell additional offerings and features. If our cross-selling efforts are unsuccessful or if our existing clients fail to expand their use of our Thryv platform or adopt additional offerings and features, our operating results may be materially adversely affected.
Our subscription renewals may decrease, and any decrease in our number of clients could harm our future revenue and operating results.
Our Thryv platform clients have no obligation to renew their subscriptions for our platform after the expiration of their initial contractual subscription periods. Our agreements with our Thryv platform clients are typically structured on an initial multi-month subscription basis with automatic monthly renewal thereafter; consequently, our clients may choose to terminate their agreements with us at any time after the expiration of the initial term by providing us with the amount of written notice stipulated in the contract. In addition, our clients may seek to renew for lower subscription amounts or for shorter contract lengths. Also, clients may choose not to renew their subscriptions for a variety of reasons. Our renewals may decline or fluctuate as a result of a number of factors, including limited client resources, pricing changes, the prices of services offered by our competitors, adoption and utilization of our platform and related add-ons by our clients, adoption of our new solutions, client satisfaction with our platform, mergers and acquisitions affecting our client base, reductions in our clients’ spending levels or declines in client activity as a result of economic downturns or uncertainty in financial markets. If our clients do not renew their subscriptions for our platform or if they decrease the amount they spend with us, our revenue will decline and our business will suffer. In addition, a subscription model creates certain risks related to the timing of revenue recognition and potential reductions in cash flows.
If we fail to further enhance our brand or maintain our existing strong brand awareness, our ability to expand our client base may be impaired and our financial condition may suffer.
We believe that our development of the Thryv brand and maintenance of our existing PYP and IYP brands, including The Real Yellow Pages and Yellowpages.com, is critical to achieving widespread awareness of our existing and future solutions and, as a result, is important to attracting new clients and maintaining existing clients. In the past, our efforts to build our brands have involved significant expenses, and we believe that this investment has resulted in relatively strong brand recognition in the SMB market. Successful promotion and maintenance of our brands will depend largely on the effectiveness of our marketing efforts and on our ability to provide a reliable and useful Thryv platform at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, our business could suffer.
We may not be able to maintain profitability in the future, and our past performance may not be indicative of our future performance.
During the year ended December 31, 2023, we generated a net loss of $259.3 million. If we are unable to acquire new clients cost effectively, we may incur net losses in the future. Our expenses may increase in the future due to additional investment in product development or expenses related to acquisitions, which could impact our ability to sustain profitability in the future. Additionally, while the majority of our revenue in fiscal years 2023, 2022 and 2021 came from advertising services provided in local classified print directories and digital marketing solutions, such as search, display and social media, future development of new services may initially have a lower profit margin than our existing services, which could have a material adverse effect on our business, financial condition and results of operations. As a result, we may not be able to maintain profitability in the future.
The continuing decline in the use of print directories and in our ability to attain new or renewed print agreements continues to adversely affect our business.
Overall references to print directories, including our Print Yellow Pages, in the United States have been declining since the early 2000s. This decline is primarily attributable to increased use of internet search providers, as well as the proliferation of large retail stores for which consumers and businesses may not reference the print directories. While we expect the decline in usage will continue to negatively affect advertising sales associated with our traditional print business, a significant further decline in usage of our print directories could impair our ability to maintain or increase advertising prices, which may cause businesses to reduce or discontinue purchasing advertising in our print directories. Either or both of these factors could adversely affect our revenue and have a material adverse effect on our business, financial condition, results of operations and prospects. These trends have resulted in declining print advertising sales, and we expect these trends to continue in 2024 and beyond.
In addition, a portion of the revenue we report each period results from the recognition of deferred revenue relating to agreements entered into during previous periods. A decline in new or renewed agreements in any period may not be immediately reflected in our reported financial results for that period but may result in a decline in our revenue in future periods. If we were to experience significant downturns in agreements and renewals, our reported financial results might not reflect such downturns until future periods.
Providing technology-based marketing solutions to small businesses is an evolving market that may not grow as quickly as we anticipate, or at all.
The value of our solutions is predicated upon the assumption that online and mobile presence, acquisition and retention marketing and the ability to connect and interact with consumers online and on mobile devices are, and will continue to be, important and valuable strategies for small businesses to enhance their abilities to establish, grow, manage and market their businesses. If this assumption is incorrect, or if small businesses do not, or perceive that they do not, derive sufficient value from our solutions, then our ability to retain existing clients, attract new clients and grow our revenues could be adversely affected.
If we are not able to provide new or enhanced functionality and features, it could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to successfully provide new or enhanced functionality and features for our existing solutions that achieve market acceptance or that keep pace with rapid technological developments. For example, we are focused on enhancing the connectivity and integration of add-ons to our Thryv platform to expand its utility for our SMB clients. The success of new or enhanced functionality and features depends on several factors, including their overall effectiveness and the timely completion, introduction and market acceptance of the enhancements, new features, or applications. Furthermore, we depend on both internal development and our third-party software partners to develop and implement their own enhancements, new features, or applications that can then be integrated into the Thryv platform. Failure in either of these areas may significantly impair our revenue growth.
In addition, because our solutions are designed to operate on a variety of systems, we will need to continuously modify and enhance our solutions to keep pace with changes in internet-related hardware, iOS and other software and communication, browser and database technologies. We may not be successful in developing these new or enhanced functionalities and features, or in bringing them to market in a timely fashion. If we do not continue to innovate and deliver high-quality, technologically advanced solutions, we will not remain competitive, which could have a material adverse effect in our business, financial condition and results of operations. Any failure of our Thryv platform and add-ons to operate effectively with future network platforms and technologies could reduce the demand for our Thryv platform and add-ons, result in client dissatisfaction and have a material adverse effect on our business, financial condition and results of operations.
We may be unsuccessful in identifying and acquiring suitable acquisition candidates or in integrating any businesses that are or have been acquired. This could have a material adverse effect on our business, financial condition and results of operations.
One of our key growth strategies is to acquire other businesses or to invest in complementary companies, channels, platforms or technologies that we believe could expand our client base or otherwise offer growth opportunities into new markets. We may also in the future seek to acquire or invest in other businesses, applications or technologies that operate in different industries than ours if we determine that an attractive investment or acquisition opportunity has been presented to us. We may not be able to identify appropriate acquisition candidates or, if we do, we may not be able to negotiate successfully the terms of an acquisition, finance the acquisition or integrate the acquired business effectively and profitably into our existing operations.
Acquired businesses may not provide us with successful client conversions, achieve the levels of revenue or profitability anticipated, or otherwise perform as expected. In addition, the pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. Acquisitions involve special risks, including the potential assumption of unanticipated liabilities and contingencies that could have a material adverse effect on our financial condition and difficulties in integrating acquired businesses.
In addition, we may be unable to successfully integrate businesses that we have acquired or may acquire in the future. The integration of an acquisition involves a number of factors that may affect our operations. These factors include:
•difficulties in converting the clients of the acquired business onto our Thryv platform;
•difficulties in converting the clients of the acquired business to our Marketing Services offerings or to our contract terms;
•diversion of management’s attention;
•incurrence of significant amounts of additional debt;
•creation of significant contingent earn out obligations or other financial liabilities;
•increased expenses, including, but not limited to, legal, administrative and compensation expenses;
•difficulties in the integration of acquired operations, including the integration of data and information solutions or other technologies;
•entry into unfamiliar segments;
•adverse effects to our existing business relationships with business partners and clients as a result of the acquisition;
•difficulties retaining key employees and maintaining the key business and client relationships of the businesses we acquire;
•cultural challenges associated with integrating employees from the acquired company into our organization;
•unanticipated problems or legal liabilities; and
•tax and accounting issues.
A failure to integrate acquisitions efficiently, may be disruptive to our operations and adversely impact our revenues or increase our expenses.
Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could increase our interest payments. To finance any acquisitions, we may choose to issue shares of our common stock as consideration, which would dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may not be able to acquire other companies using our stock as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all.
We also may divest or sell assets or businesses that we acquire, and we may have difficulty selling such assets or businesses on acceptable terms or in a timely manner. This could result in a delay in the achievement of our strategic objectives, additional expense, or the sale of such assets or businesses at a price or on terms that are less favorable than we anticipated.
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the event that the book value of goodwill or other intangible assets is impaired, any such impairment would be charged to earnings in the period of impairment. In the future, if our acquisitions do not yield expected returns, we may be required to record charges based on this impairment assessment process, which could have a material adverse effect on our financial condition and results of operations.
Expansion of our operations to, and offering our services in, markets outside of the U.S. subjects us to political, economic, legal, operational and other risks that could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation.
We are continuing to expand our operations by offering our products and services in Australia, New Zealand and Canada, and may expand to additional markets outside of the U.S. in the future, which increases our exposure to the inherent risks of doing business in international markets. Depending on the market, these risks include those relating to:
• changes in local economic environment;
• political instability;
• trade regulations;
• intellectual property legal protections;
• procedures and actions affecting pricing, reimbursement and marketing of our products and services;
• fluctuations in foreign currency rates;
• additional U.S. and foreign taxes;
• changes in local laws or regulations, or interpretation or enforcement thereof;
• potentially longer ramp-up times for offering our services; and
• data and privacy regulations.
Issues relating to the failure to comply with applicable non-U.S. laws, requirements or restrictions may also impact our domestic business and/or raise scrutiny on our domestic practices.
Additionally, some factors that will be critical to the success of our international business and operations will be different than those affecting our domestic business and operations. For example, conducting international operations requires us to devote significant management resources to implement our controls and systems in new markets, to comply with local laws and regulations, including to fulfill financial reporting requirements, and to overcome the numerous new challenges inherent in managing international operations.
Any expansion of our international operations through acquisitions or through organic growth could increase these risks. Additionally, while we may invest material amounts of capital and incur significant costs in connection with the growth and development of our international operations, including to start up or acquire new businesses, we may not be able to operate them profitably on the anticipated timeline, or at all.
These risks could have a material adverse effect on our business, results of operations, financial condition, cash flows and could materially harm our reputation.
We have recorded impairment charges in the past and may record impairment charges in the future.
We are required, at least annually, or as facts and circumstances warrant, to test goodwill to determine if impairment has occurred. We are also required to test certain other assets for impairment as facts and circumstances warrant. Impairment may result from any number of factors, including adverse changes in assumptions used for valuation purposes, such as sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data or other factors. If the testing indicates that impairment has occurred, we are required to record a non-cash impairment charge.
During the year ended December 31, 2023, the secular decline in industry demand for print services, the trending decline in our Marketing Services client base, competition in the consumer search and display space, and the Company's strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS solutions adversely impacted certain of the assumptions used to estimate the discounted future cash flows of some of our reporting units for purposes of performing our goodwill impairment test. As a result, we recognized total non-cash impairment charges of $268.8 million in the fourth quarter of 2023 to reduce goodwill for our Thryv U.S. Marketing Services segment.
As of December 31, 2023, we had $302.4 million of goodwill, with $19.8 million related to the Thryv U.S. Marketing Services segment, $218.9 million related to the Thryv U.S. SaaS segment and $63.7 million related to the Thryv International Marketing Services segment. The expected continued secular decline in industry demand for print services, increased competition, changes in valuation assumptions or other factors could result in impairment charges in the future, which could have a material adverse effect on our results of operations.
The Company’s strategic decision to convert clients from its digital Marketing Services to its Marketing Center platform could result in higher levels of client churn and have an adverse effect on the Company’s results of operations and key business metrics.
During the fourth quarter of 2023, the Company made a strategic decision to accelerate the conversion of its digital Marketing Services solutions clients to its SaaS Marketing Center platform at no cost to these clients.
Over time, the conversion of these clients will decrease the revenue of the Thryv U.S. and International Marketing Services segments and increase the revenue of the Thryv U.S. and International SaaS segments. While the Company believes these clients are receiving a valuable, no-cost upgrade to Marketing Center and will be more likely to subscribe for additional features of the Thryv Platform in the future, the accelerated conversion of these clients could result in these clients cancelling their services with the Company at a higher rate than the Company has historically experienced, which could have a materially adverse effect on the Company’s results of operations. Furthermore, the conversion of these clients could have an adverse effect on certain of the Company’s key business metrics, such as a reduction in total clients and reduced SaaS monthly ARPU. Any of these negative effects could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Strategic Relationships and Third Parties
We have agreements with several major internet search engines and search sites. The termination or material alteration of one or more of these agreements could adversely affect our business.
We have agreements with several internet search engines and search or directory websites providers, which makes our content easier for search engines to access and provides a greater response for our clients to general searches on the internet. Under the terms of the agreements with these search providers, we place our clients’ advertisements on major search engines and other third-party search and directory sites and print directories, which give us access to a higher volume of traffic than we could generate on our own, without relinquishing the client relationship. The search engines benefit from our outside and inside sales force and full-service capabilities for attracting and serving local advertisers that might not otherwise transact business with search engines. Other third-party directories and search sites benefit from our payment for traffic from their sites to our advertisers. The termination or material alteration of one or more of our agreements with major search engines or third-party providers could adversely affect our business.
Our growth depends in part on the success of our strategic relationships with third parties.
In order to grow our business, we anticipate that we will continue to depend on the continuation and expansion of relationships with vendors and other third parties. In our SaaS segment, such third parties include third-party service providers (i.e., software developers and hosting services), sales channel partners and technology and content providers. In our U.S. and international Marketing Services segments, we depend upon third parties to print, publish and distribute our directories. Identifying partners and negotiating and documenting relationships with them requires significant time and resources. In addition, the third parties we partner with may not perform as expected under our agreements, and we may have disagreements or disputes with such third parties, which could negatively affect our brand and reputation.
Additionally, we rely on the expansion of our relationships with our third-party providers as we enhance our service offerings. While some of our agreements with third parties include exclusivity provisions, we may lose the exclusivity or other protections we have in force due to our own performance or efforts by our competitors or business problems these third parties encounter. Typically, our agreements are non-exclusive and do not prohibit our third-party providers from working with our competitors.
If we are unsuccessful in establishing or maintaining our relationships with third-party service providers, our ability to compete in the marketplace or to grow our revenues could be impaired, which could have a material adverse effect on our business, financial condition and results of operations.
We rely on third-party service providers for many aspects of our business. If one or more of our third-party service providers experiences a disruption, goes out of business, experiences a decline in quality, or terminates its relationship with us, we could experience a material adverse effect on our business, financial condition or results of operations.
We rely on third-party service providers for many integral aspects of our business. A failure on the part of any of our third-party service providers to fulfill its contracts with us could result in a material adverse effect on our business, financial condition or results of operations. We depend on our third parties for many services, including, but not limited to:
Development and delivery of Thryv modules
We utilize third-party service providers for a variety of components and feature sets and related intellectual property underlying or incorporated in the Thryv platform. Additionally, we utilize third-party service providers for the development and maintenance of our Thryv platform, as well as hosting the Thryv platform itself through a third party’s relationship with a cloud services provider. We also rely on a third-party solution for order entry and monthly payment processing for Thryv orders. Any decline in the quality of, or delay in delivery of, modules or other software produced by such third-party service providers could result in reduced revenue, cause an increase in operational costs to switch providers, subject us to liability, or cause clients to fail or be unable to renew their subscriptions, any of which could materially adversely affect our business.
Typically, our license agreements with third-party service providers are not exclusive and/or do not extend to all territories in which we may wish to do business in the future, and in certain cases, our third-party service providers have the right to distribute features developed for our Thryv platform in their own software offerings, which could adversely impact select functionality of our platform as well as adversely affect our business, our ability to compete with our competitors, and our ability to generate revenue. If our agreements with our third-party service providers expire or are terminated, we may face loss of functionality or costs associated with replacing the relevant technology. Such expiration or termination may also disrupt our business, leading to liability to customers or loss of business.
Upkeep of data centers
We host our consumer-facing internet sites, which are a major source of low-cost fulfillment traffic for our clients and serve most of our digital service clients from data centers operated by third-party providers, primarily Amazon Web Services. While we control and have access to our servers and all of the components of our network that are located in our external data centers, we do not control the operation of these facilities. The owners of our data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. These third parties may also seek to cap their maximum contractual liability, resulting in Thryv being financially responsible for losses caused by their actions or omissions. Additionally, we host our internal systems through data centers that we operate and lease in Texas and Virginia. If we are unable to renew our agreements with our third-party providers or to renew our leases on commercially reasonable terms, or if one of our data center operators is acquired, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible service interruption in connection with any such transfer. Both our third-party data centers and data centers that we lease and operate are subject to break-ins, sabotage, intentional acts of vandalism and other misconduct. Any such acts could result in a breach of the security of our or our clients’ data.
Problems faced by our third-party data center locations, with the telecommunications network providers with whom we or they contract, or with the systems by which our telecommunications providers allocate capacity among their customers, including us, could adversely affect the experience of our clients. We have periodically experienced service disruptions in the past, and we may experience interruptions or delays in our service in the future. Our third-party data centers’ operators could also decide to close their facilities without adequate notice. In addition, any financial difficulties, such as bankruptcy, faced by our third-party data center operators or any of the third-party service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our data centers are unable to keep up with our growing needs for capacity, this could adversely affect the growth of our business. While we maintain both redundancy and disaster recovery protocols, any changes in third-party service levels at our data centers or any security breaches, errors, defects, disruptions, or other performance problems with our Thryv platform and add-ons could adversely affect our reputation, damage our clients’ stored files, result in lengthy interruptions in our services, or otherwise result in damage or losses to our clients for which they may seek compensation from us. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data center services we use. Interruptions in our services might reduce our revenues, cause us to issue refunds to clients for prepaid and unused subscription services, subject us to potential liability, or adversely affect our renewals.
Monitoring of changes to applicable laws
We and our third-party providers must monitor for any changes or updates in laws that are applicable to the solutions that we or our third-party providers provide to our clients. In addition, we are reliant on our third-party providers to modify the solutions that they provide to our clients to enable our clients to comply with changes to such laws and regulations. If our third-party providers fail to reflect changes or updates in applicable laws in the solutions that they provide to our clients in a timely manner, we could be subject to negative client experiences, harm to our reputation, loss of clients, claims for any fines, penalties or other damages suffered by our clients and other financial harm.
Printing of directories
In our U.S. and international Marketing Services segments, we depend on third parties to supply paper and to print, publish and distribute our directories. In connection with these services, we rely on the systems and services of our third-party service providers, their ability to perform key functions on our behalf in a timely manner and in accordance with agreed levels of service and their ability to attract and retain sufficient qualified personnel to perform services on our behalf. There are a limited number of these providers with sufficient scale to meet our needs. A failure in the systems of one of our key third-party service providers, or their inability to perform in accordance with the terms of our contracts or to retain sufficient qualified personnel, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flow.
If we were to lose the services of any of our key third-party providers, we would be required to hire and train sufficient personnel to perform these services or to find an alternative service provider. In some cases, it would be impractical for us to perform these functions, including the printing of our directories. In the event we were required to perform any of the services that we currently outsource, it is unlikely that we would be able to perform them without incurring additional costs. A failure on the part of any of our third-party service providers could result in a material adverse effect on our business, financial condition and results of operations.
If we, or our third-party providers, do not keep pace with rapid technological changes and evolving industry standards, we may not be able to remain competitive, and the demand for our services may decline.
The markets in which we operate, particularly in our SaaS segment, are characterized by the following factors:
•changes due to rapid technological advances;
•additional qualification requirements related to technological challenges; and
•evolving industry standards and changes in the regulatory and legislative environment.
Our future success will depend upon our ability to anticipate and to adapt to changes in technology and industry standards and to effectively develop, introduce, market and gain broad acceptance of new product and service enhancements incorporating the latest technological advancements. Furthermore, we depend on our third-party providers to also keep pace with rapid technological changes and evolving industry standards. If our third-party providers are unable to adapt to technological changes, this could also have a material adverse effect on our ability to retain or increase our client subscription base or cause us to incur additional operational costs involved with switching third-party providers.
If our competitors’ products, services, or technologies become more accepted than our Thryv platform and add-ons, if they are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capable than ours, it could have a material adverse effect on our business, financial condition and results of operations. Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources. In addition, some of our competitors may offer their products and services at a lower price. If we are unable to achieve our target pricing levels or if we experience significant pricing pressures, it could have a material adverse effect on our business, financial condition and results of operations.
If we do not maintain the compatibility of our Thryv platform with third-party applications that our clients use in their businesses, our revenue will decline.
A percentage of our clients choose to integrate our platform with certain capabilities provided by third-party software platforms created by our third-party providers and application providers using application programming interfaces (“APIs”), either as publicly available no-fee licenses or through fee-based partnership arrangements. The functionality and popularity of our Thryv platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including but not limited to CRM, CMS, omnichannel email and text marketing automation, accounting, e-commerce, call center, analytics and social media sites that our clients use and from which they obtain data. Third-party providers of applications and APIs may change the features of their applications and platforms, restrict our access to their applications and platforms, terminate or elect not to renew our partnership agreements or otherwise alter the terms governing use of their applications and APIs and access to those applications and platforms in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications and platforms in conjunction with our platform, which could adversely impact our offerings and harm our business. If we fail to integrate our Thryv platform with new third-party applications and platforms that our clients use for marketing, sales or services purposes, we may not be able to offer the functionality that our clients need, which would adversely impact our ability to generate revenue and harm our business.
We rely on data provided by third parties, the loss of which could limit the functionality of our platform and disrupt our business.
The success of our services depends on our ability to deliver data to both consumers and our clients, such as website searches, client leads and social media updates. Certain of this data is provided by unaffiliated third parties, such as business data aggregators (e.g. doctor, hotel or other data aggregators) and vertical industry organizations, to supplement our own business listings for our search sites. Data we provide our clients about their presence on other internet sites and social media is also provided by third parties. Some of this data is provided to us pursuant to third-party data-sharing policies and terms of use, under data-sharing agreements by third-party providers or by client consent.
In the future, any of these third parties could change its data-sharing policies, including making them more restrictive, or alter its algorithms that determine the placement, display and accessibility of search results and social media updates, any of which could result in the loss of, or significant impairment to, our ability to collect and provide useful data to our clients. These third parties could also interpret our or our third-party service providers’ data collection policies or practices as being inconsistent with their policies, which could result in the loss of our ability to collect this data for our clients. Any such changes could impair our ability to deliver data to our clients and could adversely impact select functionality of our platform, impairing the return on investment that our clients derive from using our solution, as well as adversely affecting our business and our ability to generate revenue.
Risks Related to the Economy, Disasters, Epidemics, and Other External Factors
Adverse economic conditions may have a material adverse effect on our business, financial condition and results of operations.
Our business depends on the overall demand for marketing solutions, especially business management software by SMBs, and on the economic health of our current and prospective clients. Past financial recessions have resulted in a significant weakening of the economy in North America and globally, a reduction in employment levels, a reduction in prevailing interest rates, more limited availability of credit, a reduction in business confidence and activity and other difficulties. Such difficulties have affected, and any current or future adverse economic conditions may continue to affect, one or more of the industries to which we sell our offerings. In addition, there has been pressure to reduce government spending in the United States, and any tax increases and spending cuts at the federal level might reduce demand for our offerings from organizations that receive funding from the U.S. government and could negatively affect the U.S. economy, which could further reduce demand for our offerings.
Any of these events could have a material adverse effect on our business, financial condition and results of operations, and spending levels for our offerings may not increase following any recovery.
Public health epidemics or outbreaks may reduce or delay spending on day-to-day purchases, which could result in a reduction in the level of business conducted by our clients. As a result, our clients may reduce their spending on marketing services and business operations, which could have a material adverse effect on our business, financial condition and results of operations.
Public health epidemics or outbreaks could adversely impact our business. The extent to which a public health epidemic or outbreak impacts our operations will depend on future developments, including the duration of the outbreak, the severity of the outbreak and the actions to contain the outbreak or treat its impact, among others. Depending on the severity of the outbreak, we may experience significant future disruptions to our business operations, which may adversely affect our service quality and thereby our business reputation. In addition, the spread and impact of an outbreak could adversely impact demand for our clients’ services or the level of business conducted by our clients. Such conditions could affect the rate of spending on our solutions and could adversely affect our clients’ ability or willingness to purchase our solutions; the timing of our current or prospective clients’ purchasing decisions; pressure for pricing discounts or extended payment terms; reductions in the amount or duration of clients’ subscription contracts; or increase client churn, all of which could adversely affect our future sales, operating results and overall financial performance. If an outbreak has a continued and substantial impact on the ability of our clients to purchase our solutions, our results of operations and overall financial performance may be harmed. In addition, to the extent an outbreak adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors included herein, or may affect our operating and financial results in a manner that is not presently known to us.
Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.
While we and our third-party providers host our Thryv platform and serve most of our digital clients on cloud services, should we experience a local or regional disaster or other business continuity problem, such as an earthquake, hurricane, flood, terrorist attack, pandemic, security breach, cyber-attack, power loss, telecommunications failure or other natural or man-made disaster, our ability to continue to operate will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations. In such an event, we could experience operational challenges with regard to particular areas of our operations, such as key executive officers or personnel that could have a material adverse effect on our business.
We regularly assess and take steps to improve our existing business continuity plans and key management succession. However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and result in material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.
Risks Related to Human Capital
We depend on our senior management team, and the loss of one or more key employees or an inability to attract and to retain highly skilled employees could have a material adverse effect on our business, financial condition and results of operations.
Our success depends largely upon the continued services of our key executive officers. Specifically, we believe that the continued employment of our CEO and Chairman, Joseph A. Walsh, will play an important part in our success. We also rely on our leadership team in the areas of marketing, sales, services and general and administrative functions and on mission-critical individual contributors in all such areas. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. We do not have employment agreements with most of our executive officers or other key personnel that require them to continue to work for us for any specified period, and, therefore, they could terminate their employment with us at any time. Additionally, we do not maintain key man insurance on any of our executive officers or key employees. The loss of one or more of our executive officers or key employees could have a material adverse effect on our business, financial condition and results of operations. Turnover among our outside and inside sales force or key management could adversely affect our business and the loss of a significant number of experienced key personnel could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flow.
Our success also depends on our ability to identify, hire, train and retain qualified sales personnel. To execute our growth plan, we must attract and retain highly qualified personnel. Competition for personnel is intense, including without limitation for individuals with high levels of experience in designing and developing software and internet-related services and senior sales executives. We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees have or that we have breached their legal obligations, resulting in a diversion of our time and resources. In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards declines, it may adversely affect our ability to recruit and to retain highly skilled employees. If we fail to attract new personnel or fail to retain and to motivate our current personnel, it could have a material adverse effect on our business, financial condition and results of operations.
A portion of our employees are represented by unions. Our business could be adversely affected by future labor negotiations and our ability to maintain good relations with our unionized employees.
As of December 31, 2023, 269 employees, or 9% of our employees and 25% of our sales force, were represented by unions. In addition, the employees of some of our key suppliers are represented by unions. Work stoppages or slowdowns involving our union-represented employees, or those of our suppliers, could significantly disrupt our operations and increase operating costs, which would have a material adverse effect on our business.
The inability to negotiate acceptable terms with the unions could also result in increased operating costs from higher wages or benefits paid to union employees or replacement workers. A greater percentage of our work force could also become represented by unions. If a union decides to strike and others choose to honor its picket line, it could have a material adverse effect on our business.
Legal, Tax, Regulatory and Compliance Risks
Our solutions and our business are subject to a variety of U.S. and international laws and regulations, including those regarding privacy, data protection and information security. Any failure by us or our third-party service providers, as well as the failure of our platform or services, to comply with applicable laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
We and our clients are subject to a variety of U.S. and international laws and regulations, including regulation by various federal government agencies, including the U.S. Federal Communication Commission (“FCC”) (telemarketing and text marketing), the U.S. Federal Trade Commission (“FTC”) (advertising laws, Controlling the Assault of Non-Solicited Pornography and Marketing (“CAN-SPAM”) Act compliance), U.S. Department of Health and Human Services (Health Insurance Portability and Accountability Act of 1996 (as amended and together with its implementing regulations, “HIPAA”) compliance, and state and local agencies. The Telephone Consumer Protection Act governs our ability to offer text marketing services to our clients and recorded calls. Increasingly, though inconsistently, both state and federal courts are finding obligations on businesses –even small ones– to make their websites and any videos posted online fully accessible to those with disabilities under both the ADA and various states’ laws, which impacts our website and video offerings. The United States and various state and foreign governments have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personally identifiable information (“PII”) of individuals; and the FTC and many state attorneys general are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of data. Self-regulatory obligations, other industry standards, policies and other legal obligations may apply to our collection, distribution, use, security, or storage of PII or other data relating to individuals. In addition, most states and some foreign governments have enacted laws requiring companies to notify individuals of data security breaches involving certain types of PII. These obligations may be interpreted and applied in an inconsistent manner from one jurisdiction to another and may conflict with one another, other regulatory requirements, or our internal practices.
We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, Canada, Australia, New Zealand, the European Union (the “E.U”), and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. For example, in May 2018, the General Data Protection Regulation came into effect, which brought with it a complete overhaul of E.U. data protection laws: the new rules superseded then-current E.U. data protection legislation, imposed more stringent E.U. data protection requirements and provided for greater penalties for non-compliance. In addition, the California Consumer Protection Act of 2018 (“CCPA”) became effective January 1, 2020, with implications for consumer privacy in the U.S. that reach beyond California. HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act, affects our ability to provide our solutions to medical and healthcare businesses that are Covered Entities or Business Associates under those laws. New York’s SHIELD Act may impact our ability to offer our services to financial businesses due to its compliance requirements for data collection and security. Changing definitions of what constitutes PII may also limit or inhibit our ability to operate or to expand our business, including limiting strategic partnerships that may involve the sharing of data, especially in the context of the digital advertising ecosystem. Also, some jurisdictions require that certain types of data be retained on localized servers within these jurisdictions, which could impact our ability to make solutions that impact all our clients’ needs.
Evolving and changing definitions of what constitutes PII within the United States, Canada, Australia, New Zealand, the European Union and elsewhere, especially relating to the classification of internet protocol, or IP addresses, machine or device identification numbers, location data and other information, as well as the use of PII for machine learning process or algorithm movement may limit or inhibit our ability to operate or to expand our business. Future laws, regulations, standards and other obligations could impair our ability to collect or to use information that we utilize to provide email delivery and marketing services to our clients, thereby impairing our ability to maintain and to grow our client base and to increase revenue. Future restrictions on the collection, use, sharing, or disclosure of our clients’ data or additional requirements for express or implied consent of clients for the use and disclosure of such information may limit our ability to develop new services and features.
Our failure to comply with applicable laws, directives and regulations may result in enforcement action against us, including fines and imprisonment, or actions against our clients who may not fully understand the impact of these laws on their businesses and damage to our reputation, any of which may have an adverse effect on our business and operating results. The costs of compliance with and other burdens imposed by, such laws and regulations that are applicable to us or to the businesses of our clients, may limit the use and adoption of our Thryv platform and add-ons and reduce overall demand, or lead to significant fines, penalties, or liabilities for any non-compliance with such privacy laws. Furthermore, privacy concerns may cause our clients’ workers and our clients’ customers to resist providing PII necessary to allow our clients to use our Thryv platform and add-ons effectively. Furthermore, if the processing of PII were to be curtailed in this manner, our solutions would be less effective, which may reduce demand for our Thryv platform and add-ons, which could have a material adverse effect on our business, financial condition and results of operations.
Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our Thryv platform and add-ons in certain industries. Any failure or perceived failure by us to comply with U.S., Australia, E.U., or other foreign privacy or security laws, regulations, policies, industry standards, or legal obligations, or any security incident that results in the unauthorized access to, or acquisition, release, or transfer of, PII may result in governmental enforcement actions, litigation, fines and penalties, or adverse publicity and could cause our clients to lose trust in us, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations. If our service is perceived to cause, or is otherwise unfavorably associated with, violations of privacy or data security requirements, it may subject us or our clients to public criticism and potential legal liability. Public concerns regarding PII processing, privacy and security may cause some of our clients’ end-users to be less likely to visit their websites or otherwise interact with them. If enough end-users choose not to interact with our clients, our clients could stop using our platform. This, in turn, may reduce the value of our services and slow or eliminate the growth of our business. Existing and potential privacy laws and regulations concerning privacy and data security and increasing sensitivity of consumers to unauthorized processing of PII may create negative public reactions to technologies, products and services, such as ours.
Further, the Biden administration may enact comprehensive tax reform or other regulatory changes, which may have an adverse impact to our effective tax rate or other aspects of our business.
Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.
We maintain clients in a variety of industries, including healthcare, financial services, the public sector and telecommunications. Regulators in certain industries have adopted, and may in the future adopt, regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our clients’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain clients, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our clients are unable to obtain regulatory approval to use our services where required, our business may be harmed. In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our clients may expect, such as an attestation of compliance with the New York SHIELD Law, CCPA, Payment Card Industry (“PCI”) Data Security Standards, may have an adverse impact on our business and results. Furthermore, we and our clients in the healthcare industry are regulated by HIPAA, which establishes privacy and security standards that limit the use and disclosure of protected health information (“PHI”) and requires the implementation of administrative, physical and technical safeguards to ensure the confidentiality, integrity and availability of individually identifiable health information in electronic form, as well as breach notification procedures for breaches of PHI and penalties for violation of HIPAA’s requirements for entities subject to its regulation. We work to maintain compliance with the relevant industry-specific certifications or other requirements or standards relevant to our clients, but if in the future we are unable to achieve or maintain such certifications, requirements or standards, it may harm our business and adversely affect our results.
Further, in some cases, industry-specific laws, regionally-specific, or product-specific laws, regulations, or interpretive positions may also apply directly to us as a service provider. The interpretation of many of these statutes, regulations and rulings is evolving in the courts and administrative agencies and an inability to comply may have an adverse impact on our business and results. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business. For example, there are various statutes, regulations and rulings relevant to the direct email marketing and text-messaging industries, including the CAN-SPAM Act, Telephone Consumer Protection Act (“TCPA”) and related FCC orders. The TCPA and FCC rulings impose significant restrictions on the ability to utilize telephone calls and text messages to mobile telephone numbers as a means of communication, when the prior express consent of the person being contacted has not been obtained or proof of such consent not properly maintained. We may in the future be subject to one or more lawsuits, containing allegations that one of our platforms or clients using our platform violated industry-specific regulations and any determination that we or our clients violated such regulations could expose us to significant damage awards that could, individually or in the aggregate, materially adversely affect our business.
Clients may depend on our solutions to enable them to comply with applicable laws, or may not fully comprehend the applicable laws’ impact on them when using our solutions, which requires us and our third-party providers to constantly monitor applicable laws and to make applicable changes to our solutions. If our solutions have not been updated to enable the client to comply with applicable laws or we fail to update our solutions on a timely basis, it could have a material adverse effect on our business, financial condition and results of operations.
Clients may rely on our solutions to enable them to comply with applicable laws in areas in which the solutions are intended for use. Changes in laws and regulations could require us to make significant modifications to our products or to delay or to cease sales of certain products, which could result in reduced revenues or revenue growth and our incurring substantial expenses and write-offs. Although we believe that our solutions provide us with flexibility to release updates in response to these changes, we cannot be certain that we will be able to make the necessary changes to our solutions and release updates on a timely basis, or at all. In addition, we are reliant on our third-party service providers to modify the solutions that they provide to our clients through our platform to comply with changes to such laws and regulations. The number of laws and regulations that we are required to monitor will increase as we expand the geographic region in which our solutions are offered. When a law changes, we must then test our solutions to meet the requirements necessary to enable our clients to comply with the new law or assist them in not violating the law through typical usage. If our solutions fail to enable a client to comply with applicable laws, or expose a client to legal action via typical usage of our solutions, we could be subject to negative client experiences, harm to our reputation or loss of clients, claims for any fines, penalties or other damages suffered by our client and other financial harm. Additionally, the costs associated with such monitoring implementation of changes are significant. If our solutions do not enable our clients to comply with applicable laws and regulations, or prevent them from exposing themselves to liability through typical usage, it could have a material adverse effect on our business, financial condition and results of operations.
Additionally, if we fail to make any changes to our solutions as described herein, which are required as a result of such changes to, or enactment of, any applicable laws in a timely fashion, we could be responsible for fines and penalties implemented by governmental and regulatory bodies. Our payment of fines, penalties, interest, or other damages as a result of our failure to provide compliance services prior to deadlines may have a material adverse effect on our business, financial condition and results of operations.
An information security breach of our systems or our data centers operated by third-party providers, the loss of, or unauthorized access to, client information, or a system disruption could have a material adverse effect on our business, market brand, financial condition and results of operations.
Our business is dependent on our data processing systems and our data centers operated by third-party providers. We rely on these systems to process, on a daily and time sensitive basis, a large number of complicated transactions. We electronically receive, process, store and transmit data and PII about our clients and our employees, as well as our vendors and other business partners, including names, social security numbers, credit card numbers and financial account numbers. We keep this information confidential. However, our websites, networks, applications and technologies and other information systems have in the past, and will continue to be targeted for sabotage, disruption, or data misappropriation. The uninterrupted operation of our information systems and our ability to maintain the confidentiality of PII and other client and individual information that resides on our systems are critical to the successful operation of our business. While we have information security and business continuity programs, these plans may not be sufficient to ensure the uninterrupted operation of our systems or to prevent unauthorized access to the systems by unauthorized third parties. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. These concerns about information security increase with the mounting sophistication of social engineering. Our network security hardening may be bypassed by phishing and other social engineering techniques that seek to use end-user behaviors to distribute computer viruses and malware into our systems, which might disrupt our delivery of services and make them unavailable and might also result in the disclosure or misappropriation of PII or other confidential or sensitive information. In addition, a significant cyber-security breach could prevent or delay our ability to process payment transactions.
Any information security breach in our business processes or of our processing systems has the potential to impact our client information and our financial reporting capabilities, which could result in the potential loss of business and our ability to accurately report financial results. If any of these systems fail to operate properly or become disabled even for a brief period of time, we could potentially miss a critical filing period, resulting in potential fees and penalties, or lose control of client data, all of which could result in financial loss, a disruption of our businesses, liability to clients, regulatory intervention, or damage to our reputation. The continued occurrence of high-profile data breaches provides evidence of an external environment increasingly hostile to information security. If our security measures are breached as a result of third-party action, employee or subcontractor error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to client data, our reputation may be damaged, our business may suffer, and we could incur significant liability.
We may also experience security breaches that may remain undetected for an extended period of time. Techniques used to obtain unauthorized access or to sabotage systems change frequently and are growing increasingly sophisticated. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures.
This environment demands that we continuously improve our design and coordination of security controls throughout the Company. Our Board of Directors (the “Board”), in coordination with the Audit Committee, has primary responsibility for overseeing cyber-security risk management and the effectiveness of security controls. The Audit Committee receives quarterly reports identifying major risk area exposures, such as cyber-security. In the event that the Audit Committee identifies significant risk exposures, including with respect to cyber-security, it will present such exposure to the Board to assess our risk identification, risk management and mitigation strategies. Despite these efforts, it is possible that our security controls over data, training and other practices we follow may not prevent the improper disclosure of PII or other confidential information. Any issue of data privacy as it relates to unauthorized access to or loss of client and/or employee information could result in the potential loss of business, damage to our market reputation, litigation and regulatory investigation and penalties.
There may be other such security vulnerabilities that come to our attention. Our continued investment in the security of our technology systems, continued efforts to improve the controls within our technology systems, business processes improvements and the enhancements to our culture of information security may not successfully prevent attempts to breach our security or unauthorized access to PII or other confidential, sensitive or proprietary information. In addition, in the event of a catastrophic occurrence, either natural or man-made, our ability to protect our infrastructure, including PII and other client data and to maintain ongoing operations could be significantly impaired. Our business continuity and disaster recovery plans and strategies may not be successful in mitigating the effects of a catastrophic occurrence. Insurance may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our insurance policies may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention. If our security is breached, if PII or other confidential information is accessed, or if we experience a catastrophic occurrence, it could have a material adverse effect on our business, financial condition and results of operations.
Our services present the potential for identity theft, embezzlement, or other similar illegal behavior by our employees and contractors with respect to third parties, which could damage our reputation, lead to legal liabilities and have a material adverse effect on our business, financial condition and results of operations.
The services offered by us generally require or involve collecting PII of our clients and / or their employees, such as their full names, birth dates, addresses, employer records, tax information, social security numbers, credit card numbers and bank account information. This information can be used by criminals to commit identity theft, to impersonate third parties, or to otherwise gain access to the data or funds of an individual. If any of our employees or contractors take, convert, or misuse such PII, funds or other documents or data, we could be liable for damages, and our business reputation could be damaged or destroyed. Moreover, if we fail to adequately prevent third parties from accessing PII and/or business information and using that information to commit identity theft, we might face legal liabilities and other losses that could have a material adverse effect on our business, financial condition and results of operations.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
Various trademarks and other intellectual property rights are key to our business. We rely upon a combination of patent, trademark, copyright and trade secret laws as well as contractual arrangements, including confidentiality or license agreements, to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be ineffective or inadequate. We may be required to bring lawsuits against third parties to protect our intellectual property rights. Similarly, we may be party to proceedings by third parties challenging our rights. Lawsuits brought by us may not be successful, or we may be found to infringe the intellectual property rights of others. As the commercial use of the internet further expands, it may be more difficult.
In order to protect our trade names, including Thryv®, Thryv Leads®, Thryv CompleteSM, Thryv Your Business Smarter®, The Real Yellow Pages®, Yellowpages.com®, Dexknows.com®, Superpages.com®, Yellow.co.nz, Whitepages.co.nz, Finda.co.nz and Tourism.net.nz from domain name infringement or to prevent others from using internet domain names that associate their businesses with ours, Thryv seeks formal registrations from the USPTO, participates in a tracking service for all Thryv domestic and internal trademarks and works with specialized outside counsel. In the past, we have received claims of material infringement of intellectual property rights. For example, we have had to defend against copyright violation claims on licensed images included in our print and internet directories and websites and patent infringement claims on various technologies and functionalities included in our digital products, services, and internet sites.
Related lawsuits, regardless of the outcome, could result in substantial costs and diversion of resources and could have a material adverse effect on our business. In response to the loss of important trademarks or other intellectual property rights, we may be required to spend significant resources to monitor and to protect these rights. Litigation brought to protect and to enforce our intellectual property rights could be costly, time-consuming and distracting to management, with no guarantee of success and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. We also maintain a moderate patent portfolio and work with specialized patent counsel to protect our technology rights. Our failure to secure, protect and enforce our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.
Some of our solutions utilize open source software and any failure to comply with the terms of one or more of these open source licenses could have a material adverse effect on our business, financial condition and results of operations.
Some of our solutions, such as Thryv Leads, and client consumer-facing websites and mobile applications, as well as our internal business solutions include software covered by open source licenses, such as GPL-type licenses. Although we provide what we deem to be compliant notices and attributions for the use of any open source code, the terms of various open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide our solutions or consumer-facing sites and applications. Our internal development policies and vendor contracts typically prohibit the use of open source licensed code that requires the release of the source code of our proprietary software, but any errors in application of our policies or standard contract language could potentially make our proprietary software available under open source licenses if we combine our proprietary software with open source software in a certain manner. In the event that portions of our proprietary software are determined to be subject to an open source license of a particular type, we could be required to publicly release the affected portions of our source code, to re-engineer all or a portion of our technologies, or otherwise to be limited in the licensing of our technologies, each of which could reduce or eliminate the value of our technologies and services. In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Many of the risks associated with usage of open source software cannot be eliminated and could have a material adverse effect on our business, financial condition and results of operations.
Litigation and regulatory investigations aimed at us or resulting from our actions or the actions of our predecessors may result in significant financial losses and harm to our reputation.
We face risk of litigation, regulatory investigations and similar actions in the ordinary course of our business, including the risk of lawsuits and other legal actions relating to breaches of contractual obligations or tortious claims from clients or other third parties, fines, penalties, interest, or other damages as a result of erroneous transactions, breach of data privacy laws, or lawsuits and legal actions related to us or our predecessors. Any such action may include claims for substantial or unspecified compensatory damages, as well as civil, regulatory, or criminal proceedings against our directors, officers, or employees, and the probability and amount of liability, if any, may remain unknown for significant periods of time. We may be also subject to various regulatory inquiries, such as information requests and book and records examinations, from regulators and other authorities in the geographical markets in which we operate. A substantial liability arising from a lawsuit judgment or settlement or a significant regulatory action against us or a disruption in our business arising from adverse adjudications in proceedings against our directors, officers, or employees could have a material adverse effect on our business, financial condition and results or operations. Moreover, even if we ultimately prevail in or settle any litigation, regulatory action, or investigation, we could suffer significant harm to our reputation, which could materially affect our ability to attract new clients, to retain current clients and to recruit and to retain employees, which could have a material adverse effect on our business, financial condition and results of operations.
Various lawsuits and other claims typical for a business of our size and nature are pending against us, including disputes with taxing jurisdictions. See Part II - Item 8. Note 15, Contingent Liabilities for further detail.
We are also exposed to potential future claims and litigation relating to our business, as well as methods of collection, processing and use of personal data. Our clients and users of client data collected and processed by us could also file claims against us if our data were found to be inaccurate, or if personal data stored by us were improperly accessed and disseminated by unauthorized persons. These potential future claims could have a material adverse effect on our consolidated statements of operations and comprehensive (loss) income, consolidated balance sheets or consolidated statements of cash flows.
We may be sued by third parties for alleged infringement of their proprietary rights.
There is considerable patent and other intellectual property development activity in our industry. Our success depends upon our not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, including parties commonly referred to as “patent trolls,” may own or claim to own intellectual property relating to our industry. From time to time, third parties may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. In the future, others may claim that our Thryv platform and underlying technology infringe or violate their intellectual property rights. However, we may be unaware of the intellectual property rights that others may claim cover some or all of our technology or services. Our history of mergers and acquisitions may cause the appropriate licensing of IP rights of third parties on which we rely to be difficult to trace and prove over time. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms. Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our business operations. Any such events could have a material adverse effect on our business, financial condition and results of operations.
Laws and regulations directed at limiting or restricting the distribution of our print directories or shifting the costs and responsibilities of waste management related to our print directories could adversely affect our business.
A number of states and municipalities are considering, and a limited number of municipalities have enacted, legislation or regulations that would limit or restrict our ability to distribute our print directories in the markets we serve. The most restrictive laws or regulations would prohibit us from distributing our print directories unless residents affirmatively “opt in” to receive our print directories. Other less restrictive laws or regulations would require us to allow residents to “opt out” of receiving our print directories. In addition, some states and municipalities are considering legislation or regulations that would shift the costs and responsibilities of waste management for discarded directories from municipalities to the producers of the directories. These laws and regulations will likely, if and where adopted, increase our costs, reduce the number of directories that we distribute and negatively impact our ability to market our advertising to new and existing clients. If these or similar laws and regulations are widely adopted, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flow.
Our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business, financial condition and results of operations.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) to provide a report by management on, among other things, the effectiveness of our internal control over financial reporting. In particular, Section 404 requires us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Our compliance with applicable provisions of Section 404 requires that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We have in the past identified material weaknesses in our internal control over financial reporting, which we were required to report and remediate. If we are unable to maintain adequate internal control over financial reporting, or if in the future we identify material weaknesses, we may be unable to report our financial information accurately on a timely basis, may suffer adverse regulatory consequences or violations of applicable stock exchange listing rules, may breach the covenants under our credit facilities and incur additional costs. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements, which could cause the price of our common stock to decline and have a material adverse effect on our business, financial condition and results of operations.
If we are required to collect sales and use taxes in additional jurisdictions, we might be subject to liability for past sales, and our future sales may decrease. Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our clients, which could increase the costs of our services and otherwise have a material adverse effect on our business, financial condition and results of operations.
The application of federal, state and local tax laws to services provided electronically is evolving. New income, sales, use, or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time (possibly with retroactive effect) and could be applied solely or disproportionately to services provided over the internet. These enactments could adversely affect our sales activity due to the inherent cost increase the taxes would represent and ultimately have a material adverse effect on our results of operations and cash flows.
In addition, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us (possibly with retroactive effect), which could require us or our clients to pay additional tax amounts, as well as require us or our clients to pay fines or penalties and interest for past amounts.
For example, we might lose sales or incur significant expenses if states successfully impose broader guidelines on state sales and use taxes. A successful assertion by one or more states requiring us to collect sales or other taxes on the licensing of our software or provision of our services could result in substantial tax liabilities for past transactions and otherwise harm our business. Each state has different rules and regulations governing sales and use taxes, and these rules and regulations are subject to varying interpretations that change over time. We review these rules and regulations periodically and, when we believe we are subject to sales and use taxes in a particular state, we may voluntarily engage state tax authorities in order to determine how to comply with that state’s rules and regulations. There is no guarantee that we will not be subject to sales and use taxes or related penalties for past sales in states where we currently believe no such taxes are required.
Vendors of services, like us, are typically held responsible by taxing authorities for the collection and payment of any applicable sales and similar taxes. If one or more taxing authorities determines that taxes should have, but have not, been paid with respect to our services, we might be liable for past taxes in addition to taxes going forward. Liability for past taxes might also include substantial interest and penalty charges. Our clients are typically wholly responsible for applicable sales and similar taxes. Nevertheless, clients might be reluctant to pay back taxes and might refuse responsibility for interest or penalties associated with those taxes. If we are required to collect and to pay back taxes and the associated interest and penalties, and if our clients fail or refuse to reimburse us for all or a portion of these amounts, we will incur unplanned expenses that may be substantial. Moreover, imposition of such taxes on us going forward will effectively increase the cost of our services to our clients and might adversely affect our ability to retain existing clients or to gain new clients in the areas in which such taxes are imposed.
We may not be able to utilize a significant portion of our net operating loss carryforwards, which could have a material adverse effect on our financial condition and results of operations.
As of December 31, 2023, we had state net operating loss carryforwards due to prior period losses, which, if not utilized, will begin to expire in 2024. Utilization of these net operating losses depends on many factors, including our future income, which cannot be assured. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could have a material adverse effect on our financial condition and results of operations.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Future issuances of our stock could cause an “ownership change.” It is possible that an ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could have a material adverse effect on our results of operations and profitability.
Operational Risks
Cost reduction efforts may be time-consuming and the associated savings may not be realized.
We have historically undertaken cost reduction programs, and we continue to evaluate our operations and may initiate further rationalization, depending on market conditions. The key components of our cost reduction program include reducing staff, restructuring our contracts and realizing savings in procurement and logistics. These cost reduction programs could result in our inability to continue to maintain a highly variable cost structure. The full benefits of these programs may be difficult to realize and any short term synergies and savings realized may not be sustainable in the long term. Losses of key personnel could adversely affect our business, financial condition and results of operations.
We may provide service level commitments under our client contracts. If we fail to meet these contractual commitments, we could be considered to have breached our contractual obligations, obligated to provide credits, refund prepaid amounts related to unused subscription services or face contract terminations, which could have a material adverse effect on our business, financial condition and results of operations.
Our client agreements for our Thryv hosted SaaS may include service level commitments which are measured on a monthly or other periodic basis. If we suffer extended periods of unavailability for our Thryv platform and add-ons, we may be contractually obligated to provide these clients with service credits or refunds for prepaid amounts related to unused subscription services, or we could face contract claims for damages or terminations, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our revenues could be significantly affected if we suffer unscheduled downtime that exceeds the disclosed downtimes under our agreements with our clients. Any extended service outages could have a material adverse effect on our business, financial condition and results of operations.
Any failure to offer high-quality or technical support services may adversely affect our relationships with our clients and could have a material adverse effect on our business, financial condition and results of operations.
We support our clients through the availability of business advisors prior to and following the onboarding of clients onto our Thryv platform. Once our solutions are deployed, our digital services clients depend on our support organization to resolve technical issues relating to our platform. We may be unable to respond quickly enough to accommodate short-term increases in client demand for support services. We also may be unable to modify the format of our support services to compete with changes in support services provided by our competitors. Increased client demand for these services, without corresponding revenues, could increase costs and have an adverse effect on our results of operations. In addition, our sales process is highly dependent on our business reputation and on positive recommendations from our existing clients. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation and our ability to sell our Thryv platform and add-ons to existing and prospective clients, which could have a material adverse effect on our business, financial condition and results of operations.
Aging software and hardware infrastructure may lead to increased costs and disruptions in operations that could adversely impact our financial results.
We have risks associated with aging software and hardware infrastructure assets. The age of certain of our assets may result in a need for replacement and higher level of maintenance costs. A higher level of expenses associated with our aging software and hardware infrastructure may have a material adverse effect on our business, financial condition and results of operations.
If we or our third-party service providers fail to manage our technical operations infrastructure, our existing clients may experience service outages in our Thryv platform and add-ons, and our new clients may experience delays in the deployment of our Thryv platform and add-ons, which could have a material adverse effect on our business, financial condition and results of operations.
We have experienced significant growth in the number of users, transactions and data that our operations infrastructure supports. We seek to maintain sufficient excess capacity in our operations infrastructure to meet the needs of all of our clients. We also seek to maintain excess capacity to facilitate the rapid provision of new client activations and the expansion of existing client activations. In addition, we need to properly manage our technological operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of our Thryv platform and add-ons. However, the provision of new hosting infrastructure requires significant lead time. We have experienced and may in the future experience, website disruptions, outages and other performance problems. These problems may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, increased resource consumption from expansion or modification to our code, spikes in client usage and denial of service issues.
In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. If we do not accurately predict our infrastructure requirements, our existing clients may experience service outages that may subject them to financial penalties, causing us to incur financial liabilities and client losses, and our operations infrastructure may fail to keep pace with increased sales, causing new clients to experience delays as we seek to obtain additional capacity, which could have a material adverse effect on our business, financial condition and results of operations.
If our Thryv platform and add-ons fail to perform properly, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims, which could have a material adverse effect on our business, financial condition and results of operations.
Our solutions are inherently complex and may contain material defects or errors. Any defects in functionality or that cause interruptions in the availability of our Thryv platform and add-ons could result in:
•loss or delayed market acceptance and sales;
•breach of warranty or other contractual claims for damages incurred by clients;
•loss of clients;
•diversion of development and client service resources; and
•injury to our reputation;
The occurrence of any of these issues could have a material adverse effect on our business, financial condition and results of operations. In addition, the costs incurred in correcting any material defects or errors might be substantial.
Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption, or cause the information that we collect to be incomplete or contain inaccuracies that our clients regard as significant. Furthermore, the availability or performance of our Thryv platform and add-ons could be adversely affected by a number of factors, including clients’ inability to access the internet, the failure of our network or software systems, security breaches, or variability in user traffic for our services. We may be required to issue credits or refunds for prepaid amounts related to unused services or otherwise be liable to our clients for damages they may incur resulting from certain of these events. Because of the nature of our business, our reputation could be harmed as a result of factors beyond our control. For example, because our clients access our Thryv platform and add-ons through their internet service providers, if a service provider fails to provide sufficient capacity to support our platform and add-ons or otherwise experiences service outages, such failure could interrupt our clients’ access to or experience with our platform, which could adversely affect our reputation or our clients’ perception of our platform’s reliability or otherwise have a material adverse effect on our business, financial condition and results of operations.
Our insurance may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our policy may not cover all claims made against us, and defending a suit, regardless of its merit, could be costly and divert management’s attention.
Our results of operations may fluctuate significantly and may not fully reflect the underlying performance of our business.
Our results of operations may vary significantly in the future and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, the results of any one quarter or annual period should not be relied upon as an indication of future performance. Our financial results may fluctuate as a result of a variety of factors, many of which are outside of our control and as a result, may not fully reflect the underlying performance of our business. Fluctuations in results may negatively impact the value of our common stock. Factors that may cause fluctuations in our financial results include, without limitation:
•our ability to attract new clients;
•our ability to manage our declining Marketing Services revenue;
•the timing of recognition of revenues;
•directory publication cycles;
•the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;
•network outages or security breaches;
•general economic, industry and market conditions; including as a result of war, incidents of terrorism, civil unrest, or responses to these events;
•client renewals;
•increases or decreases in the number of elements of our services or pricing changes upon any renewals of client agreements;
•changes in our pricing policies or those of our competitors;
•seasonal variations in our client subscriptions;
•fluctuation in market interest rates, which impacts debt interest expense;
•any changes in the competitive dynamics of our industry, including consolidation among competitors, clients, or strategic partners; and
•the impact of new accounting rules.
Risks Related to Our Indebtedness
Thryv Holdings, Inc. is a holding company and relies on transfers of funds and other payments from its subsidiaries to meet its obligations.
Thryv Holdings, Inc. is a holding company that does not conduct any business operations of its own. As a result, we are largely dependent upon cash transfers in the form of intercompany loans and receivables from our subsidiaries to meet our obligations. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason also could limit or impair their ability to pay dividends or other distributions to us.
Our outstanding indebtedness could have a material adverse effect on our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations.
Our outstanding indebtedness and any additional indebtedness we incur may have important consequences for us, including, without limitation, that:
•increase our vulnerability to adverse changes in general economic and industry conditions and competitive pressures;
•require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•restrict us from pursuing business opportunities as they arise or from successfully carrying out plans to expand our business;
•make it more difficult to satisfy our financial obligations, including payments on our indebtedness;
•place us at a disadvantage compared to our competitors that have less debt; and
•limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes.
Despite our substantial indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.
We may incur substantial additional indebtedness in the future. Although the agreements governing our Senior Credit Facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness we can incur in compliance with these restrictions could be substantial. This could further exacerbate the risks associated with our substantial leverage.
Restrictive covenants in the agreements governing our Senior Credit Facilities may restrict our future operations, including our ability to pursue our business strategies or respond to changes.
The agreements governing our Senior Credit Facilities contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests. These include covenants restricting, among other things, our (and our subsidiaries’) ability to:
•incur additional indebtedness;
•create, incur, assume or permit liens;
•consolidate, merge, liquidate, wind up or dissolve;
•make, purchase, hold or acquire investments, including acquisitions, loans and advances;
•pay dividends or make other distributions in respect of equity;
•make payments in respect of junior lien or subordinated debt;
•sell, transfer, lease, license or sublease or otherwise dispose of assets;
•enter into any sale and leaseback transactions;
•engage in transactions with affiliates;
•enter into any restrictive agreement;
•materially alter the business that we conduct;
•change our fiscal year for accounting and financial reporting purposes; and
•amend or otherwise change the terms of the documentation governing certain restricted debt.
In addition, our covenants require us to maintain specified financial ratios and satisfy other financial condition tests. The terms of any future indebtedness we may incur could include more restrictive covenants. We may not be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from our creditors and/or amend the covenants.
Our failure to comply with the covenants or to maintain the required financial ratios contained in the agreements governing our indebtedness could result in an event of default under such indebtedness, which could have an adverse effect on our business, financial condition, results of operations and prospects. Additionally, our default under one agreement covering our indebtedness may trigger cross-defaults under other agreements covering our indebtedness. Upon the occurrence of an event of default or cross-default under any of the agreements governing our indebtedness, the lenders could elect to declare all amounts outstanding to be due and payable and exercise other remedies. In the event our lenders accelerate the maturity of our indebtedness, we would not have sufficient cash to repay that indebtedness, which would materially and adversely affect our business, financial condition, results of operations and prospects and could have a material adverse effect on our ability to continue to operate as a going concern. Furthermore, if we were unable to repay the amounts due and payable under the agreements governing our indebtedness, those lenders could proceed against the collateral granted to them to secure that indebtedness.
We may be unable to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.
Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could have a material adverse effect on our business, financial condition, results of operations and prospects. Our ability to make payments on and to refinance our indebtedness and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.
If our business does not generate cash flow from operations in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition, results of operations and prospects and could have a material adverse effect on our ability to continue to operate as a going concern.
In the future, we may be dependent upon our lenders for financing to execute our business strategy and to meet our liquidity needs. If our lenders are unable to fund borrowings under their credit commitments or we are unable to borrow, it could have a material adverse effect on our business, financial condition and results of operations.
During periods of volatile credit markets, there is risk that lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to, extending credit up to the maximum amount permitted by the ABL Facility. If our lenders are unable to fund borrowings under their revolving credit commitments or we are unable to borrow, it could be difficult to obtain sufficient funding to execute our business strategy or to meet our liquidity needs, which could have a material adverse effect on our business, financial condition and results of operations.
Our debt may be downgraded, which could have a material adverse effect on our business, financial condition and results of operations.
A reduction in the ratings that rating agencies assign to our debt may negatively impact our access to the debt capital markets and increase our cost of borrowing, which could have a material adverse effect on our business, financial condition and results of operations.
Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us.
Banking and capital markets can experience periods of volatility and disruption. If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected. Although we currently can access the bank and capital markets, such markets may not continue to be a reliable source of financing for us. These factors, including the tightening of credit markets, could adversely affect our ability to obtain cost-effective financing. Increased volatility and disruptions in the financial markets also could make it more difficult and more expensive for us to refinance outstanding indebtedness and to obtain financing. In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws, or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit. Disruptions in the financial markets can also adversely affect our lenders, insurers, clients and other counterparties. Any of these results could have a material adverse effect on our business, financial condition and results of operations.
Changes in key assumptions could result in additional underfunded pension obligations, resulting in the need for additional plan funding by us and increased pension expenses.
We have material pension liabilities, some of which represent underfunded liabilities under our frozen pension plans. Changes in the interest rate environment, inflation, mortality rate assumptions or unfavorable changes in applicable laws or regulations could materially change the timing and amount of required plan funding. Additionally, a material deterioration in the funded status of the plans could significantly increase our pension expenses, potentially impacting our cash flow and profitability in the future.
Risks Related to Ownership of Our Common Stock
The market price of our shares of common stock may be volatile.
The public price of our common stock could be subject to wide fluctuations in response to the risk factors described herein and others beyond our control, including:
•the number of shares of our common stock publicly owned and available for trading;
•overall performance of the equity markets and/or publicly-listed companies that offer marketing services and SaaS solutions;
•actual or anticipated fluctuations in our revenue or other operating metrics;
•our actual or anticipated operating performance and the operating performance of our competitors;
•changes in the financial projections we provide to the public or our failure to meet these projections;
•failure of securities analysts to maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors;
•any major change in our Board, management, or key personnel;
•the economy as a whole and market conditions in our industry;
•rumors and market speculation involving us or other companies in our industry;
•announcements by us or our competitors of significant innovations, new products, services, features, integrations or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to data privacy and cyber-security in the U.S. or globally;
•lawsuits threatened or filed against us;
•other events or factors, including those resulting from war, incidents of terrorism, civil unrest, or responses to these events; and
•sales or expected sales of our common stock by us and our officers, directors and principal stockholders.
In addition, stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner often unrelated to the operating performance of those companies. These fluctuations may be even more pronounced in the trading market for our common stock as a result of the supply and demand forces described above. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations and financial condition.
Because we do not intend to pay cash dividends in the foreseeable future, you may not receive any return on investment unless you are able to sell your common stock for a price greater than your purchase price.
We have never declared nor paid cash dividends on our common stock. We do not intend in the foreseeable future to pay any dividends to holders of our common stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or to pay any dividends in the foreseeable future. Additionally, our ability to generate income and pay dividends is dependent on the ability of our subsidiaries to declare and pay dividends or lend funds to us. Future indebtedness of or jurisdictional requirements on our subsidiaries may prohibit the payment of dividends or the making or repayment of loans or advances to us. Consequently, the success of an investment in shares of our common stock will depend upon any future appreciation in their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which investors have purchased their shares. However, the payment of future dividends will be at the discretion of our Board, subject to applicable law and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions that apply to the payment of dividends and other considerations that our Board deems relevant. As a consequence of these limitations and restrictions, we may not be able to make the payment of dividends on our common stock.
Risks Related to Governance and Ownership Structure
Anti-takeover provisions in our fourth amended and restated certificate of incorporation and second amended and restated bylaws and certain provisions of Delaware law could delay or prevent a change of control that may be favored by some stockholders.
We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change of control would be beneficial to our existing stockholders. In addition, provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a merger or other change of control transaction that stockholders may consider favorable. These provisions may also make it more difficult for our stockholders to change our Board and senior management.
Among other things, these provisions:
•provide for a classified Board with staggered three-year terms;
•do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;
•delegate the sole power to fix the number of directors to a majority of the Board;
•provide the power of our Board to fill any vacancy on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;
•generally eliminate the ability of stockholders to call special meetings of stockholders and generally prohibit stockholder action to be taken by written consent; and
•establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings.
In addition, our Board has the authority to cause us to issue, without any further vote or action by the stockholders, up to 50,000,000 shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price, or prices and liquidation preferences of such series. The issuance of shares of preferred stock or the adoption of a stockholder rights plan may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.
Further, under the agreements governing our Senior Credit Facilities, a change of control would cause us to be in default. In the event of a default, the administrative agent under our Senior Credit Facilities would have the right (or, at the direction of lenders holding a majority of the loans and commitments under our Senior Credit Facilities, the obligation) to accelerate the outstanding loans and to terminate the commitments under our Senior Credit Facilities, and if so accelerated, we would be required to repay all of our outstanding obligations under our Senior Credit Facilities.
In addition, several of our agreements with local telephone service providers require their consent to any assignment by us of our rights and obligations under the agreements. We may from time to time enter into new contracts that contain change of control provisions that limit the value of, or even terminate, the contract upon a change of control. The consent rights in these agreements might discourage, delay or prevent a transaction that a stockholder may consider favorable.
Our second amended and restated bylaws provide, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or stockholders.
Our second amended and restated bylaws provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us, any director or our officers or employees arising pursuant to any provision of the DGCL, our fourth amended and restated certificate of incorporation or our second amended and restated bylaws; or (iv) any action asserting a claim against us, any director or our officers or employees that are governed by the internal affairs doctrine. This exclusive forum provision does not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws and rules and regulations promulgated thereunder for which there is exclusive federal or concurrent federal and state jurisdiction. The federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act, the Exchange Act or the rules and regulations promulgated thereunder, and investors cannot waive Thryv’s compliance with these laws, rules and regulations. Any person or entity purchasing or otherwise acquiring any interest in shares of our common stock shall be deemed to have notice of and to have consented to the provisions of our fourth amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees, or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision that is contained in our second amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.
General Risk Factors
Forecasts of market growth may prove to be inaccurate and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, if at all.
Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Our forecasts, if any, relating to the expected growth in marketing and management software markets may prove to be inaccurate. Even if these markets experience such forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
Accordingly, our forecasts of market growth should not be taken as necessarily indicative of our future growth.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us and/or our business. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our common stock would be adversely affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us on a regular basis, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Corporate Governance
Our information security program is managed by a dedicated Vice President of Information Technology, whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes. The Vice President of Information Technology also provides quarterly reports to the Audit Committee of our Board of Directors (the “Audit Committee”). The Vice President of Information Technology also provides reports to our Chief Executive Officer and other members of our senior management as appropriate. These reports include updates on the Company’s cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the information security program, and the current threat landscape. Our program is regularly evaluated by internal and external experts, with the results of those reviews reported quarterly to the Audit Committee and senior management. We also actively engage with key vendors and industry participants as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures.
Risk Management and Strategy
We have established processes and policies for assessing, identifying and remediating material risks posed by cybersecurity threats. Our processes and policies are based upon the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework. Our processes are focused on: (i) effecting organizational education on how to manage cybersecurity risks, (ii) implementing safeguards to protect our systems, (iii) detecting the occurrence of a cybersecurity incident, (iv) responding to a cybersecurity incident and (v) recovering from a cybersecurity incident. Additionally, we have a cybersecurity incident response plan including specific responsive protocols administered by an incident response team, led by our Vice President of Information Technology and comprised of other members of management.
As a part of our organizational education on risk management, we require that employees annually complete information and privacy training. We also administer employee awareness training around phishing, malware, and other cyber risks on an ad hoc basis as necessary to enhance our protection efforts. We actively engage with key vendors and industry participants as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. For example, our incident response team conducts periodic tabletop exercises with outside consultants to ensure adherence to our cybersecurity incident response plan. Additionally, we maintain insurance coverage for cybersecurity insurance as part of our overall insurance portfolio.
As of December 31, 2023, we have not identified any risks from cybersecurity threats (including any previous cybersecurity incidents) that have materially affected the Company, our business strategy, our results of operations or our financial condition. For a discussion of risks from cybersecurity threats that could be reasonably likely to materially affect us, please see “Risk Factors - An information security breach of our systems or our data centers operated by third-party providers, the loss of, or unauthorized access to, client information, or a system disruption could have a material adverse effect on our business, market brand, financial condition and results of operations.”
Item 2. Properties
As of December 31, 2023, we have eleven properties, all of which are leased. Since June 2020, we have operated as a “Remote First” company, meaning that the majority of our workforce operates in a remote working environment. As a result, we have closed certain office buildings, including most of the space at our corporate headquarters in Dallas, Texas. We will keep certain other office buildings open to house essential employees who cannot perform their duties remotely, such as employees who work in our data centers that are leased in Texas and Virginia.
We believe that our facilities are adequate to meet our needs for the immediate future.
Item 3. Legal Proceedings
Information in response to this item is provided in “Part II - Item 8. Note 15, Contingent Liabilities” and is incorporated by reference into Part I of this Annual Report.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information for Common Stock
The Company completed a direct listing on October 1, 2020. The Company's common stock, par value $0.01 (the “common stock”), trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “THRY”. As of February 20, 2024, there were 41 stockholders of record of our common stock (including nominee holders such as banks and brokerage firms who hold shares for beneficial owners), although we believe that the number of beneficial owners is much higher. Prior to the direct listing, there was no public trading market for our common stock.
Dividends
We have never declared nor paid cash dividends on our common stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or to pay any dividends on our common stock in the foreseeable future. The payment of any future dividends will be at the discretion of our Board, subject to applicable law, and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions that apply to the payment of dividends and other considerations that our Board deems relevant.
Performance Graph
The following graph shows a comparison from October 1, 2020 (the date our common stock commenced trading on Nasdaq) through December 31, 2023, of the cumulative total return for our common stock, the Nasdaq Composite Index and the Russell 2000 Index, calculated on a dividend-reinvested basis. The graph assumes $100 was invested in each of the Company’s common stock, the Nasdaq Composite Index and the Russell 2000 Index as of the market close on October 1, 2020. Note that past stock price performance is not necessarily indicative of future stock price performance.
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10/01/2020 |
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12/31/2020 |
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12/31/2021 |
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12/30/2022 |
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12/29/2023 |
| Thryv Holdings, Inc. |
$ |
100.00 |
|
|
$ |
96.43 |
|
|
$ |
293.79 |
|
|
$ |
135.71 |
|
|
$ |
145.36 |
|
| Nasdaq Composite Index |
$ |
100.00 |
|
|
$ |
114.14 |
|
|
$ |
138.55 |
|
|
$ |
92.69 |
|
|
$ |
132.94 |
|
| Russell 2000 Index |
$ |
100.00 |
|
|
$ |
128.97 |
|
|
$ |
146.64 |
|
|
$ |
115.02 |
|
|
$ |
132.38 |
|
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented and should be read in conjunction with our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business, and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.
Overview
We are dedicated to supporting local, independent businesses and franchises by providing innovative marketing solutions and cloud-based tools to the entrepreneurs who run them. We are one of the largest providers of SaaS end-to-end customer experience tools and digital marketing solutions to small-to-medium sized businesses. Our solutions enable our SMB clients to generate new business leads, manage their customer relationships and run their day-to-day business operations. We serve approximately 350,000 SMB clients globally through four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services, and Thryv International SaaS.
Our Thryv U.S. Marketing Services segment provides both print and digital solutions and generated $510.5 million, $820.0 million, and $797.5 million of consolidated revenues for the years ended December 31, 2023, 2022, and 2021, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages, which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing solutions and other digital media solutions, which include online display and social advertising, online presence, and video and search engine optimization tools.
On January, 21, 2022, we acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company, for $22.8 million in cash, subject to certain adjustments. Vivial results are included in the Thryv U.S. Marketing Services segment.
Our Thryv U.S. SaaS segment generated $253.6 million, $211.8 million, and $170.5 million of consolidated revenues for the years ended December 31, 2023, 2022, and 2021, respectively. Our primary SaaS offerings are comprised of Thryv®, our flagship all-in-one small business management platform (“Thryv Platform”), which includes Command Center, Business Center, Marketing Center, ThryvPaySM, and Thryv Add-Ons. Thryv Command Center enables SMBs to centralize all their communication through a modular, easily expandable, and customizable platform. Command Center allows an SMB to connect their pre-existing email accounts, Facebook and Instagram accounts along with installing Command Center’s WebChat client on their website, and using Voice over Internet Protocol (“VoIP”) in-platform telephony services along with Short Message Service (“SMS”) and video calls to provide a centralized inbox for all customer communication. Thryv Business Center is designed to allow a small business owner everything necessary to streamline day-to-day business, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Marketing Center contains everything a small business owner needs to market and grow their business effectively, including easy to understand, artificial intelligence (“AI”) driven analytics. ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. Thryv Add-Ons include AI-assisted website development, SEO tools, Google Business Profile optimization, and Hub by ThryvSM. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.
Our Thryv International Marketing Services segment is comprised of Thryv Australia Pty Ltd, which we acquired on March 1, 2021, and Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company, which we acquired on April 3, 2023 for $8.9 million in cash (the “Yellow Acquisition”), subject to certain adjustments. Our Thryv International Marketing Services segment provides both print and digital solutions and generated $142.7 million and $166.0 million of consolidated revenues for the years ended December 31, 2023 and 2022, respectively, and $144.8 million for the ten months ended December 31, 2021. Thryv Australia and Yellow serve approximately 100,000 and 20,000 SMBs, respectively, many of which we believe are ideal candidates for the Thryv platform.
Our Thryv International SaaS segment is comprised of Thryv Business Center, Command Center, Marketing Center, ThryvPay, and Thryv Add-Ons and generated $10.1 million and $4.5 million of consolidated revenues for the years ended December 31, 2023 and 2022, respectively, and $0.6 million for the ten months ended December 31, 2021.
Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2023, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service model to facilitate remote working and virtual interactions.
Impairment Charges
Our annual impairment tests resulted in non-cash impairments of our goodwill of $268.8 million and $102.0 million during the years ended December 31, 2023 and 2022, respectively, to reduce goodwill in our Thryv U.S. Marketing Services reporting unit, as a result of the historical secular decline in industry demand for print services, along with the historical trending decline in our Marketing Services client base, and competition in the consumer search and display space. The impairment during the year ended December 31, 2023 was primarily driven by the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS solutions.
While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our reporting units, it is possible a material change could occur to the estimated fair value of these assets. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.
Factors Affecting Our Performance
Our operations can be impacted by, among other factors, general economic conditions and increased competition with the introduction of new technologies and market entrants. We believe that our performance and future success depend on several factors that present significant opportunities for us, but also pose risks and challenges, including those listed below and those discussed in the section titled “Risk Factors.”
Ability to Attract and Retain Clients
Our revenue growth is driven by our ability to attract and retain SMB clients. To do so, we must deliver solutions that address the challenges currently faced by SMBs at a value-based price point that SMBs can afford.
Our strategy is to expand the use of our solutions by introducing our SaaS solutions to new SMB clients, as well as our current Thryv U.S. Marketing Services and Thryv International Marketing Services clients. This strategy includes capitalizing on the increased needs of SMBs for solutions that facilitate a remote working environment and virtual interactions. This strategy will require substantial sales and marketing capital.
Investment in Growth
We intend to continue to develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which serves as an efficient customer acquisition channel for our SaaS platform. As a result, SaaS has been able to achieve profitable growth. We will continue to improve our SaaS solutions by analyzing user behavior, expanding features, improving usability, enhancing our onboarding services and customer support and making version updates available to SMBs. We believe these initiatives will ultimately drive revenue growth; however, such improvements will also increase our operating expenses.
Ability to Grow Through Expansion and Acquisition
Our growth prospects depend upon our ability to successfully develop new markets. We currently serve the United States, Australian, New Zealand and Canadian SMB markets and plan to leverage strategic acquisitions or initiatives to expand our client base domestically and enter new markets internationally. Identifying proper targets and executing strategic acquisitions may take substantial time and capital. On March 1, 2021, we completed the acquisition of Thryv Australia, Australia’s leading provider of marketing solutions serving SMBs. In July 2022, we began operations in Canada through our own sales force and a re-seller agreement. Additionally, on April 3, 2023, we completed the acquisition of Yellow, a New Zealand marketing services company. We believe that strategic acquisitions of marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions.
Print Publication Cycle
We recognize revenue for print services at a point in time upon delivery of the published PYP directories containing customer advertisements to the intended market. Our PYP directories typically have 12-month publication cycles in Australia and New Zealand and 15 to 18-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 18 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our PYP directories is therefore directly related to the number of PYP directories we deliver to the intended market each quarter, which can vary based on the timing of the publication cycles.
Key Business Metrics
We review several operating metrics, including the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.
Total Clients
We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients.
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As of December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
Clients (1) |
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|
Marketing Services (2) |
314 |
|
|
362 |
|
|
390 |
|
SaaS (3) |
66 |
|
|
52 |
|
|
46 |
|
Total (4) |
346 |
|
|
387 |
|
|
409 |
|
(1) Clients include total clients from all four of our business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS.
(2) Clients that purchase one or more of our Marketing Services solutions are included in this metric. These clients may or may not also purchase subscriptions to our SaaS offerings.
(3) Clients that purchase subscriptions to our SaaS offerings are included in this metric. These clients may or may not also purchase one or more of our Marketing Services solutions.
(4) Total clients is less than the sum of the Marketing Services and SaaS, since clients that purchase both Marketing Services and SaaS products are counted in each category, but only counted once in the Total.
Marketing Services clients decreased by 48 thousand, or 13%, as of December 31, 2023 as compared to December 31, 2022. Marketing Services clients decreased by 28 thousand, or 7%, as of December 31, 2022 as compared to December 31, 2021. These decreases were related to the secular decline in the print media industry and significant competition in the digital media space and from focusing on offering our SaaS solutions to our current Marketing Services clients. This was partially offset by acquisitions of companies with Marketing Services clients.
SaaS clients increased by 14 thousand, or 27%, as of December 31, 2023 as compared to December 31, 2022. SaaS clients increased by 6 thousand, or 13%, as of December 31, 2022 as compared to December 31, 2021. These increases resulted from focusing on offering our SaaS solutions to our current Marketing Services clients, as well as continuing to focus on new SaaS client acquisition through improved identification of prospects, improved selling methods, introduction of new product features, and a small but growing international footprint.
Total clients decreased by 41 thousand, or 11%, as of December 31, 2023 as compared to December 31, 2022. Total clients decreased by 22 thousand, or 5%, as of December 31, 2022 as compared to December 31, 2021.
The primary driver of these decreases was the secular decline in the print media business combined with increasing competition in the digital media space, partially offset by an increase in SaaS clients and acquisitions of companies with established clients.
Monthly ARPU
We define monthly average revenue per unit (“ARPU”) as our total client billings for a particular month divided by the number of clients that have one or more revenue-generating solutions in that same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. ARPU varies based on product mix, product volumes, and the amounts we charge for our services. We believe that ARPU is an important measure of client spend and that growth in ARPU is an indicator of client satisfaction with our services.
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|
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|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
ARPU (Monthly) |
|
|
|
|
|
Marketing Services (1) |
$ |
158 |
|
|
$ |
178 |
|
|
$ |
213 |
|
SaaS (1) |
372 |
|
|
369 |
|
|
331 |
|
(1)Monthly ARPU includes results from all four of our business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS.
Monthly ARPU for Marketing Services decreased by $20, or 11%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, and $35, or 16%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease in ARPU for these periods was related to reduced spend by clients on our print media offerings due to the secular decline of the industry, caused by the continuing shift of advertising spend to less expensive digital media. This decrease in ARPU was further driven by a reduction of our resale of high-spend, low margin third-party local search and display services that were not hosted on our owned and operated platforms.
Monthly ARPU for SaaS increased by $3, or 1%, during the year ended December 31, 2023 compared to the year ended December 31, 2022, and increased by $38, or 11%, during the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase in ARPU for these periods was attributable to upsell of higher value solutions to existing customers and price increases, offset by the strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS solutions, that initially come in at lower introductory pricing. In addition, the sale of add-on features to our Thryv Platform, such as Thryv Leads and Thryv Pay contributed to Monthly SaaS ARPU growth.
Monthly Active Users - SaaS
We define a monthly active user for SaaS offerings as a client with one or more users who log into our SaaS solutions at least once during the calendar month. Individuals who register for, and use, multiple accounts across computer and mobile devices may be counted more than once, and as a result, may overstate the number of unique users who actively use our Thryv platform within a month. Additionally, some of our original SaaS clients exclusively use the website features of their Thryv platform which does not require a login and those users are not included in our active users count. For each reporting period, active users from the last month in the period are reported. We believe that monthly active users best reflects our ability to engage, retain, and monetize our users, and thereby drive increases in revenue. We view monthly active users as a key measure of user engagement for our Thryv platform.
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|
|
As of December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
Monthly Active Users - SaaS |
40 |
|
|
41 |
|
|
30 |
|
Monthly active users decreased by 1 thousand, or 2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Monthly active users increased by 11 thousand, or 37%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The number of monthly active users decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022 as our service model has adapted to changes in client expectations and allows clients to realize value without the need to login as often. The number of monthly active users increased for the year ended December 31, 2022 compared to the year ended December 31, 2021 resulting from our efforts to increase engagement among our SaaS clients, such as enhancing the initial sales process, the client onboarding experience, and lifecycle management. The increase was also driven by our focus on obtaining higher retention, higher spend clients as these clients are more engaged with our platform.
Key Components of Our Results of Operations
Revenue
We generate revenue from our four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS. Our primary sources of revenue in our Thryv U.S. Marketing Services and Thryv International Marketing Services segments are Print and Digital services. Our primary source of revenue in our Thryv U.S. SaaS and Thryv International SaaS segments are our SaaS solutions.
Cost of Services
Cost of services consists of expenses related to delivering our solutions, such as publishing, printing, and distribution of our Print directories and fulfillment of our Digital and SaaS offerings, including traffic acquisition, managed hosting, and other third-party service providers. Additionally, Cost of services includes personnel-related expenses such as salaries, benefits, and stock-based compensation for our operations team, information technology expenses, non-capitalizable software and hardware purchases, and allocated overhead costs, which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.
Operating Expenses
Sales and Marketing
Sales and marketing expense consists primarily of base salaries, stock-based compensation, sales commissions paid to our inside and outside sales force and other expenses incurred by personnel within the sales, marketing, sales training, and client care departments. Additionally, Sales and marketing expense includes advertising costs such as media, promotional material, branding, online advertising, information technology expenses and allocated overhead costs which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.
General and Administrative
General and administrative expense primarily consists of salaries, benefits and stock-based compensation incurred by corporate management and administrative functions such as information technology, finance and accounting, legal, internal audit, human resources, billing and receivables, and management personnel. In addition, General and administrative expense includes bad debt expense, non-recurring charges, and other corporate expenses such as professional fees, operating taxes, and insurance. General and administrative expense also includes allocated overhead costs which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.
Other Income (Expense)
Other income (expense) consists of interest expense, other components of net periodic pension (cost) benefit, and other income (expense), which includes a bargain purchase gain as a result of the Vivial Acquisition during the year ended December 31, 2022, and foreign currency-related income and expense.
Results of Operations
Consolidated Results of Operations
The following table sets forth certain consolidated financial data for each of the periods indicated:
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|
|
Years Ended December 31, |
|
2023 (1) |
|
2022 (2) |
|
|
| (in thousands of $) |
Amount |
|
% of Revenue |
|
Amount |
|
% of Revenue |
| Revenue |
$ |
916,961 |
|
|
100 |
% |
|
$ |
1,202,388 |
|
|
100 |
% |
| Cost of services |
338,714 |
|
|
36.9 |
% |
|
422,006 |
|
|
35.1 |
% |
| Gross profit |
578,247 |
|
|
63.1 |
% |
|
780,382 |
|
|
64.9 |
% |
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
| Sales and marketing |
300,538 |
|
|
32.8 |
% |
|
362,432 |
|
|
30.1 |
% |
| General and administrative |
208,880 |
|
|
22.8 |
% |
|
216,406 |
|
|
18.0 |
% |
| Impairment charges |
268,846 |
|
|
29.3 |
% |
|
102,222 |
|
|
8.5 |
% |
| Total operating expenses |
778,264 |
|
|
84.9 |
% |
|
681,060 |
|
|
56.6 |
% |
|
|
|
|
|
|
|
|
| Operating (loss) income |
(200,017) |
|
|
21.8 |
% |
|
99,322 |
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
| Interest expense |
(61,728) |
|
|
6.7 |
% |
|
(60,407) |
|
|
5.0 |
% |
| Other components of net periodic pension benefit |
2,719 |
|
|
0.3 |
% |
|
44,612 |
|
|
3.7 |
% |
| Other (expense) income |
(1,518) |
|
|
0.2 |
% |
|
15,448 |
|
|
1.3 |
% |
| (Loss) income before income tax benefit (expense) |
(260,544) |
|
|
28.4 |
% |
|
98,975 |
|
|
8.2 |
% |
| Income tax benefit (expense) |
1,249 |
|
|
0.1 |
% |
|
(44,627) |
|
|
3.7 |
% |
| Net (loss) income |
$ |
(259,295) |
|
|
28.3 |
% |
|
$ |
54,348 |
|
|
4.5 |
% |
| Other financial data: |
|
|
|
|
|
|
|
Adjusted EBITDA(3) |
$ |
187,515 |
|
|
20.4 |
% |
|
$ |
333,342 |
|
|
27.7 |
% |
Adjusted Gross Profit(4) |
$ |
605,849 |
|
|
|
|
$ |
819,150 |
|
|
|
Adjusted Gross Margin(5) |
66.1 |
% |
|
|
|
68.1 |
% |
|
|
(1)Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 acquisition date.
(2)Consolidated results of operations includes Vivial's results of operations subsequent to the January 21, 2022 acquisition date.
(3)See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.
(4)See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Profit and a reconciliation to Gross profit, the most directly comparable measure presented in accordance with GAAP.
(5)See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022
Revenue
The following table summarizes revenue by business segment for the periods indicated:
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
Change |
|
2023 (1) |
|
2022 (2) |
|
Amount |
|
% |
| (in thousands of $) |
(unaudited) |
|
|
|
|
| Thryv U.S. |
|
|
|
|
|
|
|
| Marketing Services |
$ |
510,533 |
|
|
$ |
820,032 |
|
|
$ |
(309,499) |
|
|
(37.7) |
% |
| SaaS |
253,579 |
|
|
211,801 |
|
|
41,778 |
|
|
19.7 |
% |
| Thryv International |
|
|
|
|
|
|
|
| Marketing Services |
142,711 |
|
|
166,010 |
|
|
(23,299) |
|
|
(14.0) |
% |
| SaaS |
10,138 |
|
|
4,545 |
|
|
5,593 |
|
|
123.1 |
% |
| Total Revenue |
$ |
916,961 |
|
|
$ |
1,202,388 |
|
|
$ |
(285,427) |
|
|
(23.7) |
% |
(1) Thryv International Marketing Services includes Yellow revenue subsequent to the Yellow Acquisition.
(2) Thryv U.S. Marketing Services includes Vivial revenue subsequent to the Vivial Acquisition.
Total Revenue decreased by $285.4 million, or 23.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in total Revenue was driven primarily by a decrease in Thryv U.S. Marketing Services Revenue of $309.5 million, a decrease Thryv International Marketing Services Revenue of $23.3 million, partially offset by an increase in Thryv U.S. SaaS Revenue of $41.8 million, and an increase in Thryv International SaaS Revenue of $5.6 million.
Thryv U.S. Revenue
Marketing Services Revenue
Thryv U.S. Marketing Services revenue decreased by $309.5 million, or 37.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Print revenue decreased by $185.2 million, or 47.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease in Print revenue was primarily driven by the impact of publication timing differences, as a result of our Print agreements having greater than 12 month terms, and the continued secular decline in industry demand for Print services, which was partially offset by increasing the terms of our new Print publications from 15 months to 18 months.
Print revenue is recognized upon delivery of the published directories. Individual published directories have different publication cycles, with a typical lifecycle of 15 to 18 months for directories published during the year ended December 31, 2022, as compared to 18 months during the year ended December 31, 2023. As a result of recognizing revenue upon delivery, we typically record revenue for each published directory only once every 15 to 18 months, depending on the publication cycle of the individual published directory, which does not make comparing revenue year-over-year fully representative of actual demand trends due to timing of publication cycles. The greater contract value for individual published directories during the year ended December 31, 2023 increased Print revenue per published directory because the revenue was based on an 18 month contract value for publications with new terms. This increase in per published directory revenue partially offset the secular decline in industry demand for Print services, resulting in an overall 22% decline in revenue for the year ended December 31, 2023 when comparing on a publication-by-publication basis.
Digital revenue decreased by $124.3 million, or 28.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook.
SaaS Revenue
Thryv U.S. SaaS revenue increased by $41.8 million, or 19.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was driven by increased demand for our Thryv SaaS solution as SMBs accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients.
Thryv International Revenue
Marketing Services Revenue
Thryv International Marketing Services revenue decreased by $23.3 million, or 14.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in revenue was driven by lower Print and digital revenue primarily resulting from the secular decline in industry demand for Print services in Australia and negative impact from changes in foreign currency rates. This decrease was partially offset by $12.3 million of Print and digital revenue recognized as a result of the Yellow Acquisition.
SaaS Revenue
Thryv International SaaS revenue increased $5.6 million, or 123.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was driven by increased demand for our SaaS solution as we continue to increase sales to SMBs in Australia.
Cost of Services
Cost of services decreased by $83.3 million, or 19.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by the corresponding decline in revenue and strategic cost saving initiatives. Specifically, we reduced printing, distribution, digital and fulfillment support costs by $66.7 million and contract services costs by $6.0 million. Additionally, depreciation and amortization expense decreased $11.4 million, driven by the accelerated amortization method used by the Company.
Gross Profit
Gross profit decreased by $202.1 million, or 25.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Our gross margin decreased by 180 basis points, to 63.1%, for the year ended December 31, 2023 compared to 64.9% for the year ended December 31, 2022. The decrease was primarily due to a decrease in Marketing Services revenue, partially offset by an increase in SaaS revenue and a decrease in cost of services as a result of the decline in revenue and strategic cost saving initiatives.
Operating Expenses
Sales and Marketing
Sales and marketing expense decreased by $61.9 million, or 17.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was attributable to a decrease in sales commissions of $23.3 million, due to new sales commissions plans and revised targets, and a decrease in sales promotion expenses of $14.0 million, primarily driven by improvements in the client acquisition funnel. Additionally, there were decreases in employee-related costs of $13.5 million, travel expenses of $2.3 million, and contract services expenses of $2.0 million, due to strategic cost-saving initiatives. Depreciation and amortization expense also decreased by $9.7 million due to the accelerated amortization method used by the Company. These decreases were partially offset by an increase in stock-based compensation expense of $4.5 million, as a result of additional grants during the year ended December 31, 2023.
General and Administrative
General and administrative expense decreased by $7.5 million, or 3.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to a decrease in contractor costs of $4.5 million, a decrease in employee-related costs of $3.9 million and a decrease in facilities costs of $3.5 million, driven primarily by cost savings initiatives. Additionally, there was a decrease in depreciation and amortization expense of $4.1 million, due to the accelerated amortization method used by the Company. These decreases were partially offset by a loss on the settlement of an indemnification asset of $10.7 million during the year ended December 31, 2023 compared to a gain of $2.1 million during the year ended December 31, 2022.
Impairment Charges
Impairment charges increased by $166.6 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Impairment charges of $268.8 million were recognized as a result of a goodwill impairment in our Thryv U.S. Marketing Services reporting unit during the year ended December 31, 2023, while $102.2 million of impairment charges were recognized in our Thryv U.S. Marketing Services reporting unit during the year ended December 31, 2022.
Other Income (Expense)
Interest Expense
Interest expense increased by $1.3 million, or 2.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven primarily by the impact of higher interest rates during the year, partially offset by lower outstanding debt balances resulting from payments made on our Term Loan.
Other Components of Net Periodic Pension Benefit
Other components of net periodic pension benefit decreased by $41.9 million for the year ended December 31, 2023. The change was primarily due to a remeasurement gain of $9.9 million recognized during the year ended December 31, 2023, compared to a remeasurement gain of $43.6 million recognized during the year ended December 31, 2022. Additionally, interest cost increased by $7.4 million, due to rising interest rates, during the year ended December 31, 2023.
Other (Expense) Income
During the year ended December 31, 2023, the Company incurred other expenses of $1.5 million, which primarily represented foreign currency-related losses. During the year ended December 31, 2022, the Company recognized other income of $15.4 million, which primarily represented a $10.9 million bargain purchase gain as a result of the Vivial Acquisition and foreign currency-related gains.
Income Tax Benefit (Expense)
Income tax expense decreased by $45.9 million, or 102.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The effective tax rate was 0.5% and 45.1% for the year ended December 31, 2023 and 2022, respectively. The effective tax rate differs from the 21.0% U.S. Federal statutory rate in the current year primarily due to our geographic mix of taxable income in various tax jurisdictions, and tax permanent differences primarily attributable to the impact of the goodwill impairment allocated to non-deductible goodwill and unrecognized tax benefits.
Adjusted EBITDA
Adjusted EBITDA decreased by $145.8 million, or 43.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by the secular decline in both our Thryv U.S. and International Marketing Services segments. The decrease was partially offset by the result of increasing the terms of our Print publications from 15 months to 18 months in our Thryv U.S. Marketing Services segment and growth in our Thryv U.S. and International SaaS segments. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.
Years Ended December 31, 2022 and 2021
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K year ended December 31, 2022.
Non-GAAP Financial Measures
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States. We also present Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin, as defined below, as non-GAAP financial measures in this Annual Report.
We have included Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin in this report because management believes they provide useful information to investors in gaining an overall understanding of our current financial performance and provide consistency and comparability with past financial performance. Specifically, we believe Adjusted EBITDA provides useful information to management and investors by excluding certain non-operating items that we believe are not indicative of our core operating results. In addition, Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin are used by management for budgeting and forecasting as well as measuring the Company’s performance. We believe Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin provide investors with the financial measures that closely align with our internal processes.
We define Adjusted EBITDA (“Adjusted EBITDA”) as Net (loss) income plus Interest expense, Income tax expense (benefit), Depreciation and amortization expense, Restructuring and integration expenses, Transaction costs, Stock-based compensation expense (benefit), Impairment charges and non-operating expenses, such as, Other components of net periodic pension (benefit) cost, Non-cash (gain) loss from remeasurement of indemnification asset, and certain unusual and non-recurring charges that might have been incurred. Adjusted EBITDA should not be considered as an alternative to Net (loss) income as a performance measure. We define Adjusted Gross Profit (“Adjusted Gross Profit”) and Adjusted Gross Margin (“Adjusted Gross Margin”) as Gross profit and Gross margin, respectively, adjusted to exclude the impact of depreciation and amortization expense and stock-based compensation expense (benefit).
Non-GAAP financial information has limitations as an analytical tool and is presented for supplemental informational purposes only. Such information should not be considered a substitute for financial information presented in accordance with U.S. GAAP and may be different from similarly-titled non-GAAP measures used by other companies.
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, Net (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Reconciliation of Adjusted EBITDA |
|
|
|
|
|
| Net (loss) income |
$ |
(259,295) |
|
|
$ |
54,348 |
|
|
$ |
101,577 |
|
| Impairment charges |
268,846 |
|
|
102,222 |
|
|
3,611 |
|
| Depreciation and amortization expense |
63,251 |
|
|
88,392 |
|
|
105,473 |
|
| Interest expense |
61,728 |
|
|
60,407 |
|
|
66,374 |
|
Stock-based compensation expense (1) |
22,201 |
|
|
14,628 |
|
|
8,094 |
|
Restructuring and integration expenses (2) |
14,612 |
|
|
17,804 |
|
|
18,145 |
|
Non-cash loss (gain) from remeasurement of indemnification asset (3) |
10,734 |
|
|
(2,148) |
|
|
(1) |
|
Transaction costs (4) |
373 |
|
|
6,119 |
|
|
25,059 |
|
| Income tax (benefit) expense |
(1,249) |
|
|
44,627 |
|
|
32,737 |
|
Other components of net periodic pension benefit (5) |
(2,719) |
|
|
(44,612) |
|
|
(14,829) |
|
Other (6) |
9,033 |
|
|
(8,445) |
|
|
4,283 |
|
| Adjusted EBITDA |
$ |
187,515 |
|
|
$ |
333,342 |
|
|
$ |
350,523 |
|
(1)The Company records Stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. See Note 12, Stock-Based Compensation and Stockholders' Equity, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.
(2)For the years ended December 31, 2023, 2022 and 2021, expenses related to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, and costs associated with abandoned facilities and system consolidation. For further detail on severance benefits, see Note 8, Accrued Liabilities, to our consolidated financial statements included in Part II, Item 8 in this Annual Report.
(3)In connection with the YP Acquisition, the seller indemnified the Company for future potential losses associated with certain federal and state tax positions taken in tax returns filed by the seller prior to the acquisition date. See Note 4, Fair Value Measurements, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.
(4)Expenses related to the Yellow Acquisition, the Vivial Acquisition, the Thryv Australia Acquisition and other transaction costs.
(5)Other components of net periodic pension benefit is from our non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs. The most significant component of other components of net periodic pension benefit relates to the mark-to-market pension remeasurement.
(6)During the year ended December 31, 2023, Other includes expenses related to the valuation of certain assets as a result of the acquisition of Thryv Australia and foreign exchange related expense. During the year ended December 31, 2022, Other primarily represents the bargain purchase gain as a result of the Vivial Acquisition, partially offset by foreign exchange-related expense. During the year ended December 31, 2021, Other primarily includes expenses related to potential non-income based tax liabilities and foreign exchange-related expense.
The following is a reconciliation of Adjusted Gross Profit and Adjusted Gross Margin, to their most directly comparable GAAP measures, Gross profit and Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2023 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Reconciliation of Adjusted Gross Profit |
|
|
|
|
|
|
|
|
|
| Gross profit |
$ |
320,327 |
|
|
$ |
161,663 |
|
|
$ |
88,730 |
|
|
$ |
7,527 |
|
|
$ |
578,247 |
|
| Plus: |
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
10,766 |
|
|
5,429 |
|
|
10,045 |
|
|
749 |
|
|
26,989 |
|
| Stock-based compensation expense |
399 |
|
|
214 |
|
|
— |
|
|
— |
|
|
613 |
|
| Adjusted Gross Profit |
$ |
331,492 |
|
|
$ |
167,306 |
|
|
$ |
98,775 |
|
|
$ |
8,276 |
|
|
$ |
605,849 |
|
| Gross Margin |
62.7 |
% |
|
63.8 |
% |
|
62.2 |
% |
|
74.2 |
% |
|
63.1 |
% |
| Adjusted Gross Margin |
64.9 |
% |
|
66.0 |
% |
|
69.2 |
% |
|
81.6 |
% |
|
66.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2022 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Reconciliation of Adjusted Gross Profit |
|
|
|
|
|
|
|
|
|
| Gross profit |
$ |
539,543 |
|
|
$ |
130,272 |
|
|
$ |
108,496 |
|
|
$ |
2,071 |
|
|
$ |
780,382 |
|
| Plus: |
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
17,800 |
|
|
4,657 |
|
|
15,385 |
|
|
505 |
|
|
38,347 |
|
| Stock-based compensation expense |
332 |
|
|
89 |
|
|
— |
|
|
— |
|
|
421 |
|
| Adjusted Gross Profit |
$ |
557,675 |
|
|
$ |
135,018 |
|
|
$ |
123,881 |
|
|
$ |
2,576 |
|
|
$ |
819,150 |
|
| Gross Margin |
65.8 |
% |
|
61.5 |
% |
|
65.4 |
% |
|
45.6 |
% |
|
64.9 |
% |
| Adjusted Gross Margin |
68.0 |
% |
|
63.7 |
% |
|
74.6 |
% |
|
56.7 |
% |
|
68.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2021 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Reconciliation of Adjusted Gross Profit |
|
|
|
|
|
|
|
|
|
| Gross profit |
$ |
539,866 |
|
|
$ |
104,944 |
|
|
$ |
60,761 |
|
|
$ |
(232) |
|
|
$ |
705,339 |
|
| Plus: |
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
16,978 |
|
|
3,700 |
|
|
32,463 |
|
|
92 |
|
|
53,233 |
|
| Stock-based compensation expense |
309 |
|
|
71 |
|
|
— |
|
|
— |
|
|
380 |
|
| Adjusted Gross Profit |
$ |
557,153 |
|
|
$ |
108,715 |
|
|
$ |
93,224 |
|
|
$ |
(140) |
|
|
$ |
758,952 |
|
| Gross Margin |
67.7 |
% |
|
61.6 |
% |
|
42.0 |
% |
|
(41.9) |
% |
|
63.4 |
% |
| Adjusted Gross Margin |
69.9 |
% |
|
63.8 |
% |
|
64.4 |
% |
|
(25.3) |
% |
|
68.2 |
% |
Liquidity and Capital Resources
Thryv Holdings, Inc. is a holding company that does not conduct any business operations of its own. We derive cash flows from cash transfers and other distributions from our operating subsidiary, Thryv Inc., which in turn generates cash flow from its own operations and operations of its subsidiaries, and has cash and cash equivalents on hand, funds provided under the Term Loan and funds available under the ABL Facility. The agreements governing our debt may restrict the ability of our subsidiaries to make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of our senior credit facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions or the making of loans by such subsidiaries to us. Our and our subsidiaries’ ability to meet our debt service requirements is dependent on our ability to generate sufficient cash flows from operations.
We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and debt payment obligations, for the following 12 months. Any projections of future earnings and cash flows are subject to substantial uncertainty. Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt, all of which are subject to general economic, financial, competitive, and other factors beyond our control. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.
In addition, our Board of Directors authorizes us to undertake share repurchases from time to time. The amount and timing of any share repurchases that we make will depend on a variety of factors, including available liquidity, cash flows, our capacity to make repurchases under our debt agreements and market conditions.
For a discussion on contingent obligations, see Note 15, Contingent Liabilities, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report.
Sources and Uses of Cash
The following table sets forth a summary of our cash flows from operating, investing and financing activities for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
$ |
| (in thousands) |
|
2023 |
|
2022 |
|
Change |
| Cash flows provided by (used in): |
|
|
|
|
|
|
| Operating activities |
|
$ |
148,226 |
|
|
$ |
148,573 |
|
|
$ |
(347) |
|
| Investing activities |
|
(42,516) |
|
|
(52,026) |
|
|
9,510 |
|
| Financing activities |
|
(103,493) |
|
|
(91,097) |
|
|
(12,396) |
|
| Effects of exchange rate changes on cash, cash equivalents and restricted cash |
|
133 |
|
|
(827) |
|
|
960 |
|
| Increase in cash, cash equivalents and restricted cash |
|
$ |
2,350 |
|
|
$ |
4,623 |
|
|
$ |
(2,273) |
|
Cash Flows from Operating Activities
Net cash provided by operating activities decreased by $0.3 million, or 0.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to the impact of changes in working capital, primarily driven by the timing of accounts payables disbursements and cash expenditures, in addition to the overall decline of our Marketing Services revenue. This decrease was partially offset by the timing of accounts receivable collections and lower income tax payments of $48.9 million.
Cash Flows from Investing Activities
Net cash used in investing activities decreased by $9.5 million, or 18.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to the difference in the cash paid of $22.8 million in connection with the Vivial Acquisition on January 1, 2022, compared to the cash paid of $8.9 million in connection with the Yellow Acquisition on April 3, 2023. This decrease was partially offset by $4.2 million increase in capital expenditures.
Cash Flows from Financing Activities
Net cash used in financing activities increased by $12.4 million, or 13.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily driven by a $7.5 million increase in payments made on the Term Loan and a decrease in net proceeds from the ABL Facility of $20.3 million. These changes were partially offset by a $15.8 million increase in proceeds from the exercises of stock warrants and a $0.4 million increase in other proceeds, primarily from the exercise of stock options.
Debt
Term Loan
On March 1, 2021, the Company entered into the Term Loan. The proceeds of the Term Loan were used to finance the Thryv Australia Acquisition, refinance in full the Company's Senior Term Loan and pay fees and expenses related to the Thryv Australia Acquisition and related financing.
The Term Loan established the Term Loan Facility in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who were equity holders of the Company, as of March 1, 2021. The Term Loan Facility matures on March 1, 2026. Prior to June 30, 2023, borrowings under the Term Loan Facility bore interest at a fluctuating rate per annum equal to, at the Company’s option, LIBOR or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for LIBOR loans) and (ii) 7.50% (for base rate loans). Effective June 30, 2023, borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, a Secured Overnight Financing Rate (“SOFR”) or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for SOFR loans) and (ii) 7.50% (for base rate loans). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter. As of December 31, 2023 and 2022, no portion of the Term Loan was held by related parties who were equity holders of the Company on that date.
ABL Facility
On March 1, 2021, the Company entered into an agreement to amend the June 30, 2017 ABL Facility. The ABL Amendment was entered into in order to permit the term loan refinancing, the Thryv Australia Acquisition and make certain other changes to the ABL credit agreement, including, among others:
•revise the maximum revolver amount to $175.0 million;
•reduce the interest rate per annum to (i) 3-month LIBOR plus 3.00% for LIBOR loans and (ii) base rate plus 2.00% for base rate loans;
•reduce the commitment fee on undrawn amounts under the ABL Facility to 0.375%;
•extend the maturity date of the ABL Facility to the earlier of March 1, 2026 and 91 days prior to the stated maturity
date of the Term Loan Facility;
•add the Australian subsidiaries acquired pursuant to the Thryv Australia Acquisition as borrowers and guarantors, and establish an Australian borrowing base; and
•make certain other conforming changes consistent with the Term Loan Agreement.
As of December 31, 2023, the Company had borrowing base availability of $50.1 million. As a result of certain restrictions in the Company's debt agreements, as of December 31, 2023, approximately $37.5 million was available to be drawn upon under the ABL Facility.
We maintain debt levels that we consider appropriate after evaluating a number of factors, including cash requirements for ongoing operations, investment and financing plans (including acquisitions and share repurchase activities), and overall cost of capital. Per the terms of the Term Loan Facility, payments of the Term Loan balance are determined by the Company's Excess Cash Flow (as defined within the Term Loan Facility). We are in compliance with all covenants under the Term Loan and ABL Facility as of December 31, 2023. We had total recorded debt outstanding of $348.9 million (net of $9.3 million of unamortized original issue discount (“OID”) and debt issuance cost) at December 31, 2023, which was comprised of amounts outstanding under our Term Loan of $309.4 million and ABL Facility of $48.8 million.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenues, results of operations and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our results and the value of our assets cannot be determined with certainty and are made based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.
We believe that the assumptions and estimates associated with revenue recognition, business combinations, goodwill, pension obligations, and income taxes have the greatest potential impact on our audited consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report for further information on these and our other significant accounting policies and estimates as well as our disclosures on recent accounting pronouncements. Our most critical accounting estimates are summarized below.
Revenue Recognition
We recognize revenue based on the revenue recognition standard, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The Company determines the amount of revenue to be recognized through application of the five-step model as described in Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report.
We derive revenue from our four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS. The Company has determined that each of its services is distinct and represents a separate performance obligation because the SMB can benefit from each service on its own or together with other resources that are readily available to the SMB, and services are separately identifiable from other promises in the contract. Revenue for all services is recognized when control transfers to the SMB. For print solutions, control transfers upon delivery of the published directories. Control over SaaS and digital services transfers to the SMB evenly over the service period.
The transaction price of a contract primarily consists of fixed consideration components pursuant to the applicable contractual terms and may involve the use of estimates. These judgments involve consideration of historical and expected experience with the customer and other similar customers. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised service separately to a client. Judgment is required to determine the standalone selling price for each distinct performance obligation. Often, the Company does not have sufficient standalone sales information, as contracts with customers generally include multiple performance obligations. When standalone sales information is not available, the Company estimates the standalone selling price using information that may include market conditions, entity-specific factors such as pricing and discounting strategies, and other inputs.
Business Combinations
We have completed several acquisitions of other businesses in the past, including the Yellow Acquisition on April 3, 2023, the Vivial Acquisition on January 21, 2022, the Thryv Australia Acquisition on March 1, 2021 and the YP Acquisition on June 30, 2017, and we may acquire additional businesses in the future. In an acquisition, we first review if substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If such concentration exists, the transaction is considered an asset acquisition rather than a business combination.
The results of businesses acquired in a business combination are included in our audited consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration paid and may consist of cash, equity, or a combination of the two, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and assumed liabilities requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, and discount rates.
We use all available information to estimate fair values. We typically engage outside appraisal firms to assist in determining the fair value of tangible and identifiable intangible assets such as client relationships, trademarks, and any other significant assets or liabilities. During the measurement period, of up to one year after the acquisition date, we may adjust the values attributed to the assets acquired and assumed liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date.
Our purchase price allocation methodology contains uncertainties because it requires assumptions and management’s judgment to estimate the fair value of assets acquired and assumed liabilities at the acquisition date. Key judgments used to estimate the fair value of intangible assets include projected revenue growth and operating margins, discount rates, client attrition rates, as well as the estimated economic life of intangible assets. Management estimates the fair value of assets and liabilities based upon quoted market prices, the carrying value of the acquired assets, and widely accepted valuation techniques, including discounted cash flows. Our estimates are inherently uncertain and subject to refinement. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies.
Goodwill
Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is tested annually for impairment as of October 1st and at any time upon the occurrence of certain triggering events or changes in circumstances. The Company performs its goodwill impairment test at the reporting unit level. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Performing a qualitative impairment assessment requires an examination of relevant events and circumstances that could have a negative impact on the carrying value of our Company, such as macroeconomic conditions, industry and market conditions, earnings and cash flows, overall financial performance, and other relevant entity-specific events. If the Company concludes an impairment is more likely than not through its qualitative assessment, then it is required to perform a quantitative assessment for impairment. The quantitative estimates of the fair value of the Company’s reporting units are primarily determined using an income approach based on discounted cash flows. The discounted cash flow methodology requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, current and anticipated economic conditions and trends, the estimation of the long-term growth rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in the estimates and assumptions incorporated in our impairment assessment could materially affect the determination of fair value and the associated impairment charge.
On October 1, 2023 and December 31, 2023, we performed our annual impairment test in accordance with ASC 350-30-35, Intangibles-Goodwill and Other. As a result, the Company recognized a non-cash impairment charge of $268.8 million in the fourth quarter of 2023 to reduce goodwill in its Thryv U.S. Marketing Services reporting unit. Additionally, the Company recognized a non-cash impairment charge of $102.0 million during the year ended December 31, 2022 to reduce goodwill in its Thryv U.S. Marketing Services reporting unit. No goodwill impairment charges were recorded in the Company’s consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2021.
As of December 31, 2023, goodwill was $302.4 million. For additional information related to goodwill, see Note 5, Goodwill and Intangible Assets to our consolidated financial statements included in Part II, Item 8 in this Annual Report.
Pension Obligations
The Company maintains pension obligations associated with non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs.
Although the plans are frozen, the Company continues to incur interest cost as well as gains or losses associated with changes in fair value of plan assets, all of which are referred to as net periodic pension cost. In determining the pension obligations at each reporting period, management makes certain actuarial assumptions, including discount rates and mortality rates. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected pension obligations, funding requirement, and net periodic pension cost. The Company immediately recognizes actuarial gains and losses in its operating results in the year in which the gains and losses occur.
Income Taxes
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 weight of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character, for example, ordinary income or capital gain within the carryback or carryforward periods available under the applicable tax law. 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. 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.
The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. The amount of income taxes we pay is subject to ongoing audits by federal and state tax authorities, which often result in proposed assessments. Significant judgment is required in determining income tax provisions and evaluating tax positions. We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate. Tax benefits recognized in the financial statements from uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
Recent Accounting Pronouncements
See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements as of and for the years ended December 31, 2023, 2022, and 2021, included in Part II, Item 8 in this Annual Report, for a discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
As of December 31, 2023, we had total recorded debt outstanding of $348.9 million (net of $9.3 million of unamortized original issue discount and debt issuance costs), which was comprised of amounts outstanding under our Term Loan of $309.4 million and ABL Facility of $48.8 million. Substantially all this debt bears interest at floating rates. Changes in interest rates affect the interest expense we pay on our floating rate debt. A hypothetical 100 basis point increase in interest rates would increase our interest expense by approximately $3.6 million annually based on the debt outstanding at December 31, 2023.
Foreign Exchange Currency Risk
We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Australian dollar and New Zealand dollar. Since we translate foreign currencies into U.S. dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results.
We have experienced and will continue to experience fluctuations in our Net (loss) income as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. We recognized immaterial amounts of foreign currency gains and losses in each of the periods presented. We have not hedged our foreign currency transactions to date. We are evaluating the costs and benefits of initiating a hedging program and may in the future hedge selected significant transactions denominated in currencies other than the U.S. dollar as we expand our international operations and our risk grows.
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Thryv Holdings, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Thryv Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2024 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill Impairment Assessment of Thryv U.S. and International Marketing Services Reporting Units
As described in Note 5 to the financial statements, the Company performs its annual impairment test for all its reporting units on October 1 or more frequently if events or changes in circumstances indicate that the goodwill may be impaired. The results of the annual quantitative impairment test indicated that the Thryv U.S. Marketing Services reporting unit had a carrying value that exceeded its fair value, which resulted in the Company recording $192.0 million of goodwill impairment as of the October 1 annual impairment testing date. In December 2023, the Company concluded a triggering event had occurred in the Thryv U.S. Marketing Services reporting unit and completed a quantitative impairment test as of December 31, 2023, which resulted in an additional impairment of $76.8 million. No goodwill impairment was recorded in the Thryv International Marketing Services reporting unit for the year ended December 31, 2023. We identified the assessment of fair value of the Thryv U.S. and International Marketing Services reporting units as a critical audit matter.
The principal consideration for our determination that the assessment of fair value of the Thryv U.S. and International Marketing Services reporting units is a critical audit matter is that the significant assumptions made by management involve subjectivity and judgment in the preparation of discounted future cash flows. The reporting units discounted future cash flows include certain management assumptions that are complex and have a higher degree of estimation uncertainty. Changes in these assumptions could have a significant impact on the fair value estimate. In particular, these assumptions include forward-looking projections related to revenue and operating expenses and the application of a discount rate. Performing audit procedures to evaluate these assumptions required a high degree of auditor judgment and audit effort, including the need to involve valuation specialists.
Our audit procedures related to the assessment of fair value of the Thryv U.S. and International Marketing Services reporting units included the following, among others.
•We tested the design and operating effectiveness of relevant controls relating to management’s preparation and review of the discounted future cash flows and the discount rate applied, and review of the methodologies applied by third-party valuation specialists engaged by the Company.
•We evaluated the reasonableness of forecasted revenues and operating expenses used in the future discounted cash flows by comparing them to historical results, and comparing prior periods forecasted amounts to respective actual results.
•With the assistance of a valuation specialist, we evaluated the reasonableness of the discount rate and the appropriateness of the methodologies used by the Company.
•We evaluated the qualifications of the third-party valuation specialists engaged by the Company based on their credentials and experience.
Pension Obligations
As described in Note 11 to the financial statements, the Company’s aggregate net pension obligations at December 31, 2023 was $69.9 million and is calculated as $408.9 million of defined benefit pension obligation for its defined benefit pension plans less the related pension assets of $339.0 million. The Company recorded a net periodic pension benefit of $2.7 million for the year-ended December 31, 2023. The Company remeasures the defined benefit pension obligations annually or upon a remeasurement date, with actuarial gains and losses immediately recorded in operating results during the period they occur. We identified the defined benefit pension obligation estimates for the Dex Pension Plan and YP Holdings LLC Pension Plan, as a critical audit matter.
The principal consideration for our determination that the defined benefit pension obligation estimates for the Dex Pension Plan and YP Holdings LLC Pension Plan is a critical audit matter is that the significant assumptions utilized in such estimates are subjective in nature and complex, specifically the discount rates and mortality rates used in the actuarial calculations. Changes in these assumptions could have a significant impact on the defined benefit pension obligation estimates and related actuarial gains and losses recognized. Performing audit procedures to evaluate management’s assumptions required a high degree of auditor judgment and audit effort, including the need to involve actuary specialists.
Our audit procedures related to the defined benefit pension obligation estimates for the Dex Pension and YP Holdings LLC Pension Plan included the following, among others.
•We tested the design and operating effectiveness of relevant controls relating to management’s determination and review of the discount rate and mortality rates applied in estimating the defined benefit pension obligations, and review of these specific assumptions applied by the actuary specialist engaged by the Company.
•With the assistance of an actuary specialist, we evaluated the reasonableness of the Company’s significant assumptions related to the discount rates and mortality rates used in determining the projected benefit obligations.
•We evaluated the qualifications of the actuary specialists engaged by the Company based on their credentials and experience.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2022.
Dallas, Texas
February 22, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Thryv Holdings, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of operations and comprehensive (loss) income, changes in stockholders' equity and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2021 in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
Dallas, Texas
March 15, 2022
except for Note 17, Segment Information, as to which the date is
February 23, 2023
Thryv Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive (Loss) Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands, except share and per share data) |
2023 |
|
2022 |
|
2021 |
| Revenue |
$ |
916,961 |
|
|
$ |
1,202,388 |
|
|
$ |
1,113,382 |
|
| Cost of services |
338,714 |
|
|
422,006 |
|
|
408,043 |
|
| Gross profit |
578,247 |
|
|
780,382 |
|
|
705,339 |
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
| Sales and marketing |
300,538 |
|
|
362,432 |
|
|
357,813 |
|
| General and administrative |
208,880 |
|
|
216,406 |
|
|
153,902 |
|
| Impairment charges |
268,846 |
|
|
102,222 |
|
|
3,611 |
|
| Total operating expenses |
778,264 |
|
|
681,060 |
|
|
515,326 |
|
|
|
|
|
|
|
| Operating (loss) income |
(200,017) |
|
|
99,322 |
|
|
190,013 |
|
| Other income (expense): |
|
|
|
|
|
| Interest expense |
(61,728) |
|
|
(56,902) |
|
|
(48,867) |
|
| Interest expense, related party |
— |
|
|
(3,505) |
|
|
(17,507) |
|
| Other components of net periodic pension benefit |
2,719 |
|
|
44,612 |
|
|
14,829 |
|
| Other (expense) income |
(1,518) |
|
|
15,448 |
|
|
(4,154) |
|
| (Loss) income before income tax benefit (expense) |
(260,544) |
|
|
98,975 |
|
|
134,314 |
|
| Income tax benefit (expense) |
1,249 |
|
|
(44,627) |
|
|
(32,737) |
|
| Net (loss) income |
$ |
(259,295) |
|
|
$ |
54,348 |
|
|
$ |
101,577 |
|
| Other comprehensive (loss) income: |
|
|
|
|
|
| Foreign currency translation adjustment, net of tax |
1,070 |
|
|
(8,214) |
|
|
(8,047) |
|
| Comprehensive (loss) income |
$ |
(258,225) |
|
|
$ |
46,134 |
|
|
$ |
93,530 |
|
|
|
|
|
|
|
| Net (loss) income per common share: |
|
|
|
|
|
| Basic |
$ |
(7.47) |
|
|
$ |
1.58 |
|
|
$ |
3.02 |
|
| Diluted |
$ |
(7.47) |
|
|
$ |
1.49 |
|
|
$ |
2.78 |
|
|
|
|
|
|
|
| Weighted-average shares used in computing basic and diluted net (loss) income per common share: |
|
|
|
|
|
| Basic |
34,723,491 |
|
|
34,336,493 |
|
|
33,607,446 |
|
| Diluted |
34,723,491 |
|
|
36,506,095 |
|
|
36,495,746 |
|
The accompanying notes are an integral part of the consolidated financial statements.
Thryv Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands, except share data) |
December 31, 2023 |
|
December 31, 2022 |
| Assets |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
$ |
18,216 |
|
|
$ |
16,031 |
|
Accounts receivable, net of allowance of $14,926 in 2023 and $14,766 in 2022 |
205,503 |
|
|
284,698 |
|
Contract assets, net of allowance of $35 in 2023 and $33 in 2022 |
2,909 |
|
|
2,583 |
|
| Taxes receivable |
3,085 |
|
|
11,553 |
|
| Prepaid expenses |
17,771 |
|
|
25,092 |
|
| Indemnification asset |
— |
|
|
26,495 |
|
| Deferred costs |
16,722 |
|
|
9,544 |
|
| Other current assets |
2,662 |
|
|
2,320 |
|
| Total current assets |
266,868 |
|
|
378,316 |
|
| Fixed assets and capitalized software, net |
38,599 |
|
|
42,334 |
|
| Goodwill |
302,400 |
|
|
566,004 |
|
| Intangible assets, net |
18,788 |
|
|
34,715 |
|
| Deferred tax assets |
128,051 |
|
|
113,859 |
|
|
|
|
|
| Other assets |
28,464 |
|
|
42,649 |
|
| Total assets |
$ |
783,170 |
|
|
$ |
1,177,877 |
|
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
| Current liabilities |
|
|
|
| Accounts payable |
$ |
10,348 |
|
|
$ |
18,972 |
|
| Accrued liabilities |
105,903 |
|
|
126,810 |
|
| Current portion of unrecognized tax benefits |
23,979 |
|
|
31,919 |
|
| Contract liabilities |
44,558 |
|
|
41,854 |
|
| Current portion of long-term debt |
70,000 |
|
|
70,000 |
|
| Other current liabilities |
8,402 |
|
|
10,937 |
|
| Total current liabilities |
263,190 |
|
|
300,492 |
|
| Term Loan, net |
230,052 |
|
|
345,256 |
|
| ABL Facility |
48,845 |
|
|
54,554 |
|
| Pension obligations, net |
69,388 |
|
|
72,590 |
|
| Other liabilities |
18,995 |
|
|
22,718 |
|
| Total long-term liabilities |
367,280 |
|
|
495,118 |
|
| Commitments and contingencies (see Note 15) |
|
|
|
| Stockholders' equity |
|
|
|
Common stock - $0.01 par value, 250,000,000 shares authorized; 62,660,783, shares issued and 35,302,746 shares outstanding at December 31, 2023; and 61,279,379 shares issued and 34,593,837 shares outstanding at December 31, 2022 |
627 |
|
|
613 |
|
| Additional paid-in capital |
1,151,259 |
|
|
1,105,701 |
|
Treasury stock - 27,358,037 shares at December 31, 2023 and 26,685,542 shares at December 31, 2022 |
(485,793) |
|
|
(468,879) |
|
| Accumulated other comprehensive loss |
(15,191) |
|
|
(16,261) |
|
| Accumulated deficit |
(498,202) |
|
|
(238,907) |
|
| Total stockholders' equity |
152,700 |
|
|
382,267 |
|
| Total liabilities and stockholders' equity |
$ |
783,170 |
|
|
$ |
1,177,877 |
|
The accompanying notes are an integral part of the consolidated financial statements.
Thryv Holdings, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Treasury Stock |
|
|
|
|
|
|
(in thousands, except share amounts) |
|
Shares |
|
Amount |
|
Additional Paid-in Capital |
|
Shares |
|
Amount |
|
Accumulated Other Comprehensive Loss |
|
Accumulated
Deficit |
|
Total Stockholders'
Equity |
| Balance as of December 31, 2020 |
|
59,590,422 |
|
|
$ |
596 |
|
|
$ |
1,059,624 |
|
|
(26,678,410) |
|
|
$ |
(468,613) |
|
|
$ |
— |
|
|
$ |
(394,832) |
|
|
$ |
196,775 |
|
| Issuance of shares related to stock-based compensation |
|
669,836 |
|
|
6 |
|
|
2,678 |
|
|
(7,132) |
|
|
(266) |
|
|
— |
|
|
— |
|
|
2,418 |
|
| Exercise of stock warrants |
|
570,595 |
|
|
6 |
|
|
13,892 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,898 |
|
| Stock compensation expense |
|
— |
|
|
— |
|
|
8,094 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8,094 |
|
| Foreign currency translation adjustment, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,047) |
|
|
— |
|
|
(8,047) |
|
| Net income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
101,577 |
|
|
101,577 |
|
Balance as of December 31, 2021 |
|
60,830,853 |
|
|
$ |
608 |
|
|
$ |
1,084,288 |
|
|
(26,685,542) |
|
|
$ |
(468,879) |
|
|
$ |
(8,047) |
|
|
$ |
(293,255) |
|
|
$ |
314,715 |
|
| Issuance of shares related to stock-based compensation |
|
445,904 |
|
|
5 |
|
|
6,721 |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
— |
|
|
6,726 |
|
| Exercise of stock warrants |
|
2,622 |
|
|
— |
|
|
64 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
64 |
|
| Stock compensation expense |
|
— |
|
|
— |
|
|
14,628 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14,628 |
|
| Foreign currency translation adjustment, net of tax |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
(8,214) |
|
|
|
|
(8,214) |
|
| Net income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
54,348 |
|
|
54,348 |
|
Balance as of December 31, 2022 |
|
61,279,379 |
|
|
$ |
613 |
|
|
$ |
1,105,701 |
|
|
(26,685,542) |
|
|
$ |
(468,879) |
|
|
$ |
(16,261) |
|
|
$ |
(238,907) |
|
|
$ |
382,267 |
|
| Issuance of shares related to stock-based compensation |
|
729,549 |
|
|
8 |
|
|
7,465 |
|
|
(58,541) |
|
|
(1,154) |
|
|
— |
|
|
— |
|
|
6,319 |
|
| Exercise of stock warrants |
|
651,855 |
|
|
6 |
|
|
15,892 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15,898 |
|
| Stock compensation expense |
|
— |
|
|
— |
|
|
22,201 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
22,201 |
|
| Settlement of indemnification asset |
|
— |
|
|
— |
|
|
— |
|
|
(613,954) |
|
|
(15,760) |
|
|
— |
|
|
— |
|
|
(15,760) |
|
| Foreign currency translation adjustment, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,070 |
|
|
— |
|
|
1,070 |
|
| Net (loss) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(259,295) |
|
|
(259,295) |
|
Balance as of December 31, 2023 |
|
62,660,783 |
|
|
$ |
627 |
|
|
$ |
1,151,259 |
|
|
(27,358,037) |
|
|
$ |
(485,793) |
|
|
$ |
(15,191) |
|
|
$ |
(498,202) |
|
|
$ |
152,700 |
|
The accompanying notes are an integral part of the consolidated financial statements.
Thryv Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Cash Flows from Operating Activities |
|
|
|
|
|
| Net (loss) income |
$ |
(259,295) |
|
|
$ |
54,348 |
|
|
$ |
101,577 |
|
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
| Depreciation and amortization |
63,251 |
|
|
88,392 |
|
|
105,473 |
|
| Amortization of deferred commissions |
14,954 |
|
|
12,110 |
|
|
11,847 |
|
| Amortization of debt issuance costs |
5,422 |
|
|
5,749 |
|
|
4,919 |
|
| Deferred income taxes |
(12,904) |
|
|
(15,119) |
|
|
(20,438) |
|
| Provision for credit losses and service credits |
24,516 |
|
|
25,971 |
|
|
19,394 |
|
| Stock-based compensation expense |
22,201 |
|
|
14,628 |
|
|
8,094 |
|
| Other components of net periodic pension benefit |
(2,719) |
|
|
(44,612) |
|
|
(14,829) |
|
| Impairment charges |
268,846 |
|
|
102,222 |
|
|
3,611 |
|
| Non-cash loss (gain) from the remeasurement of the indemnification asset |
10,734 |
|
|
(2,148) |
|
|
(1) |
|
| Bargain purchase gain |
— |
|
|
(10,883) |
|
|
— |
|
| Other, net |
603 |
|
|
(2,309) |
|
|
(1,823) |
|
| Changes in working capital items, excluding acquisitions: |
|
|
|
|
|
| Accounts receivable |
54,325 |
|
|
(5,242) |
|
|
74,368 |
|
| Contract assets |
(326) |
|
|
2,764 |
|
|
5,628 |
|
| Prepaid expenses and other assets |
7,117 |
|
|
(9,592) |
|
|
(5,763) |
|
| Accounts payable and accrued liabilities |
(37,749) |
|
|
(41,105) |
|
|
(125,883) |
|
| Other liabilities |
(10,750) |
|
|
(26,601) |
|
|
4,397 |
|
| Net cash provided by operating activities |
148,226 |
|
|
148,573 |
|
|
170,571 |
|
|
|
|
|
|
|
| Cash Flows from Investing Activities |
|
|
|
|
|
| Additions to fixed assets and capitalized software |
(33,394) |
|
|
(29,233) |
|
|
(26,849) |
|
| Proceeds from the sale of assets |
— |
|
|
— |
|
|
6,836 |
|
| Acquisition of a business, net of cash acquired |
(8,897) |
|
|
(22,793) |
|
|
(175,370) |
|
| Other |
(225) |
|
|
— |
|
|
(1,192) |
|
| Net cash used in investing activities |
(42,516) |
|
|
(52,026) |
|
|
(196,575) |
|
|
|
|
|
|
|
| Cash Flows from Financing Activities |
|
|
|
|
|
| Proceeds from Term Loan |
— |
|
|
— |
|
|
418,070 |
|
| Proceeds from Term Loan, related party |
— |
|
|
— |
|
|
260,930 |
|
| Payments of Term Loan |
(120,000) |
|
|
(104,165) |
|
|
(110,215) |
|
| Payments of Term Loan, related party |
— |
|
|
(8,347) |
|
|
(47,785) |
|
| Payments of Senior Term Loan |
— |
|
|
— |
|
|
(335,821) |
|
| Payments of Senior Term Loan, related party |
— |
|
|
— |
|
|
(113,789) |
|
| Proceeds from ABL Facility |
919,975 |
|
|
976,296 |
|
|
1,046,249 |
|
| Payments of ABL Facility |
(925,684) |
|
|
(961,670) |
|
|
(1,085,558) |
|
| Proceeds from exercises of stock warrants |
15,898 |
|
|
64 |
|
|
13,920 |
|
| Other |
6,318 |
|
|
6,725 |
|
|
(6,913) |
|
| Net cash (used in) provided by financing activities |
(103,493) |
|
|
(91,097) |
|
|
39,088 |
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash, cash equivalents and restricted cash |
133 |
|
|
(827) |
|
|
(1,933) |
|
| Increase in cash, cash equivalents and restricted cash |
2,350 |
|
|
4,623 |
|
|
11,151 |
|
| Cash, cash equivalents and restricted cash, beginning of period |
18,180 |
|
|
13,557 |
|
|
2,406 |
|
| Cash, cash equivalents and restricted cash, end of period |
$ |
20,530 |
|
|
$ |
18,180 |
|
|
$ |
13,557 |
|
|
|
|
|
|
|
| Supplemental Information |
|
|
|
|
|
| Cash paid for interest |
$ |
57,027 |
|
|
$ |
57,084 |
|
|
$ |
66,737 |
|
| Cash paid for income taxes, net |
$ |
9,313 |
|
|
$ |
58,259 |
|
|
$ |
63,893 |
|
|
|
|
|
|
|
| Non-cash investing and financing activities |
|
|
|
|
|
| Repurchase of Treasury stock as a result of the settlement of the indemnification asset |
$ |
15,760 |
|
|
$ |
— |
|
|
$ |
— |
|
The accompanying notes are an integral part of the consolidated financial statements.
Thryv Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Description of Business and Summary of Significant Accounting Policies
General
Thryv Holdings, Inc. (“Thryv” or the “Company”) provides small-to-medium sized businesses (“SMBs”) with print and digital marketing services and Software as a Service (“SaaS”) business management tools. The Company owns and operates Print Yellow Pages (“PYP” or “Print”) and digital marketing services (“Digital”), which includes Internet Yellow Pages (“IYP”), search engine marketing (“SEM”), and other digital media services, including online display advertising, and search engine optimization (“SEO”) tools. In addition, through the Thryv® platform, the Company is a provider of SaaS business management, communication, and marketing tools designed for SMBs.
On April 3, 2023 (the “Yellow Acquisition Date”), Thryv New Zealand Limited, the Company’s wholly-owned subsidiary, acquired Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company. On January 21, 2022, Thryv, Inc., the Company’s wholly-owned subsidiary, acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company with operations in the United States. Further, on March 1, 2021, the Company completed the acquisition of Sensis Holding Limited (“Thryv Australia”), a provider of marketing solutions serving SMBs in Australia.
The Company reports its results based on four reportable segments:
•Thryv U.S. Marketing Services, which includes the Company's Print and Digital solutions business in the United States;
•Thryv U.S. SaaS, which includes the Company's SaaS flagship all-in-one small business management modular software platform in the United States;
•Thryv International Marketing Services, which is comprised of Thryv's Print and Digital solutions business outside of the United States; and
•Thryv International SaaS, which primarily includes the Company's SaaS flagship all-in-one small business management modular software platform outside of the United States.
Basis of Presentation
The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated financial statements include the financial statements of Thryv Holdings, Inc. and its wholly-owned subsidiaries.
The accompanying consolidated financial statements reflect all adjustments, consisting of only normal recurring items and accruals, necessary to fairly present the financial position, results of operations and cash flows of the Company for the periods presented. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions about future events that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable. The results of those estimates form the basis for making judgments about the carrying values of certain assets and liabilities.
Examples of reported amounts that rely on significant estimates include revenue recognition, allowance for credit losses, assets acquired and liabilities assumed in business combinations, capitalized costs to obtain a contract, certain amounts relating to the accounting for income taxes, including valuation allowance, indemnification asset, stock-based compensation expense, operating lease right-of-use assets and operating lease liabilities, accrued service credits, and pension obligations. Significant estimates are also used in determining the recoverability and fair value of fixed assets and capitalized software, operating lease right-of-use assets, goodwill and intangible assets.
Summary of Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue based on the revenue recognition standard, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The Company determines the amount of revenue to be recognized through application of the following five steps: (i) identify a customer contract, (ii) identify performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) recognize revenue, each of which is described further below.
Identify the Customer Contract
The Company accounts for a contract with a client when approval and commitment from all parties is obtained, the rights of the parties and payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenue is recognized when control of the promised services or goods is transferred to the client and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods. Typical payment terms provide that the Company’s clients pay within 20 days of the invoice.
Identify the Performance Obligations in the Contract and Recognize Revenue
The Company has determined that each of its services is distinct and represents a separate performance obligation. The client can benefit from each service on its own or together with other resources that are readily available to the client. Services are separately identifiable from other promises in the contract. Control over the Company’s print services transfers to the client upon delivery of the published directories containing their advertisements to the intended market. Therefore, revenue associated with print services is recognized at a point in time upon delivery to the intended market. The Company bills customers for print advertising services monthly over the relative contract term. The difference between the timing of recognition of print advertising revenue and monthly billing generates the Company’s unbilled receivables balance. The unbilled receivables balance is reclassified as billed accounts receivable through the passage of time as the customers are invoiced each month. SaaS and digital services are recognized using the series guidance. Under the series guidance, the Company’s obligation to provide services is the same for each day under the contract, and therefore represents a single performance obligation. Revenue associated with SaaS and digital services is recognized over time using an output method to measure the progress toward satisfying a performance obligation.
As part of the SaaS offerings, the Company enters into certain development and reseller agreements with third parties. Based upon the control indicators outlined in ASC 606, the Company acts as a principal in these arrangements and recognizes revenue on a gross basis because it controls the services before they are transferred to clients.
Determine and Allocate the Transaction Price to the Performance Obligations in the Contract
The transaction price of a contract consists of fixed and variable consideration components pursuant to the applicable contractual terms and excludes sales tax. The Company’s contracts have variable consideration in the form of price concessions and service credits. Service credits may be issued to a client at the discretion of the Company related to client satisfaction issues and claims. The Company performs a monthly review of expected service credits at a portfolio level based on the Company’s history of adjustments and expected trends. The provision for service credits is recorded as a reduction to revenue in the Company’s consolidated statements of operations and comprehensive (loss) income.
For performance obligations recognized under the series guidance, variable consideration is allocated. When necessary, variable consideration is estimated and included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. These judgments involve consideration of historical and expected experience with the client and other similar clients.
The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised service separately to a client. Judgment is required to determine the standalone selling price for each distinct performance obligation. Often times, the Company does not have sufficient standalone sales information, as contracts with customers generally include multiple performance obligations. When standalone sales information is not available, the Company estimates standalone selling price using information that may include average selling price, market conditions, entity specific factors such as pricing and discounting strategies, and other inputs.
Costs to Obtain and Fulfill a Contract with a Customer
Costs to Obtain a Contract with a Customer
The Company has determined that sales commissions paid to employees and certified marketing representatives associated with selling the Company’s print, digital and SaaS services are considered incremental and recoverable costs of obtaining a contract.
Commissions related to renewal contracts are not commensurate with costs incurred to obtain an initial contract. Therefore, commissions incurred to obtain a new contract are capitalized and recognized over the benefit period, which is determined to be eighteen months based on expected contract renewals, the Company’s technology development life-cycle, and other factors. Commissions for renewals of existing contracts are expensed as incurred under a practical expedient, which allows an entity to expense costs to obtain a contract with an amortization period of less than twelve months.
Deferred costs to obtain contracts are classified as current or non-current based on the timing of when the Company expects to recognize the expense. The current portion is included in Other current assets and the non-current portion is included in Other assets on the Company’s consolidated balance sheets. Amortization of deferred costs to obtain contracts is included as a component of Sales and marketing expense in the Company's consolidated statements of operations and comprehensive (loss) income.
The following table sets for the Company's deferred costs to obtain contracts, as of December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Deferred costs to obtain contracts - Current assets |
$ |
13,495 |
|
|
$ |
6,855 |
|
| Deferred costs to obtain contracts - Non-current assets |
1,285 |
|
|
741 |
|
Amortization of the Company's deferred costs to obtain contracts, for the years ended December 31, 2023, 2022, and 2021 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Amortization of deferred costs to obtain contracts |
$ |
14,954 |
|
|
$ |
12,110 |
|
|
$ |
11,847 |
|
Costs to Fulfill a Contract with a Customer
Direct costs associated with fulfilling PYP contracts with a client include costs related to printing and distribution. Directly attributable costs incurred to fulfill print services are capitalized as incurred and then expensed at the time of delivery, in line with the recognition of revenue. Costs to fulfill SaaS and digital contracts with clients are expensed as incurred.
The following table sets for the Company's deferred costs to fulfill contracts as of December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
Deferred costs to fulfill contracts (1) |
$ |
3,227 |
|
|
$ |
2,689 |
|
(1) Included in deferred costs on the Company's consolidated balance sheets.
Amortization of the Company's deferred costs to fulfill contracts for the years ended December 31, 2023, 2022, and 2021 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
Amortization of deferred costs to fulfill contracts (1) |
$ |
2,689 |
|
|
$ |
3,466 |
|
|
$ |
2,687 |
|
(1) These costs were recorded in Cost of services in the Company's consolidated statements of operations and comprehensive (loss) income.
The Company recorded no impairment losses associated with these deferred costs during the years ended December 31, 2023, 2022, and 2021.
Cash and Cash Equivalents
Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. The Company’s cash and cash equivalents consist of bank deposits. Cash equivalents are stated at cost, which approximates market value.
Restricted Cash
The following table presents a reconciliation of cash, cash equivalents and restricted cash reported within the Company's consolidated balance sheets to the amount shown in the Company's consolidated statements of cash flows for the years ended December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Cash and cash equivalents |
$ |
18,216 |
|
|
$ |
16,031 |
|
| Restricted cash, included in Other current assets |
2,314 |
|
|
2,149 |
|
| Total cash, cash equivalents and restricted cash |
$ |
20,530 |
|
|
$ |
18,180 |
|
Accounts Receivable, Net of Allowance
Accounts receivable represents billed amounts for which invoices have been provided to clients and unbilled amounts for which revenue has been recognized, but amounts have not yet been billed to the client.
Accounts receivable are recorded net of an allowance for credit losses. The Company’s exposure to expected credit losses depends on the financial condition of its clients and other macroeconomic factors. The Company maintains an allowance for credit losses based upon its estimate of potential credit losses. This allowance is based upon historical and current client collection trends, any identified client-specific collection issues, and current as well as expected future economic conditions and market trends. See Note 6, Allowance for Credit Losses, for additional information.
The following table represents the components of Accounts receivable, net of allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
December 31, |
| (in thousands) |
|
|
2023 |
|
2022 |
| Accounts receivable |
|
|
$ |
73,094 |
|
|
$ |
80,369 |
|
Unbilled accounts receivable (1) |
|
|
147,335 |
|
|
219,095 |
|
| Total accounts receivable |
|
|
$ |
220,429 |
|
|
$ |
299,464 |
|
| Less: allowance for credit losses |
|
|
(14,926) |
|
|
(14,766) |
|
| Accounts receivable, net of allowance |
|
|
$ |
205,503 |
|
|
$ |
284,698 |
|
(1) Unbilled accounts receivable relates primarily to the Company’s print services, which are recognized at a point in time upon delivery of the print services to the intended market(s), but are billed to customers monthly after the delivery of the print services. Unbilled accounts receivable are reclassified as billed accounts receivable monthly when the customers are invoiced.
The following table represents the components of unbilled accounts receivable from contracts with customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
December 31, |
| (in thousands) |
|
|
2023 |
|
2022 |
| Unbilled accounts receivable - current |
|
|
$ |
147,335 |
|
|
$ |
219,095 |
|
Unbilled accounts receivable - non-current (1) |
|
|
16,165 |
|
|
23,653 |
|
| Total unbilled accounts receivable |
|
|
$ |
163,500 |
|
|
$ |
242,748 |
|
(1) Included in Other assets on the Company's consolidated balance sheets. Revenue recognized related to Unbilled accounts receivable - non-current balances for the years ended December 31, 2023 and 2022 was $70.7 million and $135.5 million, respectively.
Concentrations of Credit Risk
Financial instruments subject to concentrations of credit risk consist primarily of trade receivables. The Company deposits cash on hand with major financial institutions. Cash balances at major financial institutions may exceed limits insured by the Federal Deposit Insurance Corporation.
Approximately 91% of revenue in all periods presented was derived from sales to local SMBs that operate in limited geographical areas. These SMBs are usually billed in monthly installments when the services begin and, in turn, make monthly payments, requiring the Company to extend credit to these clients.
The remaining approximately 9% of revenue in all periods presented was derived from the sale of marketing services to larger businesses that advertise regionally or nationally. Contracted certified marketing representatives (“CMRs”) purchase advertising on behalf of these businesses. Payment for advertising is due when the advertising is published and is received directly from the CMRs, net of the CMRs’ commission. The CMRs are responsible for billing and collecting from these businesses. While the Company still has exposure to credit risks, historically, the losses from these clients have been less than that of local SMBs.
The Company conducts its operations primarily in the United States, Australia and New Zealand. In 2023, the Company's top ten directories, as measured by revenue, accounted for approximately 2% of total revenue. No single directory or client accounted for more than 1% of the Company’s revenue for the years ended December 31, 2023, 2022 and 2021. Additionally, no single client or CMR accounted for more than 5% of the Company’s outstanding accounts receivable as of December 31, 2023 and 2022.
Fixed Assets and Capitalized Software
Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The cost of additions and improvements associated with fixed assets are capitalized if they have a useful life in excess of one year. Expenditures for repairs and maintenance, including the cost of replacing minor items that are not considered substantial improvements, are expensed as incurred. When fixed assets are sold or retired, the related cost and accumulated depreciation are deducted from the accounts and any gains or losses on disposition are recognized in the Company’s consolidated statements of operations and comprehensive (loss) income. Fixed assets are reviewed for impairment whenever events or changes in circumstances may indicate that the carrying amount of a fixed asset may not be recoverable.
Depreciation of fixed assets and amortization associated with capitalized software, are included in Cost of services, Sales and marketing, and General and administrative expenses on the Company's consolidated statements of operations and comprehensive (loss) income.
Costs associated with internal use software are capitalized during the application development stage, if they have a useful life in excess of one year. Subsequent additions, modifications, or upgrades to internal use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Capitalized software is reviewed for impairment whenever events or changes in circumstances may indicate that the carrying amount of a capitalized software may not be recoverable.
The remaining useful lives of fixed assets and capitalized software are reviewed annually for reasonableness. Fixed assets and capitalized software are depreciated on a straight-line basis over the estimated useful lives of the assets, which are presented in the following table:
|
|
|
|
|
|
| |
Estimated
Useful Lives |
| Buildings and building improvements |
8 - 30 years |
Leasehold improvements(1) |
1 - 8 years |
| Computer and data processing equipment |
3 years |
| Furniture and fixtures |
7 years |
| Capitalized software |
1.5 - 5 years |
| Other |
3 - 7 years |
(1) Leasehold improvements are depreciated at the shorter of their estimated useful lives or the lease term. See Note 7, Fixed Assets and Capitalized Software.
Leases
The Company determines if an arrangement contains a lease at inception. The Company combines lease and non-lease components for all asset classes, except real estate leases. For real estate leases, consideration is allocated to lease and non-lease components based on a relative standalone price. Leases are included in Other assets, Other current liabilities, and Other liabilities on the Company's consolidated balance sheets and in General and administrative expense in the Company's consolidated statements of operations and comprehensive (loss) income. The Company recognizes lease expense on a straight-line basis over the lease term. Leases with a duration of 12 months or less are not recorded on the balance sheet and the related expense is recorded as incurred.
Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. If applicable, the right-of-use asset may include any initial direct costs incurred, lease payments made prior to the commencement, and is recorded net of any lease incentives received. For these calculations, the Company considers only payments that are fixed or determinable at the time of commencement or any variable payments that depend on an index or a rate.
The Company determines an incremental borrowing rate (“IBR”) based on the information available at commencement date to calculate the present value of lease payments. The IBR represents the rate of interest estimated that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment.
Lease terms may include options to extend or terminate a lease. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably certain to be exercised.
Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired net of liabilities assumed, recorded in accordance with ASC 805, Business Combinations, (“ASC 805”). Goodwill is not amortized, but rather subject to an annual impairment test at the reporting unit level. Management performs its annual goodwill impairment test on October 1 or more frequently if events or changes in circumstances indicate that the goodwill may be impaired.
The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Performing a qualitative impairment assessment requires an examination of relevant events and circumstances that could have a negative impact on the carrying value of the Company, such as macroeconomic conditions, industry and market conditions, earnings and cash flows, overall financial performance and other relevant entity-specific events.
If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if the Company concludes otherwise, then it is required to perform a quantitative assessment for impairment. If the quantitative assessment indicates that the reporting unit’s carrying amount exceeds its fair value, the Company will recognize an impairment charge up to this amount, but not to exceed the total carrying value of the reporting unit’s goodwill. The Company uses income and market-based valuation approaches to determine the fair value of its reporting units.
The Company performed its annual impairment test on goodwill as of October 1, 2023. The annual impairment test resulted in a non-cash impairment charge of $192.0 million, as of the October 1 annual impairment date, to reduce goodwill in its Thryv U.S. Marketing Services reporting unit. In December 2023, the Company concluded a triggering event had occurred in the Thryv U.S. Marketing Services reporting unit and completed an additional impairment test as of December 31, 2023. As a result, the Company recorded an additional non-cash impairment charge of $76.8 million as of December 31, 2023, further reducing goodwill in its Thryv U.S. Marketing Services reporting unit.
See Note 5, Goodwill and Intangible Assets.
Intangible Assets
The Company has definite-lived intangible assets consisting of client relationships, trademarks and domain names, and covenants not to compete. These intangible assets are amortized using the income forecast method over their useful lives, with the exception of covenants not to compete which are amortized on a straight-line basis over the terms of the agreements. These assets are allocated to their respective reporting units for impairment review purposes. Whenever events or changes in circumstances indicate the carrying amount of the reporting unit’s intangible assets may not be recoverable, an impairment analysis of the reporting unit is completed. An impairment loss, if applicable, is measured as the amount by which the carrying amount of the reporting unit’s definite-lived intangible asset exceeds its fair value. The Company uses the estimated future cash flows directly associated with, and that are expected to arise as a result of, the use and eventual disposal of such reporting unit assets in determining fair values of definite-lived intangible assets.
Amortization associated with intangible assets is included in Cost of services, Sales and marketing, and General and administrative expenses on the Company's consolidated statements of operations and comprehensive (loss) income.
The Company’s intangible assets and their estimated useful lives are presented in the table below:
|
|
|
|
|
|
| |
Estimated
Useful Lives |
| Client relationships |
3.5 - 4 years |
| Trademarks and domain names |
2.5 - 6 years |
| Covenants not to compete |
3 years |
See Note 5, Goodwill and Intangible Assets, for additional information.
Pension Obligation
The Company maintains net pension obligations associated with non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs.
Although the plans are frozen, the Company continues to incur interest cost on the projected benefit obligations, offset by an expected return on the fair value of plan assets, which is referred to as net periodic pension cost. In addition, the Company immediately recognizes gains/(losses) associated with changes in fair value of plan assets, and projected benefit obligations that occurred during the year as a component of the total net periodic pension cost. In determining the projected benefit obligations at each reporting period, management makes certain economic and demographic actuarial assumptions, including but not limited to discount rates, lump sum interest rates, retirement rates, termination rates, mortality rates, and payment form/timing. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected benefit obligations, funding requirement, and net periodic pension cost.
The Company sponsors two frozen pension plans for its employees, the Dex Pension Plan and the YP Holdings LLC Pension Plan. The Company also maintains two non-qualified pension plans for certain executives, the Dex One Pension Benefit Equalization Plan and the SuperMedia Excess Pension Plan, which are also frozen plans. Pension assets related to the Company’s qualified pension plans, which are held in master trusts and recorded in Pension obligations, net on the Company’s consolidated balance sheets, are valued in accordance with ASC 820, Fair Value Measurement. See Note 11, Pensions, for additional information.
Income Taxes
The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes (‘‘ASC 740’’).
Deferred tax assets or liabilities are recorded to reflect the expected future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts are adjusted as appropriate to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse.
The likelihood that deferred tax assets can be recovered must be assessed. The Company establishes a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In this process, certain relevant criteria are evaluated, including prior carryback years, the existence of deferred tax liabilities that can be used to absorb deferred tax assets, tax planning strategies, and taxable income in future years.
A valuation allowance is established to offset any deferred income tax assets if, based on the available evidence, it is more likely than not that some or all of the deferred income tax assets will not be realized. The Company has netted deferred tax assets for net operating losses with related unrecognized tax benefits, if such settlement is required or expected in the event the uncertain tax position is disallowed.
The Company establishes reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate. Tax benefits recognized in the financial statements from uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in (expense) benefit for income taxes in the consolidated statements of operations and comprehensive (loss) income. See Note 14, Income Taxes, for additional information.
Foreign Currency
The functional currency of the Company’s foreign operating subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive (loss) income. Income and expense accounts are translated at the weighted-average exchange rates during the period.
Transaction gains or losses in currencies other than the functional currency and certain intercompany balances that will not be settled in the foreseeable future are included as a component of Other income (expense), net in the Company's consolidated statements of operations and comprehensive (loss) income.
Advertising Costs
Advertising costs, which include media, promotional, branding and online advertising, are included in Sales and marketing expense in the Company’s consolidated statements of operations and comprehensive (loss) income and are expensed as incurred. Advertising costs for the Company for the years ended December 31, 2023, 2022 and 2021 were $14.8 million, $29.3 million and $40.8 million, respectively.
Stock-Based Compensation
Under the Company's 2016 Stock Incentive Plan, as amended (“2016 Plan”), and the Company's 2020 Incentive Award Plan (“2020 Plan”), (together, the “Stock Incentive Plans”), the Company has granted stock options, Restricted Stock Units (“RSUs”) and Performance-Based Restricted Stock Units (“PSUs”).
The Company accounts for all stock options, RSUs and PSUs granted using a fair value method and the compensation expense is based on the fair value of the awards. The fair value of the Company’s common stock is the closing price of the stock on the date of the grant. The measurement date for awards is generally the date of the grant. The fair value is recognized on a straight-line basis over the requisite service period (generally three to four years). The Company has elected to account for forfeitures as they occur as a cumulative adjustment to stock-based compensation expense. See Note 12, Stock-Based Compensation and Stockholders' Equity, for additional information.
Earnings per Share
Basic earnings per share is calculated by dividing Net (loss) income (the “numerator”) by the weighted-average number of common shares outstanding (the “denominator”) during the reporting period. Diluted earnings per share is calculated by including both the weighted-average number of common shares outstanding and any dilutive common stock equivalents within the denominator (diluted shares outstanding). The Company's common stock equivalents could consist of stock options, RSUs, PSUs, Employee Stock Purchase Plan shares (“ESPP”) and stock warrants, to the extent any are determined to be dilutive under the treasury stock method. Under the treasury stock method, the assumed proceeds relating to both the exercise price of stock options, RSUs, PSUs, ESPP shares and stock warrants, as well as the average remaining unrecognized fair value of stock options, are used to repurchase common shares at the average fair value price of the Company's common stock during the period. If the number of shares that could be repurchased, exceed the number of shares that could be issued upon exercise, the common stock equivalent is determined to be anti-dilutive. See Note 13, Earnings per Share, for additional information.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires additional disclosures, including more detailed information about segment expenses about a public entity’s reportable segments on an annual and interim basis. The new segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures necessary in the coming quarters, prior to implementation in the Company's 2024 Annual Report on Form 10-K. Other than additional disclosures, the Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires additional disclosures primarily related to the rate reconciliation and income taxes paid information. The new income tax disclosures are effective for fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures necessary in the coming years, prior to implementation in the Company's 2025 Annual Report on Form 10-K. Other than additional disclosures, the Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.
Note 2 Revenue Recognition
The Company has determined that each of its print and digital marketing services and SaaS business management tools services is distinct and represents a separate performance obligation. The client can benefit from each service on its own or together with other resources that are readily available to the client. Services are separately identifiable from other promises in the contract. Control over the Company’s print services transfers to the client upon delivery of the published directories containing their advertisements to the intended market(s). Therefore, revenue associated with print services is recognized at a point in time upon delivery to the intended market(s). The Company bills customers for print advertising services monthly over the relative contract term. The difference between the timing of recognition of print advertising revenue and monthly billing generates the Company’s unbilled receivables balance. The unbilled receivables balance is reclassified as billed accounts receivable through the passage of time as the customers are invoiced each month. SaaS and digital services are recognized using the series guidance. Under the series guidance, the Company's obligation to provide services is the same for each day under the contract, and therefore represents a single performance obligation. Revenue associated with SaaS and digital services is recognized over time using an output method to measure the progress toward satisfying a performance obligation.
The Company’s primary source of revenue is derived from the following services:
Print Yellow Pages
The Company prints yellow pages that are co-branded with various local telephone service providers. The Company operates as the authorized publisher of print yellow pages in some of the markets where these service providers offer telephone service. The Company holds multiple agreements governing the relationship with each service provider including publishing agreements, branding agreements, and non-competition agreements. Control over the Company’s print services transfers to the client upon delivery of the published directories containing their advertisements to the intended market. Therefore, revenue associated with print services is recognized at a point in time upon delivery to the intended market.
Internet Yellow Pages
IYP services include the creation of clients’ business profile, which is then primarily displayed and operated on the Yellowpages.com®, Superpages.com® and Dexknows.com® platforms domestically, and on Yellowpages.com.au, Whitepages.com.au, Whereis.com, Truelocal.com.au, Yellow.co.nz, Whitepages.co.nz, Finda.co.nz and Tourism.net.nz internationally. IYP services represent a separate performance obligation that is recognized as revenue over time following the series guidance.
Search Engine Marketing
SEM solutions deliver business leads through increased traffic to clients’ websites from Google, Yahoo!, Bing, Yelp and other major engines and directories by increasing visibility and search engine results pages through paid advertising. SEM services represent a separate performance obligation that is recognized as revenue over time following the series guidance.
Other Digital Media Solutions
Other digital media solutions primarily consist of smaller marketing services revenue streams such as online display and social advertising, online presence and video, and SEO tools. SEO optimizes a client’s website and Google profile page with relevant keywords to increase the potential for the client’s business to be found online and ranked higher in organic search engine results. Services within these revenue streams represent separate performance obligations and are recognized as revenue either at a point in time or over time based on the transfer of control.
Thryv Platform
The Company's primary SaaS offerings comprise Thryv®, an all-in-one SMB management platform, which includes Command Center, Business Center, Marketing Center, ThryvPaySM, and Thryv Add-Ons.
•Command Center. Thryv Command Center enables SMBs to centralize all their communication through a modular, easily expandable, and customizable platform.
•Business Center. Thryv Business Center, formerly known as Thryv, is our flagship SMB end-to-end customer experience platform. Business Center is designed to allow a SMB everything necessary to streamline day-to-day business, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management.
•Marketing Center. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user.
•ThryvPay. ThryvPay, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options.
•Thryv Add-Ons. Thryv Add-Ons include AI assisted website development, SEO tools, Google Business Profile optimization, and Hub by Thryv. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform, while also producing incremental revenue growth.
Revenue for performance obligations related to Thryv Platform represent separate performance obligations and are recognized as revenue either over time following the series guidance or a point in time.
Disaggregation of Revenue
The Company presents disaggregated revenue based on the type of service within its segment footnote.
Contract Assets and Liabilities
The timing of revenue recognition may differ from the timing of billing to the Company’s clients. These timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) as disclosed on the Company's consolidated balance sheets. Contract assets represent the Company's right to consideration when revenue recognized exceeds the receivable from the client because the consideration allocated to fulfilled performance obligations exceeds the Company’s right to payment, and the right to payment is subject to more than the passage of time. Contract liabilities represent remaining performance obligations that consist of advance payments and revenue deferrals resulting from the allocation of the consideration to performance obligations. The Company recognizes revenue on all of its remaining performance obligations within the next twelve months. For the year ended December 31, 2023, the Company recognized revenue of $41.9 million that was recorded in Contract liabilities as of December 31, 2022. For the year ended December 31, 2022, the Company recognized revenue of $51.3 million that was recorded in Contract liabilities as of December 31, 2021.
Note 3 Acquisitions
Yellow New Zealand Acquisition
On April 3, 2023, Thryv New Zealand Limited, the Company’s wholly-owned subsidiary, acquired Yellow, a New Zealand marketing services company for $8.9 million in cash (net of $1.7 million of cash acquired), subject to certain adjustments (the “Yellow Acquisition”). The Yellow Acquisition expanded the Company's market share with a broader geographical footprint and provided the Company with an increase in our clients. Yellow is a provider of marketing solutions serving SMBs in New Zealand. Control was obtained by means of acquiring all the voting interests. The assets acquired consisted primarily of $2.4 million in current assets and $5.6 million in fixed and intangible assets, consisting primarily of customer relationships, trade name, and technology assets, along with $5.1 million in goodwill. The Company also assumed liabilities of $4.7 million, consisting primarily of accrued, contract and deferred liabilities.
The Company accounted for the Yellow Acquisition using the acquisition method of accounting in accordance with ASC 805. This requires that the assets acquired and liabilities assumed are measured at fair value. With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets and intangible assets by applying the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method and assumptions related to Yellow's assets acquired and liabilities assumed. The fair values of existing technologies were computed using a relief of royalty approach, similar to the trade name valuation.
The following table summarizes the assets acquired and liabilities assumed at the Yellow Acquisition Date:
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| Current assets |
|
$ |
2,438 |
|
| Fixed and intangible assets |
|
5,565 |
|
|
|
|
| Other assets |
|
457 |
|
| Current liabilities |
|
(3,533) |
|
| Other liabilities |
|
(1,159) |
|
| Goodwill |
|
5,129 |
|
| Fair value allocated to net assets acquired |
|
$ |
8,897 |
|
The excess of the purchase price over the fair value of the identifiable net assets acquired and the liabilities assumed was allocated to goodwill. The recognized goodwill of $5.1 million was primarily related to the benefits expected from the acquisition and is allocated to the Thryv International Marketing Services segment. The goodwill recognized is not deductible for income tax purposes.
The Yellow Acquisition has contributed $12.3 million in revenue since the Yellow Acquisition Date.
Pro Forma Results (unaudited)
Pro forma information for the year ended December 31, 2023 was insignificant.
Vivial Acquisition
On January 21, 2022 (the “Vivial Acquisition Date”), Thryv, Inc., the Company’s wholly-owned subsidiary, acquired Vivial, a marketing and advertising company, for $22.8 million in cash (net of $8.5 million of cash acquired), subject to certain adjustments (the “Vivial Acquisition”). The assets acquired as part of these transactions consisted primarily of $27.7 million in current assets and $9.8 million in fixed and intangible assets, consisting primarily of customer relationships and technology assets, $14.5 million in deferred tax assets, along with a $10.9 million bargain purchase gain. The Vivial Acquisition resulted in a bargain purchase gain in part because the seller was motivated to divest its marketing services business that was in secular decline. The Company also assumed liabilities of $20.4 million, consisting primarily of accounts payable and accrued liabilities.
The Company accounted for the Vivial Acquisition using the acquisition method of accounting in accordance with ASC 805. This requires that the assets acquired and liabilities assumed are measured at fair value. With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets and intangible assets by applying the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method and assumptions related to Vivial’s assets acquired and liabilities assumed.
The following table summarizes the assets acquired and liabilities assumed at the Vivial Acquisition Date:
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| Current assets |
|
$ |
27,705 |
|
| Fixed and intangible assets |
|
9,759 |
|
| Deferred tax assets |
|
14,530 |
|
| Other assets |
|
2,103 |
|
| Current liabilities |
|
(18,775) |
|
| Other liabilities |
|
(1,646) |
|
| Bargain purchase gain |
|
(10,883) |
|
| Fair value allocated to net assets acquired, net of bargain purchase gain |
|
$ |
22,793 |
|
The deferred tax asset primarily relates to excess carryover tax basis over book basis in intangibles as a result of the assessment of the fair value of the assets and liabilities assumed using the acquisition method of accounting.
Pro Forma Results (unaudited)
For the year ended December 31, 2021, pro forma revenue, including the results of the Vivial Acquisition, was $1,240.4 million. Pro forma information for the year ended December 31, 2022 and pro forma net income information for the year ended December 31, 2021 was insignificant.
Thryv Australia Acquisition
On March 1, 2021 (the “Thryv Australia Acquisition Date”), Thryv Australia Holdings Pty Ltd (formerly Thryv Australia Pty Ltd) (“Buyer”), an Australian proprietary limited company and a direct wholly-owned subsidiary of Thryv International Holding LLC, a direct and wholly-owned subsidiary of the Company, acquired all of the issued and outstanding equity interests of (i) Sunshine NewCo Pty Ltd, an Australian proprietary limited company, and its subsidiaries, and (ii) Sensis Holding Limited, a private limited company incorporated under the laws of England and Wales, and its subsidiaries (collectively, the “Thryv Australia Acquisition”). The Thryv Australia Acquisition expanded the Company's market share with a broader geographical footprint. Additionally, the Thryv Australia Acquisition provided the Company with a significant increase in clients. Thryv Australia is a provider of marketing solutions serving SMBs in Australia. Control was obtained by means of acquiring all the voting interests.
In connection with the Thryv Australia Acquisition, the Company paid consideration of approximately $216.2 million in cash, subject to customary closing adjustments, financed by the Term Loan (as defined in Note 10, Debt Obligations) that was entered into on the Thryv Australia Acquisition Date. All acquisition-related costs, amounting to $8.7 million, were expensed as incurred by the Company and no portion of these costs are included in consideration transferred. These costs were presented within General and administrative expense in the Company's consolidated statement of operations and comprehensive (loss) income. Additionally, as part of the effort to fund the Thryv Australia Acquisition, the Company incurred debt issuance costs of $4.2 million related to the Term Loan, of which $2.5 million was capitalized and is being amortized using the effective interest method. See Note 10, Debt Obligations.
The Company accounted for the Thryv Australia Acquisition using the acquisition method of accounting in accordance with ASC 805. This requires that the assets acquired and liabilities assumed are measured at fair value. With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets, intangible assets, and contract liabilities, by applying a combination of the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method.
The following table summarizes the consideration transferred and the purchase price allocation of the fair values of the assets acquired and liabilities assumed at the Thryv Australia Acquisition Date:
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
| Total cash consideration |
|
$ |
216,164 |
|
| Total purchase consideration, as allocated below: |
|
$ |
216,164 |
|
|
|
|
| Cash and cash equivalents |
|
$ |
40,794 |
|
| Accounts receivable and other current assets |
|
72,404 |
|
| Other assets |
|
34,962 |
|
| Fixed assets and capitalized software |
|
18,856 |
|
| Intangible assets: |
|
|
Client relationships (estimated useful life of 3.5 years) |
|
101,839 |
|
Trademarks (estimated useful life of 3.5 years) |
|
24,877 |
|
| Accounts payable |
|
(15,038) |
|
| Accrued liabilities |
|
(41,724) |
|
| Contract liabilities |
|
(27,075) |
|
| Other current liabilities |
|
(6,733) |
|
| Deferred tax liabilities |
|
(35,884) |
|
| Other liabilities |
|
(15,506) |
|
| Total identifiable net assets |
|
$ |
151,772 |
|
| Goodwill |
|
64,392 |
|
| Total net assets acquired |
|
$ |
216,164 |
|
The excess of the purchase price over the fair value of the identifiable net assets acquired and the liabilities assumed was allocated to goodwill. The recognized goodwill of $64.4 million was primarily related to the benefits expected from the Thryv Australia Acquisition and was allocated to the Thryv International Marketing Services segment. The goodwill recognized is not deductible for income tax purposes.
Pro Forma Results (unaudited)
For the year ended December 31, 2021, pro forma revenue and net income, including the results of the Thryv Australia Acquisition, was $1,181.6 million and $140.9 million, respectively. The pro forma combined financial information was derived from the historical financial records of Thryv and Thryv Australia and represents the operating results of the combined Company, as if the Thryv Australia Acquisition had occurred on January 1, 2021. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense, and related tax effects.
Note 4 Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
Level 3 — Unobservable inputs that reflect the Company's own assumptions incorporated into valuation techniques.
These valuations require significant judgment.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have a significant impact on fair value measurements. Assets and liabilities measured at fair value using Level 3 inputs are based on one or more of the following valuation techniques: market approach, income approach or cost approach.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company’s non-financial assets such as goodwill, intangible assets, fixed assets, capitalized software and operating lease right-of-use assets are adjusted to fair value when the net book values of the assets exceed their respective fair values, resulting in an impairment charge. Such fair value measurements are predominantly based on Level 3 inputs.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Indemnification Asset
On June 30, 2017, the Company completed the acquisition of YP Holdings, Inc. (the “YP Acquisition”). As further discussed in Note 15, Contingent Liabilities, as part of the YP Acquisition agreement, the Company was indemnified for an uncertain tax position for up to the fair value of 1,804,715 shares held in escrow, subject to certain contract limitations (the “indemnification asset”).
On June 22, 2023, the Company entered into a settlement agreement with the sellers regarding the settlement of the indemnification asset. Pursuant to the settlement agreement, the Company and the sellers agreed (i) that the sellers would pay and indemnify the Company for $15.8 million of indemnified taxes (the “Indemnity Amount”) and (ii) that the Indemnity Amount would be deemed satisfied by the transfer of 613,954 outstanding shares of the Company’s common stock from the sellers back to the Company, which were returned to treasury and reduced the number of outstanding shares of the Company’s common stock. Furthermore, the sellers would be entitled to retain 1,190,761 currently outstanding shares of the Company’s common stock that previously secured the sellers' tax indemnity obligations under the YP Acquisition agreement.
As of December 31, 2023, the Company no longer recorded a Level 1 indemnification asset because it was settled on June 22, 2023. As of December 31, 2022, the fair value of the Company's Level 1 indemnification asset was $26.5 million. A loss of $10.7 million from the change in fair value of the Company’s Level 1 indemnification asset during the year ended December 31, 2023 was recorded in General and administrative expense on the Company's consolidated statements of operations and comprehensive (loss) income. The $15.8 million Indemnity Amount, which is the fair value of the shares returned to treasury, was recorded in Treasury stock on the Company's consolidated balance sheets, along with the 613,954 shares that the Company received from the sellers as of December 31, 2023.
Benefit Plan Assets
The fair value of benefit plan assets is measured and recorded on the Company's consolidated balance sheets using Level 1 and 2 inputs. See Note 11, Pensions.
Fair Value of Financial Instruments
The Company considers the carrying amounts of cash, trade receivables, and accounts payable to approximate fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment.
Additionally, the Company considers the carrying amounts of its ABL Facility (as defined in Note 10, Debt Obligations) and financing obligations to approximate their respective fair values due to their short-term nature and approximation of interest rates to market rates. These fair value measurements are considered Level 2. See Note 10, Debt Obligations.
The Term Loan (as defined in Note 10, Debt Obligations) is carried at amortized cost; however, the Company estimates the fair value of the Term Loan for disclosure purposes. The fair value of the Term Loan is determined based on quoted prices that are observable in the marketplace and are classified as Level 2 measurements. See Note 10, Debt Obligations.
The following table sets forth the carrying amount and fair value of the Term Loan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
| (in thousands) |
Carrying Amount |
|
Fair Value |
|
Carrying Amount |
|
Fair Value |
| Term Loan, net |
$ |
300,052 |
|
|
$ |
300,052 |
|
|
$ |
415,256 |
|
|
$ |
410,065 |
|
Note 5 Goodwill and Intangible Assets
Goodwill
The Company had goodwill of $302.4 million, net of accumulated impairment loss of $1,083.6 million as of December 31, 2023, and goodwill of $566.0 million, net of accumulated impairment loss of $814.8 million as of December 31, 2022. Accumulated impairment loss is only related to the U.S. Marketing Services reporting unit. As of December 31, 2023, the Company had $32.5 million of tax deductible goodwill.
The Company currently has four reporting units. Accordingly, the Company assessed its goodwill for impairment under a four reporting unit structure as of October 1, 2023.
Goodwill Impairment
Management performs its annual goodwill impairment test on October 1 or more frequently if events or changes in circumstances indicate that the goodwill may be impaired.
The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about revenue, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units as of October 1, 2023 for the annual impairment test. The estimated fair value of the Company’s U.S. Marketing Services reporting unit was below its carrying value, including goodwill. The historical secular decline in industry demand for Print services, the historical trending decline in the Company’s Marketing Services client base, continued competition in the consumer search and display space and the projected decline in cash flows from an estimated conversion of certain clients from digital Marketing Services solutions to SaaS solutions impacted the assumptions used to estimate the discounted future cash flows of the Company’s U.S. Marketing Services reporting unit for purposes of performing the annual goodwill impairment test. As a result, the Company recognized a non-cash impairment charge of $192.0 million as of the October 1 annual impairment testing date to reduce goodwill in its Thryv U.S. Marketing Services reporting unit.
Based on the initial success of client conversions from digital Marketing Services solutions to SaaS solutions, the Company made a strategic decision during the fourth quarter of 2023 to accelerate the conversion of additional clients and services from its digital Marketing Services solutions to its SaaS solutions. This resulted in an additional decline in estimated future cash flows, and the Company concluded a triggering event had occurred in the Thryv U.S. Marketing Services reporting unit. As a result, the Company recorded an additional non-cash impairment charge of $76.8 million as of December 31, 2023, further reducing goodwill in its Thryv U.S. Marketing Services reporting unit. No goodwill impairment charges were recorded on the Company's other reporting units during the year ended December 31, 2023.
During the year ended December 31, 2022, the Company recorded a goodwill impairment charge of $102.0 million in its Thryv U.S. Marketing Services reporting unit. No goodwill impairment charges were recorded in the Company's consolidated statement of operations and comprehensive (loss) income during the year ended December 31, 2021.
The fair values of the Company's U.S. and International SaaS reporting units substantially exceeded their carrying values. The fair value of Company's International Marketing Services reporting unit only exceeded its carrying value by 8%. Changes in any of the significant assumptions used could materially affect the expected cash flows, and such impacts could result in a potentially material non-cash impairment charge in the future.
The following table sets forth the changes in the carrying amount of goodwill for each of the Company's reporting units for the years ended December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing
Services |
|
SaaS |
|
Marketing
Services |
|
SaaS |
|
Total |
Balance as of December 31, 2021 |
$ |
390,573 |
|
|
$ |
218,884 |
|
|
$ |
62,429 |
|
|
$ |
— |
|
|
$ |
671,886 |
|
| Additions |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Impairments |
(102,000) |
|
|
— |
|
|
— |
|
|
— |
|
|
(102,000) |
|
| Effects of foreign currency translation |
— |
|
|
— |
|
|
(3,882) |
|
|
— |
|
|
(3,882) |
|
Balance as of December 31, 2022 |
$ |
288,573 |
|
|
$ |
218,884 |
|
|
$ |
58,547 |
|
|
$ |
— |
|
|
$ |
566,004 |
|
| Yellow Acquisition |
— |
|
|
— |
|
|
5,129 |
|
|
— |
|
|
5,129 |
|
| Impairments |
(268,800) |
|
|
— |
|
|
— |
|
|
— |
|
|
(268,800) |
|
| Effects of foreign currency translation |
— |
|
|
— |
|
|
67 |
|
|
— |
|
|
67 |
|
Balance as of December 31, 2023 |
$ |
19,773 |
|
|
$ |
218,884 |
|
|
$ |
63,743 |
|
|
$ |
— |
|
|
$ |
302,400 |
|
(1) Yellow was included in the Thryv International Marketing Services reporting unit.
Intangible Assets
The Company had definite-lived intangible assets of $18.8 million and $34.7 million as of December 31, 2023 and 2022, respectively.
As a result of the goodwill impairment noted above, the Company performed impairment tests as of October 1, 2023 and December 31, 2023 on its intangible assets. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized. Accordingly, no impairment charges were recorded during the years ended December 31, 2023 and 2022, respectively.
The following tables set forth the details of the Company's intangible assets as of December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
As of December 31, 2023 |
| (in thousands) |
Gross |
|
Accumulated
Amortization |
|
Net |
|
Weighted
Average
Remaining
Amortization
Period in Years |
| Client relationships |
$ |
799,882 |
|
|
$ |
(787,736) |
|
|
$ |
12,146 |
|
|
1.4 |
| Trademarks and domain names |
224,423 |
|
|
(220,886) |
|
|
3,537 |
|
|
1.9 |
| Covenants not to compete |
10,446 |
|
|
(7,341) |
|
|
3,105 |
|
|
0.8 |
| Total intangible assets |
$ |
1,034,751 |
|
|
$ |
(1,015,963) |
|
|
$ |
18,788 |
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
As of December 31, 2022 |
| (in thousands) |
Gross |
|
Accumulated
Amortization |
|
Net |
|
Weighted
Average
Remaining
Amortization
Period in Years |
| Client relationships |
$ |
796,213 |
|
|
$ |
(771,475) |
|
|
$ |
24,738 |
|
|
1.8 |
| Trademarks and domain names |
223,206 |
|
|
(215,639) |
|
|
7,567 |
|
|
1.7 |
| Covenants not to compete |
5,240 |
|
|
(2,830) |
|
|
2,410 |
|
|
2.0 |
| Total intangible assets |
$ |
1,024,659 |
|
|
$ |
(989,944) |
|
|
$ |
34,715 |
|
|
1.8 |
Amortization expense for intangible assets for the years ended December 31, 2023, 2022, and 2021 was $25.5 million, $51.5 million, and $72.1 million, respectively.
Estimated aggregate future amortization expense by fiscal year for the Company's intangible assets is as follows:
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
Estimated Future
Amortization Expense |
| 2024 |
|
$ |
16,120 |
|
| 2025 |
|
2,068 |
|
| 2026 |
|
418 |
|
| 2027 |
|
139 |
|
| 2028 |
|
43 |
|
| Total |
|
$ |
18,788 |
|
Note 6 Allowance for Credit Losses
The following table sets forth the Company's allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Balance as of January 1 |
$ |
14,799 |
|
|
$ |
17,475 |
|
|
$ |
33,368 |
|
| Acquisitions |
— |
|
|
— |
|
|
2,733 |
|
Additions (1) |
18,664 |
|
|
16,516 |
|
|
8,031 |
|
Deductions (2) |
(18,502) |
|
|
(19,192) |
|
|
(26,657) |
|
Balance as of December 31 (3) |
$ |
14,961 |
|
|
$ |
14,799 |
|
|
$ |
17,475 |
|
(1)For the years ended December 31, 2023, 2022, and 2021, the Company recorded a provision for credit losses of $18.7 million, $16.5 million, and $8.0 million, respectively, which is included in General and administrative expense in the Company's consolidated statements of operations and comprehensive (loss) income.
(2)For the years ended December 31, 2023, 2022, and 2021, represents amounts written off as uncollectible, net of recoveries.
(3)As of December 31, 2023, $14.9 million of the allowance is attributable to Accounts receivable and less than $0.1 million is attributable to Contract assets. As of December 31, 2022, $14.8 million of the allowance is attributable to Accounts receivable and less than $0.1 million is attributable to Contract assets. The Company expects to collect substantially all of its long-term unbilled balance.
The Company’s exposure to expected credit losses depends on the financial condition of its clients and other macroeconomic factors. The Company maintains an allowance for credit losses based upon its estimate of potential credit losses. This allowance is based upon historical and current client collection trends, any identified client-specific collection issues, and current as well as expected future economic conditions and market trends.
Note 7 Fixed Assets and Capitalized Software
The following table sets forth the components of the Company's fixed assets and capitalized software:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Capitalized software |
$ |
154,590 |
|
|
$ |
129,086 |
|
| Computer and data processing equipment |
39,077 |
|
|
40,765 |
|
| Other |
1,314 |
|
|
1,345 |
|
| Fixed assets and capitalized software |
$ |
194,981 |
|
|
$ |
171,196 |
|
| Less: accumulated depreciation and amortization |
156,382 |
|
|
128,862 |
|
| Total fixed assets and capitalized software, net |
$ |
38,599 |
|
|
$ |
42,334 |
|
Depreciation and amortization expense associated with the Company's fixed assets and capitalized software was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Amortization of capitalized software |
$ |
30,087 |
|
|
$ |
29,882 |
|
|
$ |
24,886 |
|
Depreciation of fixed assets(1) |
7,709 |
|
|
6,976 |
|
|
8,452 |
|
| Total depreciation and amortization expense |
$ |
37,796 |
|
|
$ |
36,858 |
|
|
$ |
33,338 |
|
(1)Includes depreciation expense associated with assets held under leaseback obligations of $0.7 million for the year ended December 31, 2021.
Note 8 Accrued Liabilities
The following table sets forth additional financial information related to the Company's accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Accrued salaries and related expenses |
$ |
57,357 |
|
|
$ |
62,044 |
|
| Accrued expenses |
37,889 |
|
|
52,313 |
|
| Accrued taxes |
8,832 |
|
|
9,799 |
|
| Accrued service credits |
1,825 |
|
|
2,654 |
|
| Accrued liabilities |
$ |
105,903 |
|
|
$ |
126,810 |
|
The following table sets forth additional information related to severance expense incurred by the Company and recorded to General and administrative expense during the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
Severance Expense (1) |
|
|
|
|
|
| Thryv U.S. |
|
|
|
|
|
| Marketing Services |
$ |
3,294 |
|
|
$ |
2,516 |
|
|
$ |
1,433 |
|
| SaaS |
1,622 |
|
|
669 |
|
|
306 |
|
| Total Thryv U.S. |
$ |
4,916 |
|
|
$ |
3,185 |
|
|
$ |
1,739 |
|
|
|
|
|
|
|
| Thryv International |
|
|
|
|
|
| Marketing Services |
$ |
854 |
|
|
$ |
297 |
|
|
$ |
2,945 |
|
| SaaS |
64 |
|
|
9 |
|
|
— |
|
| Total Thryv International |
$ |
918 |
|
|
$ |
306 |
|
|
$ |
2,945 |
|
| Total |
$ |
5,834 |
|
|
$ |
3,491 |
|
|
$ |
4,684 |
|
(1) During the years ended December 31, 2023 2022, and 2021, none of the severance expense recorded was related to employee terminations as a result of COVID-19.
Severance payments made by the Company during the years ended December 31, 2023, 2022, and 2021 totaled $4.6 million, $2.6 million, and $4.8 million, respectively.
Note 9 Leases
The Company has entered into operating lease agreements for certain facilities and equipment, with remaining terms of approximately one to three years and that may include options to extend. The Company does not have lease agreements with residual value guarantees or material restrictive covenants. Variable lease payments included in the lease agreements are immaterial.
During the year ended December 31, 2023, the Company recorded no operating lease right-of-use asset impairment charges.
During the year ended December 31, 2022, the Company recorded operating lease right-of-use asset impairment charges of $0.2 million due to the Company's decision to consolidate operations at certain locations. Approximately $0.2 million and less than $0.1 million of the impairment charge was recorded in the Thryv U.S. Marketing Services and Thryv U.S. SaaS segments, respectively.
During the year ended December 31, 2021, the Company recorded operating lease right-of-use asset impairment charges of $3.6 million due to the Company's decision to operate in a "Remote First" working environment and consolidate operations at certain locations. These impairment charges were recorded in the Thryv International segment.
These operating lease right-of-use assets were remeasured at fair value based upon the discounted cash flows of estimated sublease income using market participant assumptions. These fair value measurements are considered Level 3.
The following table sets forth components of lease cost related to the Company's operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Operating lease cost |
$ |
5,201 |
|
|
$ |
9,087 |
|
|
$ |
7,684 |
|
| Short-term lease cost |
154 |
|
|
1,854 |
|
|
— |
|
| Sublease income |
(1,348) |
|
|
(2,389) |
|
|
(1,954) |
|
| Total lease cost |
$ |
4,007 |
|
|
$ |
8,552 |
|
|
$ |
5,730 |
|
The following table sets forth supplemental balance sheet information related to the Company's operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Assets |
|
|
|
Operating lease right-of-use assets, net (1) |
$ |
2,716 |
|
|
$ |
4,838 |
|
| |
|
|
|
| Liabilities |
|
|
|
Current portion of long-term lease liability (2) |
7,299 |
|
|
9,780 |
|
Long-term lease liability (3) |
5,832 |
|
|
13,585 |
|
| Total operating lease liability |
$ |
13,131 |
|
|
$ |
23,365 |
|
(1)Operating lease right-of-use assets, net, are included in Other assets on the Company's consolidated balance sheet.
(2)The current portion of long-term lease liability is included in Other current liabilities on the Company's consolidated balance sheet.
(3)The long-term lease liability is included in Other liabilities on the Company's consolidated balance sheet.
The following table sets forth supplemental cash flow information related to the Company's operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Cash flows from operating activities |
|
|
|
|
|
| Cash paid for amounts included in the measurement of operating lease liabilities: |
|
|
|
|
|
| Operating cash flows from operating leases |
$ |
11,997 |
|
|
$ |
15,313 |
|
|
$ |
14,941 |
|
The following table sets forth additional information related to the Company's operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| |
2023 |
|
2022 |
|
2021 |
Weighted-average remaining lease term - Operating leases (in years) |
1.7 |
|
2.3 |
|
3.1 |
| Weighted-average discount rate - Operating leases |
9.0 |
% |
|
9.0 |
% |
|
9.2 |
% |
The following table sets forth, by year, the maturities of operating lease liabilities as of December 31, 2023:
|
|
|
|
|
|
| (in thousands) |
Operating Leases |
| 2024 |
$ |
8,551 |
|
| 2025 |
6,054 |
|
| 2026 |
— |
|
| 2027 |
— |
|
| 2028 |
— |
|
| Thereafter |
— |
|
| Total undiscounted lease payments |
$ |
14,605 |
|
| Less: imputed interest |
1,474 |
|
| Present value of operating lease liability |
$ |
13,131 |
|
Note 10 Debt Obligations
The following table sets forth the Company's outstanding debt obligations as of December 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Maturity |
|
Interest Rate |
|
December 31, 2023 |
|
December 31, 2022 |
Term Loan(1) |
March 1, 2026 |
|
SOFR + |
|
8.5% |
|
$ |
309,368 |
|
|
$ |
429,368 |
|
ABL Facility (Seventh Amendment)(2) |
March 1, 2026 |
|
Adjusted Daily Simple SOFR + |
|
3.0% |
|
48,845 |
|
|
54,554 |
|
| Unamortized original issue discount and debt issuance costs |
|
|
|
|
|
|
(9,316) |
|
|
(14,112) |
|
| Total debt obligations |
|
|
|
|
|
|
$ |
348,897 |
|
|
$ |
469,810 |
|
| Current portion of Term Loan |
|
|
|
|
|
|
(70,000) |
|
|
(70,000) |
|
| Total long-term debt obligations |
|
|
|
|
|
$ |
278,897 |
|
|
$ |
399,810 |
|
(1) Effective June 30, 2023, the Company's Term Loan amendment replaced the London Interbank Offered Rate (“LIBOR”) benchmark with a Secured Overnight Financing Rate (“SOFR”) based benchmark.
(2) Effective June 1, 2023, the Company's ABL Facility amendment replaced the LIBOR benchmark with a SOFR based benchmark.
Term Loan
On March 1, 2021, the Company entered into a Term Loan credit agreement (the “Term Loan”). The Term Loan established a senior secured term loan facility (the “Term Loan Facility”) in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who are equity holders of the Company, as of March 1, 2021. As of December 31, 2023 and December 31, 2022, no portion of the Term Loan was held by related parties.
The Term Loan Facility matures on March 1, 2026. Through the six months ended June 30, 2023 borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, LIBOR or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for LIBOR loans) and (ii) 7.50% (for base rate loans). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter.
On June 21, 2023, the Company entered into an agreement to amend the Term Loan Facility (the “Term Loan Amendment”). The Term Loan Amendment replaced the LIBOR-based rate with a SOFR-based rate. Effective June 30, 2023, borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, SOFR or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for SOFR loans) and (ii) 7.50% (for base rate loans). In connection with these amendments, the Company applied the modification accounting relief provided by the FASB in ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”.
The net proceeds from the Term Loan of $674.9 million (net of original issue discount costs of $21.0 million and third-party fees of $4.1 million) were used to repay the remaining $449.6 million outstanding principal balance of the Senior Term Loan, accrued interest of $0.4 million, and third-party fees of $0.1 million. The Company accounted for this transaction with existing lenders as a modification. The transaction with other lenders party to only the Senior Term Loan was accounted for as an extinguishment.
The Company recorded no interest expense with related parties for the year ended December 31, 2023. For the years ended December 31, 2022 and 2021, the Company recorded interest expense with related parties of $3.5 million and $17.5 million, respectively.
The Company has recorded accrued interest of $1.1 million and $1.2 million, as of December 31, 2023 and 2022, respectively. Accrued interest is included in Other current liabilities on the Company's consolidated balance sheets.
The Term Loan, which was incurred by Thryv, Inc., the Company’s operating subsidiary, is secured by all the assets of Thryv, Inc., certain of its subsidiaries and the Company, and is guaranteed by the Company and certain of its subsidiaries.
Term Loan Covenants
The Term Loan contains certain covenants that, subject to exceptions, limit or restrict the borrower's incurrence of additional indebtedness, liens, investments, loans, advances, guarantees, acquisitions, sales of assets, sale-leaseback transactions, swap agreements, payments of dividends or distributions, payments in respect of certain indebtedness, certain affiliate transactions, restrictive amendments to agreements, changes in business, amendments of certain material documents, capital expenditures, mergers, consolidations and liquidations, and use of the proceeds. Additionally, the Company is required to maintain compliance with a Total Net Leverage Ratio, calculated as Net Debt to Consolidated EBITDA, which shall not be greater than 3.0 to 1.0 as of the last day of each fiscal quarter. As of December 31, 2023, the Company was in compliance with the Term Loan covenants. The Company expects to be in compliance with these covenants for the next twelve months.
ABL Facility
On March 1, 2021, the Company entered into an agreement to amend (the “ABL Amendment”) the Company's June 30, 2017 asset-based lending (“ABL”) facility (the “ABL Facility”). The ABL Amendment was entered into in order to permit the Term Loan refinancing, the Thryv Australia Acquisition and make certain other changes to the ABL credit agreement, including, among others:
•revise the maximum revolver amount to $175.0 million;
•reduce the interest rate per annum to (i) 3-month LIBOR plus 3.00% for LIBOR loans and (ii) base rate plus 2.00% for base rate loans;
•reduce the commitment fee on undrawn amounts under the ABL Facility to 0.375%;
•extend the maturity date of the ABL Facility to the earlier of March 1, 2026 and 91 days prior to the stated maturity
date of the Term Loan Facility;
•add the Australian subsidiaries acquired pursuant to the Thryv Australia Acquisition as borrowers and guarantors and establish an Australian borrowing base; and
•make certain other conforming changes consistent with the Term Loan agreement.
On June 1, 2023, the Company entered into an agreement to amend its existing ABL Facility (the “ABL Seventh Amendment”). The ABL Seventh Amendment replaced the 3-month LIBOR benchmark applicable to the facility with a SOFR-based rate, defined as the Adjusted Daily Simple SOFR. Borrowings under the ABL Facility bear interest at a rate per annum equal to (i) Adjusted Daily Simple SOFR plus 3.00% for SOFR loans and (ii) base rate plus 2.00% for base rate loans. In connection with these amendments, the Company applied the modification accounting relief provided by the FASB in ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”.
As of December 31, 2023 and 2022, the Company had unamortized debt issuance costs of $1.4 million and $2.0 million, respectively. These debt issuance costs are included in Other assets on the Company's consolidated balance sheets.
As of December 31, 2023, the Company had borrowing base availability of $50.1 million. As a result of certain restrictions in the Company's debt agreements, as of December 31, 2023, approximately $37.5 million was available to be drawn upon under the ABL Facility.
ABL Facility Covenants
The ABL Facility contains certain covenants that, subject to exceptions, limit or restrict the borrower's incurrence of additional indebtedness, liens, investments, loans, advances, guarantees, acquisitions, disposals of assets, payments of certain indebtedness, certain affiliate transactions, changes in fiscal year or accounting methods, issuance or sale of equity instruments, mergers, liquidations and consolidations, use of proceeds, maintenance of certain deposit accounts, compliance with certain ERISA requirements and compliance with certain Australian tax requirements. The Company is required to maintain compliance with a fixed charge coverage ratio that must exceed a ratio of 1.00. The fixed charge coverage ratio is defined as, with respect to any fiscal period determined on a consolidated basis in accordance with GAAP, the ratio of (a) Consolidated EBITDA as defined in the ABL credit agreement for such period minus capital expenditures incurred during such period, to (b) fixed charges. Fixed charges is defined as, with respect to any fiscal period determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) consolidated interest expense accrued (other than amortization of debt issuance costs, and other non-cash interest expense) during such period, (b) scheduled principal payments in respect of indebtedness paid during such period, (c) all federal, state, and local income taxes accrued during such period, (d) all management, consulting, monitoring, and advisory fees paid to certain individuals or their affiliates during such period, and (e) all restricted payments paid during such period (whether in cash or other property, other than common equity interest).
The Company is also required to maintain excess availability of at least $14.0 million, and U.S. excess availability of $10.0 million, in each case, at all times. As of December 31, 2023, the Company was in compliance with the ABL Facility covenants. The Company expects to be in compliance with these covenants for the next twelve months.
Leaseback Obligations
As part of the YP Acquisition on June 30, 2017, the Company assumed certain obligations including a failed sale-leaseback liability associated with land and a building in Tucker, Georgia. In conjunction with this financing liability, the fair value of the land and building was included as a part of the total tangible assets acquired in the acquisition. A portion of this liability consists of a non-cash residual value at termination of the lease, which upon termination will be written off against the remaining carrying value of the land and building, with any amount remaining recorded as a gain on termination of the lease. In June 2022, the Company made a $10.2 million cash payment to terminate the lease, which is recorded in Other in Cash flows from financing activities on the Company's consolidated statement of cash flows. As of December 31, 2021, the lease termination resulted in the write-off of $48.1 million in net carrying value of assets under leaseback obligation and $55.2 million in leaseback obligations. During the year ended December 31, 2021, a $3.1 million loss on the termination of leaseback obligations was recorded in Other expense on the Company's consolidated statements of operations and comprehensive (loss) income.
Future Cash Commitments
The following table sets forth future cash commitments associated with the Company's Term Loan and ABL Facility:
|
|
|
|
|
|
(in thousands) |
Debt Obligations |
| 2024 |
$ |
70,000 |
|
| 2025 |
70,000 |
|
| 2026 |
218,213 |
|
| Total future cash commitments |
$ |
358,213 |
|
Note 11 Pensions
The Company maintains pension obligations associated with non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs.
The Company immediately recognizes actuarial gains and losses in its operating results in the year in which the gains and losses occur. The Company estimates the interest cost component of net periodic pension cost by utilizing a full yield curve approach and applying the specific spot rates along the yield curve used in the determination of the benefit obligations of the relevant projected cash flows. This method provides a more precise measurement of interest costs by improving the correlation between projected cash flows to the corresponding spot yield curve rates.
Net Periodic Pension Benefit
The following table details the Other components of net periodic pension benefit for the Company's pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Interest cost |
$ |
21,386 |
|
|
$ |
14,017 |
|
|
$ |
10,469 |
|
| Expected return on assets |
(13,752) |
|
|
(13,534) |
|
|
(11,560) |
|
| Settlement gain |
(407) |
|
|
(1,492) |
|
|
(374) |
|
| Remeasurement gain |
(9,946) |
|
|
(43,603) |
|
|
(13,364) |
|
Net periodic pension benefit |
$ |
(2,719) |
|
|
$ |
(44,612) |
|
|
$ |
(14,829) |
|
Since all pension plans are frozen and no employees accrue future pension benefits under any of the pension plans, the rate of compensation increase assumption is no longer applicable. The Company determines the weighted-average discount rate by applying a yield curve comprised of the yields on several hundred high-quality, fixed income corporate bonds available on the measurement date to expected future benefit cash flows.
The following table sets forth the weighted-average assumptions used for determining the Company's net periodic pension cost benefit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| |
2023 |
|
2022 |
|
2021 |
| Pension benefit obligations discount rate |
5.14 |
% |
|
2.77 |
% |
|
2.39 |
% |
| Interest cost discount rate |
5.10 |
% |
|
2.37 |
% |
|
1.71 |
% |
| Expected return on plan assets, net of administrative expenses |
4.04 |
% |
|
3.18 |
% |
|
2.69 |
% |
| Interest crediting rate |
3.02 |
% |
|
3.02 |
% |
|
3.01 |
% |
| Rate of compensation expense increase |
N/A |
|
N/A |
|
N/A |
The following table sets forth the weighted-average assumptions used for determining the Company's pension benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| |
2023 |
|
2022 |
| Pension benefit obligations discount rate |
4.95 |
% |
|
5.14 |
% |
| Interest crediting rate |
3.51 |
% |
|
3.02 |
% |
| Rate of compensation increase |
N/A |
|
N/A |
Pension Benefit Obligations and Plan Assets
The following table summarizes the benefit obligations, plan assets, and funded status associated with the Company's pension and benefit plan:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
2023 |
|
2022 |
| Change in Benefit Obligations |
|
|
|
| Balance as of January 1 |
$ |
444,899 |
|
|
$ |
591,967 |
|
| Interest cost |
21,386 |
|
|
14,017 |
|
| Actuarial (gain) loss, net |
501 |
|
|
(117,958) |
|
| Benefits paid |
(57,836) |
|
|
(43,127) |
|
| Balance as of December 31 |
$ |
408,950 |
|
|
$ |
444,899 |
|
| |
|
|
|
| Change in Plan Assets |
|
|
|
| Balance as of January 1 |
$ |
371,498 |
|
|
$ |
450,713 |
|
| Plan contributions |
778 |
|
|
23,242 |
|
| Actual return on plan assets, net of administrative expenses |
24,605 |
|
|
(59,330) |
|
| Benefits paid |
(57,835) |
|
|
(43,127) |
|
| Balance as of December 31 |
$ |
339,046 |
|
|
$ |
371,498 |
|
| |
|
|
|
| Funded Status as of December 31 (plan assets less benefit obligations) |
$ |
(69,904) |
|
|
$ |
(73,401) |
|
The accumulated obligations for all defined pension plans was $409.0 million and $444.9 million as of December 31, 2023 and 2022, respectively.
The following table sets forth cash contributions made by the Company to its qualified and non-qualified plans during the years ended December 31, 2023, 2022 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Qualified plans |
$ |
— |
|
|
$ |
22,500 |
|
|
$ |
35,000 |
|
| Non-qualified plans |
778 |
|
|
742 |
|
|
1,176 |
|
For fiscal year 2024, the Company expects to contribute approximately $6.0 million to the qualified plans and approximately $0.5 million to the non-qualified plans.
The net actuarial gain in the benefit obligations of $10.4 million for the year ended December 31, 2023 was a result of gains attributable to asset performance exceeding expectations, plan experience different than expected, and economic assumption updates, partially offset by losses attributable to decreasing discount rates due to changes in the corporate bond markets.
The following table sets forth the amounts associated with pension plans recognized within Pension obligations, net on the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Current liabilities |
$ |
(516) |
|
|
$ |
(811) |
|
| Long-term liabilities |
(69,388) |
|
(72,590) |
| Total pension liability as of December 31 |
$ |
(69,904) |
|
|
$ |
(73,401) |
|
The following table sets forth the amounts associated with the Company's pension plans that have accumulated pension obligations greater than plan assets (underfunded):
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| Accumulated benefit obligations |
$ |
408,950 |
|
|
$ |
444,899 |
|
| Projected benefit obligations |
408,950 |
|
|
444,899 |
|
| Plan assets |
339,046 |
|
|
371,498 |
|
Expected Cash Flows
The following table sets forth the Company's expected future pension benefit payments:
|
|
|
|
|
|
| (in thousands) |
Expected Future
Pension Benefit
Payments |
| 2024 |
$ |
43,942 |
| 2025 |
36,643 |
| 2026 |
35,823 |
| 2027 |
35,447 |
| 2028 |
33,311 |
| 2029 to 2033 |
148,771 |
Pension Plan Assets
The Company's overall investment strategy is to achieve a mix of assets, allowing it to meet projected benefits payments while taking into consideration expected levels of risk and return. Depending on perceived market pricing and various other factors, both active and passive approaches are utilized.
The following tables set forth the fair values of the Company's pension plan assets by asset category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2023 |
| (in thousands) |
Total |
|
Level 1
(Quoted
Market Prices
in Active
Markets) |
|
Level 2
(Significant
Observable
Input) |
|
Level 3
(Unobservable
Inputs) |
| Cash and cash equivalents |
$ |
3,475 |
|
|
$ |
3,475 |
|
|
$ |
— |
|
|
$ |
— |
|
| Equity funds |
32,540 |
|
|
32,540 |
|
|
— |
|
|
— |
|
| U.S. treasuries and agencies |
31,229 |
|
|
— |
|
|
31,229 |
|
|
— |
|
| Corporate bond funds |
189,697 |
|
|
189,697 |
|
|
— |
|
|
— |
|
| Total |
$ |
256,941 |
|
|
$ |
225,712 |
|
|
$ |
31,229 |
|
|
$ |
— |
|
Hedge funds-investments measured at net asset value (“NAV”) as a practical expedient |
82,105 |
|
|
|
|
|
|
|
| Total plan assets |
$ |
339,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2022 |
| |
Total |
|
Level 1
(Quoted
Market Prices
in Active
Markets) |
|
Level 2
(Significant
Observable
Input) |
|
Level 3
(Unobservable
Inputs) |
| Cash and cash equivalents |
$ |
3,002 |
|
|
$ |
3,002 |
|
|
$ |
— |
|
|
$ |
— |
|
| Equity funds |
35,000 |
|
|
35,000 |
|
|
— |
|
|
— |
|
| U.S. treasuries and agencies |
61,749 |
|
|
— |
|
|
61,749 |
|
|
— |
|
| Corporate bond funds |
159,411 |
|
|
159,411 |
|
|
— |
|
|
— |
|
| Total |
$ |
259,162 |
|
|
$ |
197,413 |
|
|
$ |
61,749 |
|
|
$ |
— |
|
| Hedge funds-investments measured at NAV as a practical expedient |
112,336 |
|
|
|
|
|
|
|
| Total plan assets |
$ |
371,498 |
|
|
|
|
|
|
|
Cash and cash equivalents are comprised of cash and high-grade money market instruments with short-term maturities. Equity funds are mutual funds invested in equity securities. U.S. treasuries and agencies are fixed income investments in U.S. government or agency securities. Corporate bonds are mutual fund investments in corporate debt. Hedge funds are private investment vehicles that use a variety of investment strategies with the objective of providing positive total returns regardless of market performance.
Pension Plan Hedge Fund Investments
The Company's hedge fund investments are made through limited partnership interests in various hedge funds that employ different trading strategies. Examples of strategies followed by hedge funds include directional strategies, relative value strategies and event driven strategies. A directional strategy entails taking a net long or short position in a market. Relative value seeks to take advantage of mis-pricing between two related and often correlated securities with the expectation that the pricing discrepancy will be resolved over time. Relative value strategies typically involve buying and selling related securities. An event driven strategy uses different investment approaches to profit from reactions to various events. Typically, events can include acquisitions, divestitures or restructurings that are expected to affect individual companies and may include long and short positions in common and preferred stocks, as well as debt securities and options. The Company has no unfunded commitments to these investments and has redemption rights with respect to its investments that range up to three years.
The Company uses NAV to determine the fair value of all the underlying investments which do not have a readily determinable fair market value, and either have the attributes of an investment company or prepare their financial statements consistent with the measurement principles of an investment company. As of December 31, 2023 and 2022, the Company used NAV to value its hedge fund investments.
The following table sets forth the weighted asset allocation percentages for the pension plans by asset category:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
| |
2023 |
|
2022 |
| Cash and cash equivalents |
1.0 |
% |
|
0.8 |
% |
| U.S. treasuries and agencies, corporate bond funds, and other fixed income |
65.2 |
% |
|
59.5 |
% |
| Equity funds |
9.6 |
% |
|
9.4 |
% |
| Hedge funds |
24.2 |
% |
|
30.3 |
% |
| Total |
100.0 |
% |
|
100.0 |
% |
Prospective Pension Plan Investment Strategy
The Company uses a liability driven investment (“LDI”) strategy, and as part of the strategy, the Company may invest in hedge fund investments, fixed income investments, equity investments and will hold an adequate amount of cash and cash equivalents to meet daily pension obligations.
Expected Rate of Return for Pension Assets
The expected rate of return for the pension assets represents the average rate of return to be earned on plan assets over the period the benefits are expected to be paid. The expected rate of return on the plan assets is developed from the expected future return on each asset class, weighted by the expected allocation of pension assets to that asset class. Historical performance is considered for the types of assets in which the plan invests. Independent market forecasts and economic and capital market considerations are also utilized.
For 2024, the expected rates of return, net of administrative expenses, for the Dex Pension Plan and the YP Holdings LLC Pension Plan are 4.0% and 4.8%, respectively, with a weighted-average expected rate of return of 4.1%. In 2023, the actual rates of return on assets for the Dex Pension Plan and the YP Holdings LLC Pension Plan were 7.2% and 6.9%, respectively. In 2022, the actual rates of return on assets for the Dex Pension Plan and the YP Holdings LLC Pension Plan were (11.0)% and (22.7)%, respectively.
Savings Plan Benefits
The Company sponsors a defined contribution savings plan to provide opportunities for eligible employees to save for retirement. Substantially all of the Company's employees are eligible to participate in the plan. Participant contributions may be made on a pre-tax, after-tax, or Roth basis. Under the plan, a certain percentage of eligible employee contributions are matched with Company cash contributions that are allocated to the participants' current investment elections. The Company recognizes its contributions as savings plan expense based on its matching obligation to participating employees. For the years ended December 31, 2023, 2022 and 2021, the Company recorded total savings plan expense of $9.0 million, $9.2 million, and $7.7 million, respectively.
Note 12 Stock-Based Compensation and Stockholders' Equity
The Stock Incentive Plans provide for several forms of incentive awards to be granted to designated eligible employees, non-management directors, and independent contractors providing services to the Company. On September 3, 2020, the Company's Board of Directors adopted and the Company's stockholders approved, the Company's 2020 Plan. The 2020 Plan replaced the 2016 Plan, as the Company determined not to make additional awards under the 2016 Plan following the effectiveness of the 2020 Plan. However, the terms of the 2016 Plan continue to govern outstanding equity awards granted under the 2016 Plan.
The maximum number of shares of the Company’s common stock authorized for issuance under the 2016 Plan is 6,166,667. Any shares reserved for issuance, but unissued, forfeited or lapse unexercised under the 2016 Plan will be made available under the 2020 Plan for issuance. On May 18, 2021, the Company’s stockholders approved an amendment to the 2020 Plan to provide that commencing on January 1, 2022 and ending on (and including) January 1, 2030, there will be an automatic annual increase in the total number of shares of common stock reserved and available for delivery in connection with the 2020 Plan of up to 5% of the total number of shares of common stock outstanding on December 31st of the preceding year.
On January 1, 2022, the 2020 Plan share pool increased by 1,703,584 shares, 5% of the outstanding common stock of 34,071,684 shares on December 31, 2021. On January 1, 2023, the 2020 Plan share pool increased by 1,723,944 shares, 5% of the outstanding common stock of 34,478,892 shares on December 31, 2022. As of December 31, 2023, the maximum number of shares of the Company’s common stock authorized for issuance under the 2020 Plan was 7,977,480.
The following table sets forth stock-based compensation expense recognized by the Company in the following line items in the Company's consolidated statements of operations and comprehensive (loss) income during the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Cost of services |
$ |
613 |
|
|
$ |
421 |
|
|
$ |
380 |
|
| Sales and marketing |
11,089 |
|
|
6,634 |
|
|
3,490 |
|
| General and administrative |
10,499 |
|
|
7,573 |
|
|
4,224 |
|
| Stock-based compensation expense |
$ |
22,201 |
|
|
$ |
14,628 |
|
|
$ |
8,094 |
|
The following table sets forth the Company's stock-based compensation expense by award type during the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| RSUs |
$ |
9,637 |
|
|
$ |
3,569 |
|
|
$ |
— |
|
| PSUs |
9,372 |
|
|
3,141 |
|
|
— |
|
| Stock Options |
1,674 |
|
|
6,156 |
|
|
6,351 |
|
| ESPP |
1,518 |
|
|
1,762 |
|
|
1,743 |
|
| Stock-based compensation expense |
$ |
22,201 |
|
|
$ |
14,628 |
|
|
$ |
8,094 |
|
Restricted Stock Units
The following table sets forth the Company's RSU activity during the year ended December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Restricted Stock Units |
|
Weighted-Average Grant-Date Fair Value |
Nonvested balance as of December 31, 2022 |
517,135 |
|
|
$ |
25.93 |
|
| Granted |
709,175 |
|
|
19.58 |
|
| Vested |
(208,345) |
|
|
25.66 |
|
| Forfeited |
(25,501) |
|
|
23.20 |
|
Nonvested balance as of December 31, 2023 |
992,464 |
|
|
$ |
21.52 |
|
The following table sets forth the Company's RSU activity during the year ended December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Restricted Stock Units |
|
Weighted-Average Grant-Date Fair Value |
Nonvested balance as of December 31, 2021 |
— |
|
|
$ |
— |
|
| Granted |
525,735 |
|
|
25.93 |
|
| Vested |
(890) |
|
|
— |
|
| Forfeited |
(7,710) |
|
|
26.09 |
|
Nonvested balance as of December 31, 2022 |
517,135 |
|
|
$ |
25.93 |
|
The Company grants RSUs to the Company's employees and non-employee directors under the 2020 Plan. Pursuant to the RSU award agreements, each RSU entitles the recipient to one share of the Company’s common stock, subject to time-based vesting conditions set forth in individual agreements.
The fair value of each RSU grant is determined based upon the market closing price of the Company’s common stock on the date of grant. The RSUs vest and are expensed on a straight-line basis over the requisite service period, which ranges between one year and three years from the date of grant, subject to the continued employment of the employees and services of the non-employee board members.
As of December 31, 2023, the unrecognized stock-based compensation expense related to the unvested portion of the Company's RSU awards was $13.5 million and is expected to be recognized over a weighted-average period of 1.66 years.
During the year ended December 31, 2023, the Company issued an aggregate of 209,235 shares of common stock to employees and non-employee directors upon the vesting of RSUs previously granted under the 2020 Plan.
As of December 31, 2023, there were 992,464 RSU's expected to vest with a weighted-average grant date fair value of 21.52 per unit. As of December 31, 2022, there were 517,135 RSUs expected to vest with a weighted-average grant date fair value of 25.93 per unit.
Performance-Based Restricted Stock Units
The following table sets forth the Company's PSU activity during the year ended December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Performance-Based Restricted Stock Units |
|
Weighted-Average Grant-Date Fair Value |
Nonvested balance as of December 31, 2022 |
473,371 |
|
|
$ |
26.76 |
|
| Granted |
657,408 |
|
|
21.46 |
|
| Vested |
— |
|
|
— |
|
| Forfeited |
— |
|
|
— |
|
Nonvested balance as of December 31, 2023 |
1,130,779 |
|
|
$ |
23.68 |
|
The following table sets forth the Company's PSU activity during the year ended December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Performance-Based Restricted Stock Units |
|
Weighted-Average Grant-Date Fair Value |
Nonvested balance as of December 31, 2021 |
— |
|
|
$ |
— |
|
| Granted |
473,371 |
|
|
26.76 |
|
| Vested |
— |
|
|
— |
|
| Forfeited |
— |
|
|
— |
|
Nonvested balance as of December 31, 2022 |
473,371 |
|
|
$ |
26.76 |
|
The Company grants PSUs to employees under the Company’s 2020 Plan. Pursuant to the PSU Award Agreement, each PSU entitles the recipient to up to 1.5 shares of the Company’s common stock, subject to certain performance measures set forth in individual agreements.
The PSUs will vest, if at all, following the achievement of certain performance measures over a three year performance period, relative to certain performance and market conditions. Grant date fair value of PSUs that vest relative to a performance condition are measured based upon the market closing price of the Company’s common stock on the date of grant and expensed on a straight-line basis when it becomes probable that the performance conditions will be satisfied, net of forfeitures, over the service period of the awards, which is generally the vesting term of three years. Grant date fair value of PSUs that vest relative to a market condition are measured using a Monte Carlo simulation model and expensed on a straight-line basis, net of forfeitures, over the service period of the awards, which is generally the vesting term of three years. As of December 31, 2023, the nonvested balance of PSUs that vest based on performance and market conditions were 452,316 and 678,463, respectively.
As of December 31, 2023, the unrecognized stock-based compensation expense related to the unvested portion of the Company's PSU awards was $14.3 million and is expected to be recognized over a weighted average period of 1.59 years.
The following table sets forth the PSUs weighted-average fair values and assumptions used in the Monte Carlo simulation model during the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
|
2023 |
2022 |
2021 |
| Weighted-average fair value |
$ |
21.46 |
|
$ |
27.21 |
|
N/A |
| Dividend yield |
— |
|
— |
|
N/A |
| Volatility |
75.80 |
% |
77.12 |
% |
N/A |
| Risk-free interest rate |
4.14 |
% |
2.87 |
% |
N/A |
| Expected life (in years) |
2.99 |
2.66 |
N/A |
Stock Options
No stock options were issued during the years ended December 31, 2023 or 2022.
In 2020, the Company granted stock options to certain employees and non-management directors that vest over the service period, which is a three-year to four-year period ending on October 15, 2024 and have a 10-year term from the date of grant.
A stock option holder may pay the option exercise price in cash, by delivering to the Company unrestricted shares having a value at the time of exercise equal to the exercise price, by a cashless broker-assisted exercise, by a loan from the Company, (unless prohibited by law) or by a combination of these methods.
Any unvested portion of the stock option award will be forfeited upon the employee’s termination of employment with the Company for any reason before the date the option vests, except that the Compensation Committee of the Company, at its sole option and election, may provide for the accelerated vesting of the stock option award. If the Company terminates the employee without cause or the employee resigns for good reason, then the employee is eligible to exercise the stock options that vested on or before the effective date of such termination or resignation. If the Company terminates the employee for cause, then the employee's stock options, whether or not vested, shall terminate immediately upon termination of employment. The Compensation Committee of the Company shall have the authority to determine the treatment of awards in the event of a change in control of the Company or the affiliate which employs the award holder.
The following table sets forth the Company's stock options activity during the year ended December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Stock Option Awards |
|
Weighted-Average Grant-Date Fair Value |
Nonvested balance as of December 31, 2022 |
1,401,467 |
|
|
$ |
13.10 |
|
| Granted |
— |
|
|
— |
|
| Vested |
(992,723) |
|
|
13.20 |
|
| Forfeited |
(7,669) |
|
|
10.35 |
|
Outstanding stock option awards expected to vest as of December 31, 2023 |
401,075 |
|
|
$ |
12.98 |
|
The following table reflects changes in the Company's outstanding stock option awards for the year ended December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
2023 |
| |
Number of
Stock Option
Awards |
|
Weighted-
Average
Exercise Price |
|
Weighted-
Average
Remaining
Contractual
Term (years) |
|
Aggregate
Intrinsic Value (in thousands) |
| Outstanding stock option awards at January 1 |
3,533,507 |
|
|
$ |
11.62 |
|
|
6.52 |
|
$ |
26,070 |
|
| Granted |
— |
|
|
— |
|
|
— |
|
— |
|
| Exercises (issuance of shares) |
(216,549) |
|
|
11.22 |
|
|
5.56 |
|
173 |
|
| Forfeitures/expirations |
(7,736) |
|
|
10.35 |
|
|
6.95 |
|
91 |
|
| Outstanding stock option awards as of December 31 |
3,309,222 |
|
|
$ |
11.65 |
|
|
5.52 |
|
$ |
28,781 |
|
| |
|
|
|
|
|
|
|
| Options exercisable as of December 31 |
2,908,147 |
|
|
$ |
11.52 |
|
|
5.39 |
|
$ |
25,682 |
|
As of December 31, 2023, the unrecognized stock-based compensation expense related to the unvested portion of the Company's stock options was $0.5 million and is expected to be recognized over a weighted-average period of 0.1 years.
The following table reflects changes in the Company's outstanding stock option awards for the year ended December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
2022 |
| |
Number of
Stock Option
Awards |
|
Weighted-
Average
Exercise Price |
|
Weighted-
Average
Remaining
Contractual
Term (years) |
|
Aggregate
Intrinsic Value (in thousands) |
| Outstanding stock option awards at January 1 |
3,733,814 |
|
|
$ |
11.59 |
|
|
7.52 |
|
$ |
110,298 |
|
| Granted |
— |
|
|
— |
|
|
— |
|
|
— |
|
| Exercises (issuance of shares) |
(173,709) |
|
|
10.87 |
|
|
6.22 |
|
2,908 |
|
| Forfeitures/expirations |
(26,598) |
|
|
11.99 |
|
|
7.44 |
|
365 |
|
| Outstanding stock option awards at December 31 |
3,533,507 |
|
|
$ |
11.62 |
|
|
6.52 |
|
$ |
26,070 |
|
|
|
|
|
|
|
|
|
| Options exercisable as of December 31 |
2,132,040 |
|
|
$ |
10.65 |
|
|
6.07 |
|
$ |
17,797 |
|
As of December 31, 2022, the unrecognized stock-based compensation expense related to the unvested portion of the Company's stock options was $2.2 million and was expected to be recognized over a weighted-average period of 0.7 years.
Proceeds from Exercises of Stock Options
Cash proceeds received from exercises of stock options during the years ended December 31, 2023, 2022 and 2021 were $3.1 million, $2.8 million and $7.0 million, respectively. The associated tax benefit from options exercised and RSUs issued were $1.7 million, $0.7 million and $1.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Employee Stock Purchase Plan
The ESPP was approved by the Company's Board of Directors on September 10, 2020 and became effective on September 23, 2020. Under the ESPP, eligible employees may purchase a limited number of shares of our common stock at the lesser of 85% of the market value at the beginning of the offering period or 85% of the market value at the end of the offering period. The ESPP is intended to enable eligible employees to use payroll deductions to purchase shares of stock in offerings under the plan, and thereby acquire an interest in the Company. The maximum aggregate number of shares of stock available for purchase under the plan by eligible employees is 2,000,000 shares.
A total of 189,837 shares were issued on June 30, 2023, and 114,147 shares were issued on December 31, 2023, for a total of 303,984 shares issued through the ESPP during the year ended December 31, 2023.
A total of 157,250 shares were issued on June 30, 2022, and 114,945 shares were issued on December 31, 2022, for a total of 272,195 shares issued through the ESPP during the year ended December 31, 2022.
A total of 149,865 shares were issued on June 30, 2021, and 73,627 shares were issued on December 31, 2021, for a total of 223,492 shares issued through the ESPP during the year ended December 31, 2021.
Stock Warrants
On August 15, 2023, 8,253,997 warrants expired unexercised. As of August 16, 2023, the Company did not have any warrants outstanding.
As of December 31, 2022, the Company had fully vested outstanding warrants of 9,427,343 and the holders of such warrants were entitled to purchase, in the aggregate, up to 5,237,413 shares of common stock at an exercise price of $24.39 per common share. The warrants were issued in 2016 upon the Company's emergence from its pre-packaged bankruptcy.
During the years ended December 31, 2023 and 2022, 1,173,348 and 4,721 warrants, respectively, were exercised. Cash proceeds from exercises of stock warrants during the years ended December 31, 2023 and 2022 were $15.9 million and $0.1 million, respectively, and are recorded in Proceeds from exercises of stock warrants in Cash flows from financing activities on the Company's consolidated statements of cash flows.
Note 13 Earnings per Share
The following tables set forth the calculation of basic and diluted earnings per share for the years ended December 31, 2023, 2022 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands, except share and per share amounts) |
2023 |
|
2022 |
|
2021 |
| Basic net (loss) income per share: |
|
|
|
|
|
| Net (loss) income |
$ |
(259,295) |
|
|
$ |
54,348 |
|
|
$ |
101,577 |
|
| Weighted-average common shares outstanding during the period |
34,723,491 |
|
|
34,336,493 |
|
|
33,607,446 |
|
| Basic net (loss) income per share |
$ |
(7.47) |
|
|
$ |
1.58 |
|
|
$ |
3.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands, except share and per share amounts) |
2023 |
|
2022 |
|
2021 |
| Diluted net (loss) income per share: |
|
|
|
|
|
| Net (loss) income |
$ |
(259,295) |
|
|
$ |
54,348 |
|
|
$ |
101,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic shares outstanding during the period |
34,723,491 |
|
|
34,336,493 |
|
|
33,607,446 |
|
| Plus: Common stock equivalents associated with stock option awards |
— |
|
|
2,169,602 |
|
|
2,888,300 |
|
| Diluted shares outstanding |
34,723,491 |
|
|
36,506,095 |
|
|
36,495,746 |
|
| Diluted net (loss) income per share |
$ |
(7.47) |
|
|
$ |
1.49 |
|
|
$ |
2.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The computation of diluted shares outstanding excluded the following share amounts as their effect would have been anti-dilutive for the years ended December 31, 2023, 2022, and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
| Outstanding RSUs |
218,804 |
|
|
254,780 |
|
|
— |
|
| Outstanding PSUs |
238,655 |
|
|
272,189 |
|
|
— |
|
| Outstanding ESPP shares |
64,091 |
|
|
27,827 |
|
|
15,151 |
|
| Outstanding stock warrants |
3,489,662 |
|
|
2,618,707 |
|
|
2,614,664 |
|
| Outstanding stock option awards |
— |
|
|
— |
|
|
97,223 |
|
Note 14 Income Taxes
The following table sets forth the components of the Company's (loss) income before income tax benefit (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| United States |
$ |
(278,741) |
|
|
$ |
68,706 |
|
|
$ |
168,965 |
|
| Foreign |
18,197 |
|
|
30,269 |
|
|
(34,651) |
|
| Total (loss) income before income tax benefit (expense) |
$ |
(260,544) |
|
|
$ |
98,975 |
|
|
$ |
134,314 |
|
The following table sets forth the components of the Company's income tax benefit (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Current tax (expense): |
|
|
|
|
|
| Federal |
$ |
(1,870) |
|
|
$ |
(42,065) |
|
|
$ |
(31,690) |
|
| State and local |
(1,542) |
|
|
(6,579) |
|
|
(5,852) |
|
| Foreign |
(8,238) |
|
|
(11,096) |
|
|
(14,494) |
|
| Total current tax (expense) |
(11,650) |
|
|
(59,740) |
|
|
(52,036) |
|
| Deferred tax (expense) benefit: |
|
|
|
|
|
| Federal |
7,789 |
|
|
9,096 |
|
|
(4,378) |
|
| State and local |
(826) |
|
|
(3,439) |
|
|
2,560 |
|
| Foreign |
5,936 |
|
|
9,456 |
|
|
21,117 |
|
| Total deferred tax benefit |
12,899 |
|
|
15,113 |
|
|
19,299 |
|
| Total income tax benefit (expense) |
$ |
1,249 |
|
|
$ |
(44,627) |
|
|
$ |
(32,737) |
|
The following table sets forth the principal reasons for the differences between the effective income tax rate and the statutory federal income tax rate for the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| |
2023 |
|
2022 |
|
2021 |
| Statutory federal tax rate |
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
| Foreign rate differential |
0.3 |
% |
|
0.1 |
% |
|
(3.6) |
% |
| State and local taxes, net of federal tax benefit |
(0.8) |
% |
|
9.1 |
% |
|
4.3 |
% |
| Change in value of indemnification asset |
(0.9) |
% |
|
(0.4) |
% |
|
— |
% |
| Non-deductible executive compensation |
(1.0) |
% |
|
1.8 |
% |
|
1.0 |
% |
| Stock compensation |
— |
% |
|
— |
% |
|
(0.5) |
% |
| Non-deductible transaction costs |
(0.2) |
% |
|
0.1 |
% |
|
4.2 |
% |
| Change in federal and state valuation allowance |
0.1 |
% |
|
(0.7) |
% |
|
(2.3) |
% |
| Change in unrecognized tax benefits (including FBOS) |
2.4 |
% |
|
1.9 |
% |
|
(1.4) |
% |
| Bargain purchase gain |
— |
% |
|
(2.2) |
% |
|
— |
% |
| Non-deductible goodwill impairment |
(21.7) |
% |
|
21.6 |
% |
|
— |
% |
| Federal research and development credit |
0.6 |
% |
|
(1.4) |
% |
|
— |
% |
| Other, net |
0.7 |
% |
|
(5.8) |
% |
|
1.7 |
% |
| Effective tax rate |
0.5 |
% |
|
45.1 |
% |
|
24.4 |
% |
Deferred Taxes
Deferred taxes arise because of differences in the book and tax basis of certain assets and liabilities. A valuation allowance is recognized to reduce gross deferred tax assets to the amount that will more likely than not be realized.
The following table sets forth the significant components of the Company's deferred income tax assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
| |
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
| Deferred tax assets |
|
|
|
| Allowance for doubtful accounts |
$ |
4,405 |
|
|
$ |
4,453 |
|
| Deferred and other compensation |
16,662 |
|
|
16,638 |
|
| Capital investments |
3,790 |
|
|
3,809 |
|
| Interest expense limitation |
9,680 |
|
|
— |
|
| Fixed assets and capitalized software |
14,786 |
|
|
4,552 |
|
| Pension and other post-employment benefits |
18,805 |
|
|
20,063 |
|
| Operating lease liability |
3,474 |
|
|
6,176 |
|
| Reserve for facility exit costs |
4,812 |
|
|
5,039 |
|
Net operating loss and credit carryforwards (1) |
27,593 |
|
|
28,069 |
|
| Non-compete and other agreements |
37,615 |
|
|
44,210 |
|
| Goodwill and other intangible assets |
15,567 |
|
|
17,033 |
|
| Other, net |
8,361 |
|
|
10,077 |
|
| Total deferred tax assets |
$ |
165,550 |
|
|
$ |
160,119 |
|
| Valuation allowance |
(18,810) |
|
|
(21,109) |
|
| Net deferred tax assets |
$ |
146,740 |
|
|
$ |
139,010 |
|
|
|
|
|
| Deferred tax liabilities |
|
|
|
| Goodwill and other intangible assets |
$ |
(2,587) |
|
|
$ |
(8,694) |
|
| Deferred costs |
(3,368) |
|
|
(1,923) |
|
| Investment in subsidiaries |
(4,489) |
|
|
(4,809) |
|
| Operating lease right-of-use assets |
(5,582) |
|
|
(6,270) |
|
| Debt, capitalized fees, and other interest |
— |
|
|
(24) |
|
| Fixed assets and capitalized software |
(1,099) |
|
|
(961) |
|
| Other, net |
(2,676) |
|
|
(2,983) |
|
| Total deferred tax (liabilities) |
$ |
(19,801) |
|
|
$ |
(25,664) |
|
| Net deferred tax asset |
$ |
126,939 |
|
|
$ |
113,346 |
|
(1) For the year ended December 31, 2023, the Company had gross federal net operating loss carryforwards of $32.7 million, subject to an annual Section 382 limitation of $0.4 million. The Company also had net operating loss and credit carryforward deferred tax assets of $20.9 million and $22.8 million for the years ended December 31, 2023 and 2022, respectively, for state income tax purposes, which will begin to expire in 2024. Additionally, $0.3 million of the state net operating loss carryforward deferred tax asset balance is subject to a Section 382 limitation.
The Company establishes a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In evaluating the ability to realize deferred tax assets, the Company considers all available positive and negative evidence, in determining whether, based on the weight of that evidence, a valuation allowance is needed for some or all of the Company's deferred tax assets. In determining the need for a valuation allowance on the Company's deferred tax assets, the Company places greater weight on recent and objectively verifiable current information. The Company has considered taxable income in prior carryback years, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income in assessing the need for the valuation allowance. If the Company was to determine that it would be able to realize the deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.
As of December 31, 2023, management has determined that it is more likely than not that its deferred taxes will be realized, with the exception of certain indefinite lived deferred tax assets and certain state net operating loss carryforwards of $18.8 million. For the year ended December 31, 2023, the Company recorded a net valuation allowance decrease of $2.3 million on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized.
Valuation Allowance
The following table sets forth changes in the Company’s valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
2023 |
|
2022 |
| Balance at beginning of period |
$ |
21,109 |
|
|
$ |
21,338 |
|
| Net change in valuation allowance |
(2,299) |
|
|
(229) |
|
| Balance at end of period |
$ |
18,810 |
|
|
$ |
21,109 |
|
Unrecognized Tax Benefits
The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns.
The Company is subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which the Company is subject to potential examination include the United States and Australia. Generally, tax years 2020 through 2022 are subject to examination by the Internal Revenue Service and tax years 2019 through 2022 are subject to examination by the Australian Tax Authority. State tax returns are open for examination for an average of three years; however, certain jurisdictions remain open to examination longer than three years due to the existence of net operating loss carryforwards. The Company received IRS FPAA notification letters (Form 1830-C) dated August 29, 2018 for IRS adjustments related to the tax years 2012-2015, for which the Company has previously adequately reserved. See Note 15, Contingent Liabilities. The Company is also currently under California Franchise Tax Board tax examination for tax years 2013 and 2014. The Company does not have any other significant state or local examinations in process.
The following table reflects changes to and balances of the Company's unrecognized tax benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Balance at beginning of period |
$ |
21,443 |
|
|
$ |
20,834 |
|
|
$ |
23,703 |
|
| Gross additions for tax positions related to the current year |
624 |
|
|
423 |
|
|
— |
|
| Gross additions for tax positions related to prior years |
201 |
|
|
332 |
|
|
— |
|
| Gross reductions for tax positions related to prior years |
(5,128) |
|
|
— |
|
|
— |
|
| Gross reductions for tax positions related to the lapse of applicable statute of limitations |
— |
|
|
(146) |
|
|
(2,869) |
|
| Balance at end of period |
$ |
17,140 |
|
|
$ |
21,443 |
|
|
$ |
20,834 |
|
For the year ended December 31, 2023, the Company's unrecognized tax benefit decreased by $4.3 million, while for the year ended December 31, 2022, the Company's unrecognized tax benefit increased by $0.6 million, and for the year ended December 31, 2021, the Company's unrecognized tax benefit decreased by $2.9 million. The decrease for the year ended December 31, 2023 was primarily attributable to favorable developments with ongoing U.S. federal tax examinations, partially offset by the increase attributable to tax positions related to research and development credits claimed for tax years 2022 and 2023. The increase for the year ended December 31, 2022 was primarily attributable to tax positions related to research and development credits claimed for tax years 2021 and 2022 offset by the reduction for tax positions related to the lapse of applicable statute of limitations. The decrease for the year ended December 31, 2021 was primarily attributable to the reduction for tax positions related to the lapse of applicable statute of limitations.
For the years ended December 31, 2023, 2022 and 2021, the Company had $17.1 million, $21.4 million, and $20.8 million, respectively, of unrecognized tax benefits, excluding interest and penalties, that if recognized, would impact the effective tax rate. The Company recorded adjustments to interest and penalties related to unrecognized tax benefits as part of the expense/(benefit) for income taxes in the Company's consolidated statements of operations and comprehensive (loss) income of $(2.8) million, $2.1 million, and $1.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Unrecognized tax benefits include $9.0 million, $11.7 million, and $9.6 million of accrued interest as of December 31, 2023, 2022, and 2021, respectively.
It is reasonably possible that the $17.1 million unrecognized tax benefit liability presented above for the year ended December 31, 2023, could decrease by $15.6 million within the next twelve months, due to an anticipated settlement with the tax authorities and the expiration of the statute of limitations in certain jurisdictions.
Risks Related to Taxes and Tariffs
The international tax environment remains highly uncertain and increasingly complex as evidenced by initiatives put forth by the Organization for Economic Co-operation and Development (“OECD”), which includes the introduction of a global minimum tax at a rate of 15% under the OECD’s Pillar Two rules. The OECD continues to release additional guidance on these rules and suggests enactment to take effect in 2024. We continue to monitor these proposals closely and, if enacted by various countries in which we do business, they may increase our taxes in the applicable jurisdictions or cause us to change the way we operate our business and result in increased taxation of our international earnings.
Note 15 Contingent Liabilities
Litigation
The Company is subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.
The Company establishes reserves for the estimated losses on specific contingent liabilities for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, losses are considered probable, but the Company is not able to make a reasonable estimate of the liability because of the uncertainties related to the outcome or the amount or range of potential loss. For these matters, disclosure is made, but no amount is reserved. The Company does not expect that the ultimate resolution of pending regulatory and legal matters in future periods will have a material adverse effect on the Company's consolidated statements of operations and comprehensive (loss) income, balance sheets or cash flows.
Section 199 and Research and Development Tax Case
Section 199 of the Internal Revenue Code of 1986, as amended (the “Tax Code”) provides for deductions for manufacturing performed in the U.S. The Internal Revenue Service (“IRS”) has taken the position that directory providers are not entitled to take advantage of the deductions because printing vendors are already taking deductions and only one taxpayer can claim the deduction. The Tax Code also grants tax credits related to research and development expenditures. The IRS also takes the position that the expenditures have not been sufficiently documented to be eligible for the tax credit. The Company disagrees with these positions.
The IRS has challenged the Company's positions. With respect to the tax years 2012 through June 2015 for the YP LLC partnership, the IRS sent 90-day notices to DexYP on August 29, 2018. In response, the Company filed three petitions (in the names of various related partners) in U.S. Tax Court, and the IRS filed answers to those petitions. The three cases were consolidated by the court and were referred back to IRS Administrative Appeals for settlement negotiations, during which time the litigation was suspended. Several appeals conferences for YP have been held. The Company is working through ongoing settlement negotiations with the Appeals Officer related to the Section 199 disallowance. The Company and the IRS also reached an agreement regarding additional research and development tax credits for the tax years at issue whereby the IRS will allow more tax credits than were originally claimed on the tax returns. With respect to the tax year from July to December 2015 for the Print Media LLC partnership, the Company has been unsuccessful in its attempt to negotiate a settlement with IRS Appeals, and the IRS issued a 90-day notice to the Company. The Company filed a petition in the U.S. Tax Court to challenge the IRS denial.
As of December 31, 2023 and December 31, 2022, the Company has reserved $26.1 million and $34.0 million, respectively, in connection with the Section 199 disallowance and less than $0.1 million related to the research and development tax credit disallowance. Pursuant to the YP Acquisition agreement, the Company was entitled to (i) a dollar-for-dollar indemnification from the sellers for the research and development tax liability, and (ii) a dollar-for-dollar indemnification from the sellers for the Section 199 tax liability after the Company pays the first $8.0 million in liability. On June 22, 2023, the Company entered into a settlement agreement with the sellers regarding the settlement of the indemnification asset. The balance of the indemnification asset was $0.0 million and $26.5 million at December 31, 2023 and December 31, 2022, respectively.
On May 22, 2023, the Company received a draft Appeals Settlement document (“Draft Settlement”) from the IRS relating to the Section 199 tax case. Once finalized, the Draft Settlement will result in a decrease in the unrecognized tax benefit recorded for this tax position. During the year ended December 31, 2023, the Company recorded a measurement adjustment to the uncertain tax position liability to account for the new information received in the Draft Settlement. The Company is in continued discussion with the IRS regarding the finalization of this case and final tax impact that will result. As of December 31, 2023, the final resolution has not been issued by the Court. Accordingly, the Company does not consider the matter effectively settled.
Other
Ohio Use Tax Audit
In November 2021, the Company received a notice from the Ohio Department of Taxation Audit Division requesting to schedule an audit of the Ohio use tax records for the period of October 1, 2015 through March 31, 2022. On September 30, 2023, the Company received the final Statement of Proposed Audit Changed for the Sales and Use Tax for $0.2 million, including interest and penalties. The Company reversed the $1.3 million reserve existing on the Company's consolidated balance sheet as of September 30, 2023.
Note 16 Changes in Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders' equity, for the years ended December 31, 2023 and 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
|
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
2023 |
|
2022 |
| Beginning balance at January 1, |
|
|
|
|
$ |
(16,261) |
|
|
$ |
(8,047) |
|
Foreign currency translation adjustment, net of tax expense of $4.9 million and $5.5 million, respectively |
|
|
|
|
1,070 |
|
|
(8,214) |
|
Ending balance at December 31, |
|
|
|
|
$ |
(15,191) |
|
|
$ |
(16,261) |
|
Note 17 Segment Information
The Company manages its operations using four operating segments, which are also its reportable segments: (1) Thryv U.S. Marketing Services, (2) Thryv U.S. SaaS, (3) Thryv International Marketing Services, and (4) Thryv International SaaS.
The Company does not allocate assets to its segments and the CODM does not evaluate performance or allocate resources based on segment asset data, and, therefore, such information is not presented.
The following tables summarize the operating results of the Company's reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2023 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Revenue |
$ |
510,533 |
|
|
$ |
253,579 |
|
|
$ |
142,711 |
|
|
$ |
10,138 |
|
|
$ |
916,961 |
|
| Segment Gross Profit |
320,327 |
|
|
161,663 |
|
|
88,730 |
|
|
7,527 |
|
|
578,247 |
|
| Segment Adjusted EBITDA |
123,249 |
|
|
18,576 |
|
|
52,241 |
|
|
(6,551) |
|
|
187,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2022 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Revenue |
$ |
820,032 |
|
|
$ |
211,801 |
|
|
$ |
166,010 |
|
|
$ |
4,545 |
|
|
$ |
1,202,388 |
|
| Segment Gross Profit |
539,543 |
|
|
130,272 |
|
|
108,496 |
|
|
2,071 |
|
|
780,382 |
|
| Segment Adjusted EBITDA |
271,629 |
|
|
(3,686) |
|
|
75,106 |
|
|
(9,707) |
|
|
333,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2021 |
|
Thryv U.S. |
|
Thryv International |
|
|
| (in thousands) |
Marketing Services |
|
SaaS |
|
Marketing Services |
|
SaaS |
|
Total |
| Revenue |
$ |
797,493 |
|
|
$ |
170,498 |
|
|
$ |
144,837 |
|
|
$ |
554 |
|
|
$ |
1,113,382 |
|
| Segment Gross Profit |
539,866 |
|
|
104,944 |
|
|
60,761 |
|
|
(232) |
|
|
705,339 |
|
| Segment Adjusted EBITDA |
318,230 |
|
|
(14,004) |
|
|
53,150 |
|
|
(6,853) |
|
|
350,523 |
|
A reconciliation of the Company’s Income before income tax benefit (expense) to total Segment Adjusted EBITDA is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
(Loss) income before income tax benefit (expense) |
$ |
(260,544) |
|
|
$ |
98,975 |
|
|
$ |
134,314 |
|
| Impairment charges |
268,846 |
|
|
102,222 |
|
|
3,611 |
|
| Depreciation and amortization expense |
63,251 |
|
|
88,392 |
|
|
105,473 |
|
| Interest expense |
61,728 |
|
|
60,407 |
|
|
66,374 |
|
| Stock-based compensation expense |
22,201 |
|
|
14,628 |
|
|
8,094 |
|
| Restructuring and integration expenses |
14,612 |
|
|
17,804 |
|
|
18,145 |
|
| Non-cash loss (gain) from remeasurement of indemnification asset |
10,734 |
|
|
(2,148) |
|
|
(1) |
|
Transaction costs (1) |
373 |
|
|
6,119 |
|
|
25,059 |
|
| Other components of net periodic pension benefit |
(2,719) |
|
|
(44,612) |
|
|
(14,829) |
|
| Other |
9,033 |
|
|
(8,445) |
|
|
4,283 |
|
| Total Segment Adjusted EBITDA |
$ |
187,515 |
|
|
$ |
333,342 |
|
|
$ |
350,523 |
|
(1)Consists of Yellow Acquisition, Vivial Acquisition, Thryv Australia Acquisition and other transaction costs.
The following table sets forth the Company's disaggregation of Revenue based on services and geographical region by customers for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| (in thousands) |
2023 |
|
2022 |
|
2021 |
| Thryv U.S. |
|
|
|
|
|
| Print |
$ |
201,301 |
|
|
$ |
386,500 |
|
|
$ |
365,966 |
|
| Digital |
309,232 |
|
|
433,532 |
|
|
431,527 |
|
| Total Marketing Services |
510,533 |
|
|
820,032 |
|
|
797,493 |
|
| SaaS |
253,579 |
|
|
211,801 |
|
|
170,498 |
|
| Total Thryv U.S. |
$ |
764,112 |
|
|
$ |
1,031,833 |
|
|
$ |
967,991 |
|
|
|
|
|
|
|
| Thryv International |
|
|
|
|
|
| Print |
$ |
63,533 |
|
|
$ |
73,474 |
|
|
$ |
46,859 |
|
| Digital |
79,178 |
|
|
92,536 |
|
|
97,978 |
|
| Total Marketing Services |
142,711 |
|
|
166,010 |
|
|
144,837 |
|
| SaaS |
10,138 |
|
|
4,545 |
|
|
554 |
|
| Total Thryv International |
152,849 |
|
|
170,555 |
|
|
145,391 |
|
| Total Revenue |
$ |
916,961 |
|
|
$ |
1,202,388 |
|
|
$ |
1,113,382 |
|
The following table sets forth the Company's total long-lived assets by geographical region:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
December 31, 2023 |
|
December 31, 2022 |
| United States |
$ |
12,711 |
|
|
$ |
16,960 |
|
| International |
611 |
|
|
1,142 |
|
| Total long-lived assets |
$ |
13,322 |
|
|
$ |
18,102 |
|
Percentage of long-lived assets held outside of the United States |
5 |
% |
|
6 |
% |
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate over time.
Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on its assessment and those criteria, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023.
We are in the process of integrating Yellow, a New Zealand marketing services company that we acquired on April 3, 2023. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2023 excludes an assessment of the internal control over financial reporting related to the Yellow Acquisition. The Yellow Acquisition represented 1.9% of our consolidated total assets at December 31, 2023, and 1.3% of our consolidated revenue included in our consolidated financial statements for the year ended December 31, 2023.
Grant Thornton LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Company's internal control over financial reporting, which is included herein.
Changes in Internal Control over Financial Reporting
We have completed one acquisition in the 12 months ended December 31, 2023. As part of our ongoing integration activities, we continue to implement our controls and procedures over the business we acquired to reflect the risks inherent in our acquisition. Throughout the integration process, we monitor these efforts and take corrective action as needed to reinforce the application of our controls and procedures. Other than the foregoing, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the year ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Thryv Holdings, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Thryv Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated February 22, 2024 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Yellow Holdings Limited, a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 1.9% and 1.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023. As indicated in Management’s Report, Yellow Holdings Limited was acquired during 2023. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Yellow Holdings Limited.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Dallas, Texas
February 22, 2024
Item 9B. Other Information
None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s quarter ended December 31, 2023.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics (the “Code”) that is applicable to all of our employees, officers and directors including our principal executive officer, principal financial officer, principal accounting officer, controller, and any other persons performing similar functions, which is available on our website at www.thryv.com under “Investor Relations - Governance Documents.” We intend to satisfy the disclosure requirement regarding any amendment to, or waiver from a provision of the Code for Thryv’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website.
The remaining information required by this Item 10 is incorporated by reference from the information to be provided in our definitive proxy statement for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”). The 2024 Proxy Statement will be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2023.
Item 11. Executive Compensation
The information required by this Item 11 is incorporated by reference from our 2024 Proxy Statement, which will be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 13 is incorporated by reference from our 2024 Proxy Statement, which will be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2023.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated by reference from our 2024 Proxy Statement, which will be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2023.
Item 14. Principal Accounting Fees and Services
The information required by this Item 14 is incorporated by reference from our 2024 Proxy Statement, which will be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2023.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as a part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements (included in Part II, Item 8 of this Annual Report on Form 10-K).
•Report of Independent Registered Public Accounting Firm (PCAOB ID: 248)
•Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
•Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2023, 2022 and 2021
•Consolidated Balance Sheets as of December 31, 2023 and 2022
•Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021
•Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
•Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Financial statement schedules have been omitted as the information is either not required or the information is otherwise included in the consolidated financial statements.
(3) Exhibits
The documents set forth below are filed herewith or are incorporated herein by reference to the location indicated.
|
|
|
|
|
|
|
|
|
| Exhibit No. |
|
Description |
| 2.1 |
|
|
| 3.1 |
|
|
| 3.2 |
|
|
| 4.1 |
|
|
| 10.1 |
|
Amended and Restated Credit Agreement, dated June 30, 2017, by and among Thryv, Inc., certain other Credit Parties, certain other Subsidiaries of Thryv, Inc., the lenders party thereto and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1, filed with the SEC on September 1, 2020). |
| 10.2 |
|
First Amendment to Amended and Restated Credit Agreement, dated January 31, 2019, among Thryv, Inc., as borrower, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1, filed with the SEC on September 1, 2020). |
| 10.3 |
|
Second Amendment to Amended and Restated Credit Agreement, dated March 21, 2019, among Thryv, Inc., as borrower, Thryv Holdings, Inc., the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-1, filed with the SEC on September 1, 2020). |
| 10.4 |
|
Third Amendment to Amended and Restated Credit Agreement, dated August 20, 2019, among Thryv, Inc., as borrower, Thryv Holdings, Inc., the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, filed with the SEC on September 1, 2020). |
| 10.5 |
|
Fourth Amendment to Amended and Restated Credit Agreement, dated January 28, 2020, among Thryv, Inc., as borrower, Thryv Holdings, Inc., the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-1, filed with the SEC on September 1, 2020). |
| 10.6+ |
|
|
| 10.7+ |
|
|
| 10.8+ |
|
|
| 10.9+ |
|
|
|
|
|
|
|
|
|
|
|
| 10.10 |
|
|
| 10.11*+ |
|
|
| 10.12*+ |
|
|
| 10.13+ |
|
|
| 10.14+ |
|
|
| 10.15+ |
|
|
| 10.16+ |
|
|
| 10.17+ |
|
|
| 10.18+ |
|
|
| 10.19 |
|
Term Loan Credit Agreement by and among Thryv Holdings, Inc., Thryv, Inc., the Lenders party thereto from time to time and Wells Fargo Bank, National Association, as Administrative Agent, dated as of March 1, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed, with the SEC on March 2, 2021). |
| 10.20 |
|
Fifth Amendment to Amended and Restated Credit Agreement, First Amendment to Guaranty and Security Agreement and Joinder, among Thryv Holdings, Inc., Thryv, Inc. and the other borrowers from time to time party thereto, the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent, dated as of March 1, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed, with the SEC on March 2, 2021). |
| 10.21+ |
|
|
| 10.22+ |
|
|
| 10.23+ |
|
|
| 10.24* |
|
|
| 10.25* |
|
|
| 21.1* |
|
|
| 23.1* |
|
|
| 23.2* |
|
|
| 31.1* |
|
|
| 31.2* |
|
|
| 32.1* |
|
|
|
|
|
|
|
|
|
|
|
| 32.2* |
|
|
| 97* |
|
|
| 101.INS* |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 104 |
|
Cover Page Interactive Data File (included in Exhibits 101). |
*Filed herewith
+ Management contract of compensatory plan or arrangement 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 thereunto duly authorized.
Item 16. Form 10-K Summary
None.
SIGNATURES
|
|
|
|
|
|
|
|
|
| THRYV HOLDINGS, INC. |
|
|
|
| February 22, 2024 |
By: |
/s/ Joseph A. Walsh |
|
|
Joseph A. Walsh
Chairman of the Board and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
| February 22, 2024 |
By: |
/s/ Paul D. Rouse |
|
|
Paul D. Rouse
Chief Financial Officer, Executive Vice President and Treasurer |
|
|
(Principal Financial Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
|
|
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|
|
|
|
|
|
| Signatures |
Title(s) |
Date |
|
|
|
| /s/ Joseph A. Walsh |
Chairman of the Board and Chief Executive Officer |
February 22, 2024 |
| Joseph A. Walsh |
(Principal Executive Officer) |
|
|
|
|
| /s/ Paul D. Rouse |
Chief Financial Officer, Executive Vice President and Treasurer |
February 22, 2024 |
| Paul D. Rouse |
(Principal Financial and Accounting Officer) |
|
|
|
|
| /s/ Amer Akhtar |
Director |
February 22, 2024 |
| Amer Akhtar |
|
|
|
|
|
| /s/ Bonnie Kintzer |
Director |
February 22, 2024 |
| Bonnie Kintzer |
|
|
|
|
|
| /s/ Ryan O'Hara |
Director |
February 22, 2024 |
| Ryan O'Hara |
|
|
|
|
|
| /s/ John Slater |
Director |
February 22, 2024 |
| John Slater |
|
|
|
|
|
| /s/ Lauren Vaccarello |
Director |
February 22, 2024 |
| Lauren Vaccarello |
|
|
|
|
|
| /s/ Heather Zynczak |
Director |
February 22, 2024 |
| Heather Zynczak |
|
|
EX-10.11
2
exhibit1011-202310xk.htm
EX-10.11
exhibit1011-202310xk
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 2023 OVER PERFORMANCE PLAN (“OPP”) Effective January 1 – December 31, 2023 PURPOSE The Over Performance Plan (the “Plan” or “OPP”) is an incremental incentive plan designed to reward eligible Sr Leaders at the Director level and above for over achievement of pre-established corporate performance measure(s) that are assigned a specific weight according to the Company’s budgeted goals and objectives for the Plan year. This Plan, for eligible employees, covers the period from January 1, through December 31 of the Plan year. This Plan supersedes any prior incremental incentive plan versions and cancels any document that provides information contrary to the information contained in this Plan version. The Company may terminate the Plan, amend or modify the Plan in any respect, at any time, and without notice, provided, however, that such termination, modification or amendment shall not adversely affect the rights of a participant to receive an award already fully earned under the Plan. ELIGIBILITY All US based regular full-time and part-time non-sales, non-bargained and non-commissioned Director level and above employees who are eligible under the current Short Term Incentive Plan (“STIP”), who are employed during the Plan year, and who commence employment with the Company on or before September 30 of the Plan year are potentially eligible to participate in the Plan. To be eligible to earn and receive payment of an incentive award, the participant must be: 1. Classified as a permanent US employee and currently participating under the STIP; 2. Employed with the Company during some portion of the period for which the award is being measured, and begins work for the Company on or before September 30 of the Plan year; and 3. Actively working at the Director level or above through the payment date, or on Company-approved or job- protected leave for any periods not worked where the Company has a reasonable expectation that the employee will return to their position in the near future and is active on the date the incentive award is “earned,” as defined in the Administration section. An individual is “actively working” if he or she is actually working and carrying out his or her duties at the Company, or he or she is on PTO or a paid Company holiday. Incentive awards are not “earned” until the events described in the Administration section occur. The following individuals are not eligible for a payment under OPP: 1. Employees who voluntarily terminate their employment or are involuntarily terminated for any reason are not eligible for the OPP payment. In addition, payment to employees who are under investigation for misconduct on the normal payout date may be delayed. If it is determined that misconduct occurred and termination occurs, the award is forfeited in accordance with applicable state law. 2. Contractors and interns. 3. Non-US employees. 4. Employees who are not current participants under the current STIP.
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 OPP DESIGN PLAN COVERAGE PERIOD Awards under the Plan will be based upon the achievement of pre-established annual Corporate performance measure(s) and the eligible employee’s annual eligible base salary on December 31 of the Plan year will be used when proration(s) are not required for the following Plan Coverage Period(s), unless modified by the Compensation Committee: January 1, through December 31 of the Plan year. OPP PERFORMANCE MEASURES AND GOALS The amount of any OPP payment will be based on the eligible employee’s target OPP opportunity and exceeding the approved budgeted corporate performances measures. Target opportunities, corporate performance metrics, weighting, and the pre-established performance goals, as determined by the Compensation Committee in its sole discretion and may be changed at any time. The Compensation Committee, upon consultation with the Chief Executive Officer, determine the funding level that will be available for awarding incentives. If it is determined that OPP awards will be granted, the Compensation Committee retains the sole discretion to set award levels and to adjust award levels and subsequent employee distributions. INDIVIDUAL TARGET OPPORTUNITY Eligible employees have an OPP target percentage opportunity, equivalent to their STIP target, assigned based on their job(s) during the Plan year. Targets may be prorated to capture the relevant base salary earnings in each job, the target percentage of each job, and the amount of time spent in each job. The eligible employee’s annual base salary on December 31 of the Plan year will be used when proration(s) are not required. The annual OPP targets by job level are as follows and mirrors eligible employees STIP target: Table 1: JOB LEVEL OPP TARGET % Chief Executive Officer (CEO) 100% Executive Vice President (EVP) 60% - 70% Vice President (VP) 40% Assistant Vice President (AVP) 30% Director (DIR) 25% Additionally, the participant’s total incentive payout (STI award + OPP award) may not exceed 2x the participant’s STI award at target. Using a Director with a base salary of $100,000 as an example. • STI target = 25% • STI target value = $25,000 ($100,000 x 25%) • 2x STI target = $50,000 ($25,000 x 2) • Assuming STI performance at 125%, payout = $31,250 ($25,000 x 125% performance) • Assuming OPP performance at 105% payout = $26,250 ($25,000 x 105% performance) • STI award of $31,250 + OPP award of $26,250 = $57,500 • Total combined incentive payment capped at $50,000
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 CORPORATE PERFORMANCE MEASURES AND GOALS The Corporate performance measures are Free Cash Flow (“FCF”), Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) and SaaS Revenue. The planned performance metrics will only reach threshold and begin to payout after the STIP metric achieves maximum performance. No incentive payment will be earned for performance below the minimum thresholds. The eligible employee’s individual performance rating does not carry a weight in the OPP payment.” Table 2: Metric Weight Threshold Maximum Free Cash Flow 40% $102.00 MM See Funding Table 3 EBITDA 30% $187.50 MM See Funding Table 3 SaaS Revenue 30% $260.50 MM See Funding Table 3 Self funding Plan pays with funds in excess of $102.00MM in FCF weighted at 40% and $187.50MM EBITDA and $260.50MM SaaS Revenue equally weighted at 30%. The table below illustrates the minimum threshold and incremental achievement levels of FCF, EBITDA and SaaS Revenue performance for the Plan year and the corresponding payout levels for OPP. Incentive awards are interpolated between achievement levels. Overall OPP performance payout is capped at 125% payout.
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 Table 3: PRORATION OF INCENTIVE If an employee meets Plan eligibility requirements, the OPP award will be prorated for any periods during which the employee was not working and not on regular, company-approved paid time off. For example, the OPP award will be prorated to reflect any of the following: 1. Unpaid leave – includes FMLA leave or a Personal Leave of Absence. 2. Supplemented leave – includes Short Term Leave “STD”, Long Term Leave “LTD” or Workers Compensation. 3. Administrative leave as part of any Company investigation, discipline, or inquiry 4. Administrative leave as part of any company investigation, discipline, or inquiry 5. Hire date after January 1 of the Plan year 6. A job change that results in a change in Target % or a change in base pay during the Plan year who are eligible for participation in the OPP. In such situations as described above, the OPP award, if any, will be paid at the time that other OPP awards are scheduled to be paid in accordance to Plan, unless otherwise specifically stated in this Plan. For employees on leave, OPP awards will be paid to the employee once they return to work, are active and no longer on leave.
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 EXAMPLE - OPP INCENTIVE AWARD CALCULATION (For illustrative purposes only) Compensation Assumptions: January 1 – December 31: • Base Salary = $100,000 • Target Bonus % = 25% • Total Target Bonus = $25,000 (EBITDA = $10,000; FCF = $7,500 & SaaS Revenue = $7,500) Table 4: OPP Component Achievement (MM) Target Payout % of Pool Achieved Total Payout FCF $105.00 MM $10,000 20% $2,000 EBITDA $198.00 MM $7,500 70% $5,250 SaaS Revenue $266.50 MM $7,500 40% $3,000 $9,250 Assumes $100,000 base, 25% target bonus with no prorations TIMING OF PAYMENTS Assuming Plan requirements are satisfied, which include Compensation Committee review and approval, award payments will be targeted after the end of the Plan year; typically, to be paid the last week of March or first week of April to eligible employees actively working and on payroll at the time of payment.
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 DEFINITIONS BASE SALARY EARNINGS An eligible employee’s base salary earnings paid during the Plan year as of December 31 or prorated for each eligible job(s) within the Plan year. Base salary earnings for this purpose do not include benefits, bonuses, overtime, or other awards. BOARD The Company’s Board of Directors. COMPENSATION COMMITTEE The Compensation Committee of the Board of Directors of the Company. COMPANY Thryv Holdings, Inc. and Thryv, Inc. only. Financial metrics of EBITDA, FCF and SaaS Revenues are based on the consolidated company including international operations. EBITDA Total Company operating income, before interest, taxes, depreciation and amortization, each calculated in accordance with GAAP, adjusted to exclude the impact of stock compensation expense. FREE CASH FLOW (FCF) Operating cash generated by the company less outlays for capital expenditures. SAAS REVENUE SaaS revenue generated from the sale of Thryv Software, Thryv Leads and other associated add-ons or products. INDIVIDUAL TARGET OPPORTUNITY An eligible employee’s OPP target percentage based on job level(s) which mirror employee’s STIP target percentage. PLAN PARTICIPATION EFFECTIVE DATES The effective date for participants who become eligible for this Plan is on January 1 of the Plan year or after their eligibility date. The effective date for cessation of participation in this Plan for participants who move into a position not eligible for this Plan is the end of the pay period in which the move occurs. Non-sales employees at the Director level and above who are hired after January 1 of the Plan Coverage Period and who do not payments will be targeted for the spring following the end of Plan year rules based on hire date. PLAN YEAR OR COVERAGE PERIOD The Plan Year is the Company’s fiscal year, January 1, through December 31 of the Plan year.
Exhibit 10.11 Total Rewards 2023 Over Performance Plan Approved by Compensation Committee February 16, 2023 ADMINISTRATION Approval/Objectives Guidelines OPP Awards for Section 16 Officers are at the sole discretion of the Compensation Committee and the Board of Directors, awards to non-Section 16 employees are at the sole discretion of Sr Management. Awards may or may not be granted based upon Company, functional unit, departmental, and/or individual performance in the Plan year. If it is determined that OPP awards will be granted, the Compensation Committee and the Board of Directors retains the sole discretion to set award levels and to adjust award levels and subsequent employee distributions. When OPP Awards are Earned OPP Awards are not earned, are not due, and shall not be paid, unless and until the following conditions are met: (1) the Approval/Objective Guidelines are met, (2) the Compensation Committee approves Corporate performance and payment (3) all Plan eligibility requirements described of the Plan are met, (4) employee is employed and actively working (or on Company Approved or job protected leave) on the payment date, and (5) the payout date occurs. OPP incentive awards, if any, will be via payroll. All legally required and applicable income and employment taxes and withholdings will be deducted from the gross incentive award paid to participants. Awards are not considered eligible compensation for the purposes of calculating 401(k) match and contributions, other employee benefits, such as life insurance calculation of medical contributions. Disclaimer THIS PLAN IS NOT A CONTRACT OF EMPLOYMENT AND DOES NOT OTHERWISE ALTER YOUR AT-WILL EMPLOYMENT STATUS AND DOES NOT CREATE ANY CONTRACTUAL RIGHTS. Any payment under the Plan or this incentive award is discretionary and at the will of the Company. This Plan document and the award schedules set forth herein do not constitute an express or implied promise of continued employment for any period or at all, and will not interfere in any way with a participant’s right to terminate or the Company’s right to terminate a participant’s employment at any time, with or without cause and with or without notice. The Company may terminate the Plan, or amend or modify the Plan in any respect, at any time, and without notice. This Plan may be superseded by federal, state, and local laws to the extent applicable.
EX-10.12
3
exhibit1012-202310xk.htm
EX-10.12
exhibit1012-202310xk
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 2023 SHORT TERM INCENTIVE PLAN (“STIP”) US Employees Effective January 1 – December 31, 2023 PURPOSE The Short Term Incentive Plan (the “Plan” or “STIP”) is designed to reward eligible US non-sales, non-bargained for employees for achievement of pre-established corporate performance measures and individual performance objectives that are assigned a specific weight according to their importance in the Company’s business plan. This Plan, for eligible US employees, covers the period from January 1, through December 31 of the Plan year. This Plan supersedes any prior incentive plan version and cancels any document that provides information contrary to the information contained in this Plan version. The Company may terminate the Plan, amend or modify the Plan in any respect, at any time, and without notice. In addition, incentive awards are not “earned” until the events described in the Administration section occur. ELIGIBILITY All US based regular full-time and part-time non-sales, non-bargained and non-commissioned employees who are employed during the Plan year, and who begins work for the Company on or before September 30 of the Plan year, and who do not participate in another incentive plan currently in operation, are potentially eligible to participate in the Plan. To be eligible to earn and receive payment of any incentive award, the participant must be: 1. Classified as a permanent US employee; 2. Employed with the Company during some portion of the period for which the award is being measured, and begins work for the Company on or before September 30 of the Plan year; and 3. Actively working through the payment date, or on Company-approved or job-protected leave for any periods not worked where the Company has a reasonable expectation that the employee will return to their position in the near future and is active on the date the award is “earned,” as defined in the Administration section. An individual is “actively working” if they are actually working and carrying out their duties at the Company, or they are on PTO or a paid Company holiday. 4. Must be in a STIP eligible position for a minimum of 90 consecutive days in order to be eligible for a prorated award. Incentive awards are not “earned” until the events described in the Administration section occur. The following individuals are not eligible for a payment under STIP: 1. Employees who voluntarily terminate their employment or are involuntarily terminated for any reason are not eligible for the STIP payment. In addition, payment to employees who are under investigation for misconduct on the normal payout date may be delayed. If it is determined that misconduct occurred and termination occurs, the award is forfeited in accordance with applicable state law. 2. Contractors and interns. 3. Non-US employees. 4. Employees who are participating in any other incentive plan within the Company (i.e. Sales Incentive programs, quarterly incentive programs, etc.). 5. Employees who are in a STIP eligible position for less than 90 consecutive days.
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 STIP DESIGN Performance metrics, weighting, and the pre-established performance goals are set by the Compensation Committee. Performance against pre-established performance goals, as determined by the Compensation Committee in its sole discretion and may be changed at any time. The Compensation Committee, upon consultation with the Chief Executive Officer, determine the funding level that will be available for awarding incentives. If it is determined that the STIP awards will be granted, the Compensation Committee retains the sole discretion to set award levels and to adjust award payouts and subsequent employee distribution. Individual Target Bonus Opportunity Each individual is assigned a target award opportunity that is a percentage of the individual’s base salary. The target percentage opportunity is determined based on the individual’s job(s) during the Plan Coverage Period, which may result in a target that has been prorated to capture the relevant base salary earnings in each job, the target percentage of each job and the amount of time spent in each job. The eligible employee’s annual eligible base salary on December 31 of the Plan year will be used when proration(s) are not required. The annual STIP targets by job level are as follows: Table 1: JOB LEVEL STIP TARGET % CEO 100% Executive Vice President (EVP) 60-70% Vice President (VP) 40% Assistant Vice President (AVP) 30% Director (DIR) 25% Sr Manager (SRMGR), Manager (MGR), Sr Exempt Individual Contributor (SRIC) 15% Supervisor (SUPV) 10% Exempt Individual Contributor (IC) 8% Non-Exempt Individual Contributor (NEIC) 5% Performance Goals There are four components of the STIP performance goals for January 1 through December 31: Table 2: Metric Weighting Target for January 1 - December 31 EBITDA 25% $180.00 MM Free Cash Flow 25% $97.00 MM SaaS Revenue 25% $255.50 MM Individual Performance 25% Funds once EBITDA reaches $155.00 MM
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 The individual performance component is determined based on individual performance ratings as recorded during the year-end performance appraisal. As a result, eligible employees may receive an award that is higher or lower than the STIP target award as defined by their job level. FUNDING STIP Financial Targets and Payout “Curve” – EBITDA incentive component begins to fund after exceeding a minimum EBITDA of $171.00 MM after cost of individual performance incentive, any adjusted FCF incentive earned and any adjusted SaaS revenue component earned, payout curve shown in Table 3 below. – The Free Cash Flow (FCF) incentive component begins to fund after exceeding a minimum FCF of $88.00 MM, payout curve shown in Table 3 below. – The SaaS Revenue incentive component begins to fund after exceeding a minimum SaaS Revenue of $246.50 MM, payout curve shown in Table 3 below. – Individual performance component of the incentive funds after obtaining minimum EBITDA of $155.00 MM. Table 3:
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 IMPACT OF INDIVIDUAL PERFORMANCE RATING ON THE STIP AWARD Individual performance rating has a direct impact on the individual performance component (25% of total) of the STIP award. Your manager will determine the award amount for this component based on the scale below. Award amounts for company component (75% of total) are fixed based on Company performance. Table 4: Individual Performance Rating Individual Payout Percentage (25% of Award) Far Exceeded Expectations 125% - 150% Exceeded Expectations 100% - 125% Achieved Expectations 75% - 100% Partially Met Expectations 0% - 50% Did Not Meet Expectations 0% Note: Employees with an individual performance rating of “Partially Met Expectations” will receive between 0% and 50% of their individual award portion (25% of award) as determined by their manager. Employees with an individual performance rating of “Did Not Meet Expectations” are not eligible for the individual component of the award and will receive a reduced payout of the Company performance portion at 25%. PRORATION OF INCENTIVE If an employee meets Plan eligibility requirements for only a portion of the Plan Coverage Period, the STIP award will be prorated (in days) for any periods the employee was not eligible. For example, the STIP will be prorated in an amount equivalent to the amount of time the employee was on any of the following: 1. Unpaid leave – includes FMLA leave or a Personal Leave of Absence. 2. Supplemented Leave – includes Short Term Leave “STD”, Long Term Leave “LTD” or Workers Compensation. 3. Administrative leave as part of any Company investigation, discipline, or inquiry 4. Hire date after January 1 of the Plan year 5. Movement from the STIP to another incentive plan (e.g., Sales / Operations) within the Plan year 6. Movement to the STIP eligible position from another incentive plan (e.g., Sales / Operations) or from a position covered by a collective bargaining agreement within the Plan year 7. A job change that results in a change in Target % or a change in base pay during the Plan year. In such situations as described above, the STIP award, if any, will be paid at the time that other STIP awards are scheduled to be paid in accordance to Plan, unless otherwise specifically stated in this Plan. For employees on leave, STIP awards will be paid to the employee once they return to work, are active and no longer on leave. EXAMPLE - INCENTIVE AWARD CALCULATIONS: Thryv Plan – January 1 to December 31: Company performance metrics as well as your individual performance count towards your STIP payout calculation. Below is an example of the target STIP calculation for an eligible employee who has been employed with the Company since January 1 with an annual base salary of $50,000 and an 8% STIP target opportunity. For illustrative purposes only, this assumes a full 365 days of the Plan Coverage Period within the same eligible job (I.e. no prorations):
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 Compensation Assumptions: January 1 – December 31: • Base Salary = $50,000 • STI Target % = 8% • STI Target Value $ = $4,000 • Performance Rating = Achieved Expectations Company Performance Assumptions: January 1 – December 31: • Company EBITDA achievement of $177.00 MM, 70% of target. • Company FCF achievement of $92.00 MM, 50% of target. • Company SaaS Revenue achievement of $255.50, target (100%) • Individual Performance pool fully funded as EBITDA threshold of $155.00 MM exceeded. The employee’s STIP will therefore be as follows for each of the components: Payout calculation for the Period January 1 – December 31 of the Plan year: Table 5: A B C STIP Component Bonus Target ($) Measure Weighting Target Achieved Award Payout (A*B*C) EBITDA $4,000 25% 70% $700 FCF $4,000 25% 50% $500 SaaS Revenue $4,000 25% 100% $1,000 Individual Performance $4,000 25% 100% * $1,000 STIP Payout $3,200 * Awarded by manager within allotted guidelines, see table 4. TIMING OF PAYMENTS Assuming Plan requirements are satisfied, which include Compensation Committee review and approval, award payments will be targeted after the end of the Plan year; typically, to be paid the last week of March or first week of April to eligible employees actively working and on payroll at the time of payment.
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 DEFINITIONS BASE SALARY EARNINGS An eligible employee’s base salary earnings paid during the Plan period as of December 31 or prorated for each eligible job(s) within the Plan period. Base salary earnings for this purpose do not include benefits, bonuses, overtime, or other awards. BOARD The Company’s Board of Directors. COMMITTEE The Compensation Committee of the Board of Directors of the Company. COMPANY Thryv Holdings, Inc. and Thryv, Inc. only. Financial metrics of EBITDA, FCF and SaaS Revenues are based on the consolidated company including international operations. EBITDA Total Company operating income, before interest, taxes, depreciation and amortization, each calculated in accordance with GAAP, adjusted to exclude the impact of stock compensation expense. FREE CASH FLOW (FCF) Operating cash generated by the company less outlays for capital expenditures. SAAS REVENUE Revenue generated from the sales of Thryv Software, Thryv Leads and other associated add-ons or products. INDIVIDUAL TARGET OPPORTUNITY An eligible employee’s STIP target percentage based on one’s job level and prorated when employee held more than one job levels during the Plan year. NON-BARGAINED FOR Non-represented employees or those employees not working under a collective bargaining agreement. PLAN COVERAGE PERIOD The Plan Coverage Period is January 1, through December 31 of the Plan year.
Total Rewards 2023 Short Term Incentive Plan Approved by Compensation Committee February 16, 2023 Exhibit 10.12 ADMINISTRATION Approval/Objectives Guidelines STIP Awards for Section 16 Officers are at the sole discretion of the Compensation Committee and the Board of Directors, awards to non-Section 16 employees are at the discretion of Sr Management. Awards may or may not be granted based upon Company, functional unit, departmental, and/or individual performance in the Plan year. If it is determined that STIP awards will be granted, the Compensation Committee and the Board of Directors retain the sole discretion to set award levels and to adjust award levels and subsequent employee distributions. When STIP Awards are Earned STIP Awards are not earned, are not due, and shall not vest unless until the following conditions are met: (1) the Approval/Objective Guidelines are met, (2) the Board approves corporate performance and payment, (3) all STIP eligibility requirements as described herein are met, (4) the individual is employed and actively working for the Company (or on Company Approved or job protected leave) on the payment date, and (5) the payout date occurs. STIP awards, if any, will be paid via payroll. All legally required and applicable income and employment taxes and withholdings will be deducted from the gross incentive award paid to participants. Awards are considered eligible compensation for the purposes of calculating 401(k) plan match and contributions, in addition to ESPP contributions, but are not otherwise considered compensation for the purpose of other employee benefits. Interpretation The Company shall have the full power and authority to interpret, construe, and administer this Plan, including the determination of the amount of each participant’s award amount. Short-Term Deferral All STIP awards will be paid with the short-term deferral period, and thus, are exempt from Internal Revenue Code Section 409A. Disclaimer THIS PLAN IS NOT A CONTRACT OF EMPLOYMENT AND DOES NOT OTHERWISE ALTER YOUR AT-WILL EMPLOYMENT STATUS AND DOES NOT CREATE ANY CONTRACTUAL RIGHTS. Any payment under the Plan or this incentive award is discretionary and at the will of the Company. This Plan document and the award schedules set forth herein do not constitute an express or implied promise of continued employment for any period or at all, and will not interfere in any way with a participant’s right to terminate or the Company’s right to terminate a participant’s employment at any time, with or without cause and with or without notice. The Company may terminate the Plan, or amend or modify the Plan in any respect, at any time, and without notice. This Plan may be superseded by federal, state, and local laws to the extent applicable.
EX-10.24
4
exhibit1024-202310xk.htm
EX-10.24
exhibit1024-202310xk
Exhibit 10.24 Execution Version 7446955.3 SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”), dated as of June 1, 2023, is entered into by and among Thryv, Inc. (formerly known as Dex Media, Inc.), a Delaware corporation (“US Borrower”), THRYV AUSTRALIA HOLDINGS PTY LTD ACN 638 633 342 (formerly known as THRYV AUSTRALIA PTY LTD), an Australian proprietary limited company (“Thryv Ausco”), THRYV AUSTRALIA PTY LTD ACN 007 423 912 (formerly known as SENSIS PTY LTD), an Australian proprietary limited company (“Sensis”), AUSTRALIAN LOCAL SEARCH PTY LIMITED ACN 109 826 351, an Australian proprietary limited company (“ALSPL”, and together with Thryv Ausco and Sensis, each individually, an “Australian Borrower” and, collectively, the “Australian Borrowers”, and together with US Borrower, each individually, a “Borrower” and, collectively, the “Borrowers”), Thryv Holdings, Inc. (formerly known as Dex Media Holdings, Inc.), a Delaware corporation (“Parent”), Thryv International Holding, LLC, a Delaware limited liability company (“TIH”), LIFE EVENTS MEDIA PTY LIMITED ACN 118 014 298, an Australian proprietary limited company (“Life Events”), Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent for each Secured Party (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”) and as Australian security trustee for each Secured Party (in such capacity, together with its successor and assigns in such capacity, the “Australian Security Trustee”), and the Lenders party hereto. RECITALS WHEREAS, Borrowers, Parent, certain of its Subsidiaries, Administrative Agent and the Lenders from time to time party thereto are parties to the Amended and Restated Credit Agreement, dated as of June 30, 2017, as amended by First Amendment to Amended and Restated Credit Agreement, dated as of January 31, 2019, Second Amendment to Amended and Restated Credit Agreement, dated as of March 21, 2019, Third Amendment to Amended and Restated Credit Agreement, dated as of August 20, 2019, Fourth Amendment to Amended and Restated Credit Agreement, dated January 28, 2020, Fifth Amendment to Amended and Restated Credit Agreement, First Amendment to Guaranty and Security Agreement and Joinder, dated as of March 1, 2021 and Sixth Amendment to Amended and Restated Credit Agreement, dated July 1, 2021 (as the same now exists, the “Existing Credit Agreement”) and have agreed to amend the Existing Credit Agreement and replace it in its entirety in the form of Exhibit A to this Amendment (as amended and supplemented by this Amendment and as may hereafter be further amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Credit Agreement”) pursuant to the terms and conditions of this Amendment; WHEREAS, Parent has notified Administrative Agent that (a) Vivial Media LLC and Vivial Mobile LLC merged with and into Vivial Media Holdings, Inc., with Vivial Media Holdings, Inc. being the surviving entity, as evidenced by the Certificate of Merger filed with the Delaware Secretary of State on December 30, 2022, and (b) Vivial Media Holdings, Inc. merged with and into US Borrower, with US Borrower being the surviving entity, as evidenced by the Certificate of Merger filed with the Delaware Secretary of State on January 4, 2023;
-2- 7446955.3 WHEREAS, Parent has notified Administrative Agent that each of the following entities were dissolved on December 21, 2022 pursuant to the applications for voluntary deregistration filed with the Australian Securities & Investments Commission: (a) SENSIS HOLDINGS PTY LTD ACN 090 894 769, (b) SUNSHINE NEWCO PTY LTD ACN 638 934 335, (c) PROJECT SUNSHINE I PTY LIMITED ACN 167 275 818, (d) PROJECT SUNSHINE II PTY LIMITED ACN 167 275 890, (e) PROJECT SUNSHINE III PTY LIMITED ACN 167 276 066, (f) PROJECT SUNSHINE IV PTY LIMITED ACN 167 276 226, and (g) CITYSEARCH AUSTRALIA PTY. LTD. ACN 076 673 857; WHEREAS, Borrowers have requested certain amendments be made to the Credit Agreement; and WHEREAS, by this Amendment, Administrative Agent, Lenders, Borrowers and Guarantors desire and intend to evidence such amendments. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows: 1. Definitions. For purposes of this Amendment, all capitalized terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement. 2. Amendment of Credit Agreement. The Existing Credit Agreement is hereby amended to read in its entirety as set forth in Exhibit A hereto (the “Amended Credit Agreement”). All schedules and exhibits to the Existing Credit Agreement, as in effect immediately prior to the date of this Amendment, shall constitute schedules and exhibits to the Amended Credit Agreement, except that the schedules and exhibits which are attached to the Amended Credit Agreement shall constitute those respective schedules and exhibits to the Amended Credit Agreement after the date of this Amendment. Each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import, and each reference in the other Loan Documents to the “Credit Agreement” (including, without limitation, by means of words such as “thereunder” or “thereof” and words of similar import), shall mean and be a reference to the Credit Agreement as amended herein as reflected by the Amended Credit Agreement. The Administrative Agent, each of the Lenders signatory hereto, Borrower and each Guarantor consent to the amendment of the Credit Agreement pursuant to this Amendment. 3. Representations and Warranties. Each Loan Party hereby represents and warrants to Administrative Agent and Lenders as follows: (a) as to such Loan Party, the execution, delivery, and performance by such Loan Party of this Amendment and any other agreements or instruments required hereunder to which it is a party on the date hereof have been duly authorized by all necessary action on the part of such Loan Party;
-3- 7446955.3 (b) this Amendment and any other agreements or instruments required hereunder to which such Loan Party is a party on the date hereof have been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally; (c) the execution, delivery, and performance by each Loan Party of this Amendment and any other agreements or instruments required hereunder to which such Loan Party is a party on the date hereof will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Administrative Agent for filing or recordation, as of the date hereof; (d) as to each Loan Party, the execution, delivery, and performance by such Loan Party of the this Amendment and any other agreements or instruments required hereunder to which it is a party on the date hereof do not and will not (i) violate any material provision of federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, or (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of any Loan Party or its Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect; and (e) all of the representations and warranties contained in Section 4 of the Credit Agreement are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date). 4. Conditions Precedent. This Amendment shall be effective upon the date the Administrative Agent shall have received counterparts of this Amendment, duly authorized, executed and delivered by Borrowers, Guarantors and the Lenders. 5. Effect of this Amendment. Except as expressly set forth herein, no other amendments, changes or modifications to the Loan Documents are intended or implied, and in all other respects the Loan Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Borrowers shall not be entitled to any other or further amendment or consent by virtue of the provisions of this Amendment or with respect to the subject matter of this Amendment. To the extent of conflict between the terms of this Amendment and
-4- 7446955.3 the other Loan Documents, the terms of this Amendment shall control. The Credit Agreement and this Amendment shall be read and construed as one agreement. 6. No Novation. The amendment and restatement of the Existing Credit Agreement pursuant to this Amendment and the Amended Credit Agreement shall not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in respect of, the Obligations and other obligations and liabilities of Borrowers and Guarantors evidenced by or arising under the Existing Credit Agreement or any of the other Loan Documents and each Borrower and each Guarantor confirms and agrees that it continues to remain liable for all such Obligations and other obligations and liabilities, and the liens and security interests in the Collateral of Administrative Agent (including Australian Security Trustee) and Lenders securing such Obligations and other obligations and liabilities, which shall not in any manner be impaired, limited, terminated, waived or released, but shall continue in full force and effect in favor of Administrative Agent (including Australian Security Trustee) for the benefit of Lenders. 7. References. All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; any and all references in the Loan Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby. 8. No Waiver. The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or a waiver of any breach, default or event of default under any Loan Document or other document held by Administrative Agent, whether or not known to Administrative Agent and whether or not existing on the date of this Amendment. 9. Costs and Expenses. Borrowers hereby reaffirm their agreement under the Credit Agreement to pay or reimburse Administrative Agent on demand for all reasonable and documented out-of-pocket costs and expenses incurred by Administrative Agent in connection with this Amendment, including, without limitation, all reasonable and documented out-of-pocket fees and disbursements of one firm of outside legal counsel (which firm is Otterbourg P.C.), as and to the extent required pursuant to Section 2.6(d) of the Credit Agreement. Without limiting the generality of the foregoing, Borrowers specifically agree to pay all reasonable and documented out-of-pocket fees and disbursements of Otterbourg, P.C. for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto as and to the extent required pursuant to Section 2.6(d) of the Credit Agreement. 10. Counterparts. This Amendment, any documents executed in connection herewith and any notices delivered under this Amendment, may be executed by means of (i) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable electronic signatures law; (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Administrative Agent reserves the right, in its sole
-5- 7446955.3 discretion, to accept, deny, or condition acceptance of any electronic signature on this Amendment or on any notice delivered to Administrative Agent under this Amendment. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment. Delivery of an executed counterpart of a signature page of this Amendment by any means set forth in clauses (i) or (iii) above will be as effective as delivery of an original manually executed counterpart of this Amendment. 11. Governing Law. EXCEPT AS PROVIDED IN SECTION 15.19 OF THE CREDIT AGREEMENT AND SOLELY WITH RESPECT TO THE MATTERS SET FORTH THEREIN AND IN THE CASE OF THE AUSTRALIAN SECURITY TRUST DEED, THE VALIDITY OF THIS AMENDMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. [Signature Pages Follow]
Signature page to Seventh Amendment to Amended and Restated Credit Agreement IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. THRYV, INC. By: /s/ KJ Christopher Name: KJ Christopher Title: Vice President-Accounting and Corporate Development, Tax THRYV HOLDINGS, INC. By: /s/ KJ Christopher Name: KJ Christopher Title: Vice President-Accounting and Corporate Development, Tax THRYV INTERNATIONAL HOLDING, LLC By: /s/ KJ Christopher Name: KJ Christopher Title: Managing Member
Signature page to Seventh Amendment to Amended and Restated Credit Agreement Executed by Thryv Australia Holdings Pty Ltd ACN 638 633 342 in accordance with section 127 of the Australian Corporations Act 2001: /s/ KJ Christopher /s/ Elise Szczygielski Director/Company Secretary Director KJ Christopher Elise Szczygielski Name of Director/Company Secretary (BLOCK LETTERS) Name of Director (BLOCK LETTERS) Executed by Thryv Australia Pty Ltd ACN 007 423 912 in accordance with section 127 of the Australian Corporations Act 2001: /s/ KJ Christopher /s/ Elise Szczygielski Director/Company Secretary Director KJ Christopher Elise Szczygielski Name of Director/Company Secretary (BLOCK LETTERS) Name of Director (BLOCK LETTERS) Executed by Australian Local Search Pty Limited ACN 109 826 351 in accordance with section 127 of the Australian Corporations Act 2001: /s/ Elise Szczygielski /s/ EA Houston Director Director Elise Szczygielski E A Houston Name of Director/Company Secretary (BLOCK LETTERS) Name of Director (BLOCK LETTERS)
Signature page to Seventh Amendment to Amended and Restated Credit Agreement Executed by Life Events Media Pty Limited ACN 118 014 298 in accordance with section 127 of the Australian Corporations Act 2001: /s/ Elise Szczygielski /s/ EA Houston Director Director Elise Szczygielski E A Houston Name of Director/Company Secretary (BLOCK LETTERS) Name of Director (BLOCK LETTERS)
Signature page to Seventh Amendment to Amended and Restated Credit Agreement WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association as Administrative Agent, as Australian Security Trustee and as a Lender By: /s/ Roberto M. Ruiz Name: Roberto M. Ruiz Title: Authorized Signatory
Signature page to Seventh Amendment to Amended and Restated Credit Agreement PNC BANK, NATIONAL ASSOCIATION, a national banking association, as a Lender By: /s/ Cody Mamone Name: Cody Mamone Title: Vice President
Signature page to Seventh Amendment to Amended and Restated Credit Agreement FIRST CITIZENS BANK & TRUST COMPANY (successor by merger to CIT BANK, N.A.), a North Carolina chartered commercial bank, as a Lender By: /s/ Craig Hopper Name: Craig Hopper Title: Director
Exhibit A to Seventh Amendment to Amended and Restated Credit Agreement Amended Credit Agreement See attached.
Execution Version EXHIBIT A TO SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and Australian Security Trustee, WELLS FARGO BANK, NATIONAL ASSOCIATION and PNC BANK, NATIONAL ASSOCIATION, as Joint Lead Arrangers, Joint Book Runners, and Co-Collateral Agents, PNC BANK, NATIONAL ASSOCIATION, as Syndication Agent, THE LENDERS THAT ARE PARTIES HERETO, as the Lenders, THRYV, INC. (formerly known as DEX MEDIA, INC.), as a US Borrower, Each Entity Party Hereto as an Australian Borrower THRYV HOLDINGS, INC. (formerly known as DEX MEDIA HOLDINGS, INC.), THRYV INTERNATIONAL HOLDING, LLC, and Each Entity From Time To Time Party Hereto as a US Guarantor, as US Guarantors, Each Entity From Time to Time Party Hereto as an Australian Guarantor and THE OTHER LOAN PARTIES PARTY HERETO FROM TIME TO TIME Dated as of June 30, 2017 as amended through June 1, 2023
TABLE OF CONTENTS Page -i- 1. DEFINITIONS AND CONSTRUCTION. ................................................................................................... 1 1.1 Definitions .......................................................................................................................................... 1 1.2 Accounting Terms ............................................................................................................................. 2 1.3 Code ................................................................................................................................................... 2 1.4 Construction ...................................................................................................................................... 2 1.5 Time References ................................................................................................................................ 3 1.6 Schedules and Exhibits ..................................................................................................................... 3 1.7 Co-Collateral Agent Determinations .............................................................................................. 3 1.8 Currency Translation ....................................................................................................................... 3 1.9 Divisions ............................................................................................................................................. 4 1.10 Australian Terms .............................................................................................................................. 4 1.11 Banking Code of Practice (Australia) ............................................................................................. 4 1.12 Additional Borrowers ....................................................................................................................... 4 1.13 Rates ................................................................................................................................................... 4 1.14 Certain Calculations ......................................................................................................................... 5 2. LOANS AND TERMS OF PAYMENT. ...................................................................................................... 5 2.1 Revolving Loans. ............................................................................................................................... 5 2.2 [Reserved]. ......................................................................................................................................... 7 2.3 Borrowing Procedures and Settlements. ........................................................................................ 7 2.4 Payments; Reductions of Commitments; Prepayments. ............................................................. 13 2.5 Promise to Pay; Promissory Notes. ............................................................................................... 16 2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations. ......................... 16 2.7 Crediting Payments ........................................................................................................................ 18 2.8 Designated Account ........................................................................................................................ 18 2.9 Maintenance of Loan Account; Statements of Obligations......................................................... 19 2.10 Fees. .................................................................................................................................................. 19 2.11 Letters of Credit. ............................................................................................................................. 20 2.12 Special Provisions Applicable to Benchmark Availability and Australian Bill Rate. .............. 26 2.13 Capital Requirements; Illegality. .................................................................................................. 27 2.14 [Reserved] ........................................................................................................................................ 28
TABLE OF CONTENTS (continued) Page -ii- 2.15 Joint and Several Liability of Borrowers. .................................................................................... 29 3. CONDITIONS; TERM OF AGREEMENT. ............................................................................................. 30 3.1 Conditions Precedent to the Initial Extension of Credit ............................................................. 30 3.2 Conditions Precedent to all Extensions of Credit ........................................................................ 30 3.3 Maturity ........................................................................................................................................... 31 3.4 Effect of Maturity ........................................................................................................................... 31 3.5 Early Termination by Borrowers .................................................................................................. 31 3.6 Conditions Subsequent ................................................................................................................... 31 4. REPRESENTATIONS AND WARRANTIES. ......................................................................................... 32 4.1 Due Organization and Qualification; Subsidiaries. ..................................................................... 32 4.2 Due Authorization; No Conflict..................................................................................................... 32 4.3 Governmental Consents ................................................................................................................. 33 4.4 Binding Obligations; Perfected Liens. .......................................................................................... 33 4.5 Title to Assets; No Encumbrances ................................................................................................. 33 4.6 Litigation. ........................................................................................................................................ 33 4.7 Compliance with Laws ................................................................................................................... 34 4.8 No Material Adverse Effect ........................................................................................................... 34 4.9 Solvency. .......................................................................................................................................... 34 4.10 ERISA .............................................................................................................................................. 34 4.11 Environmental Condition .............................................................................................................. 34 4.12 Complete Disclosure ....................................................................................................................... 35 4.13 Patriot Act ....................................................................................................................................... 35 4.14 Indebtedness .................................................................................................................................... 35 4.15 Payment of Taxes ............................................................................................................................ 35 4.16 Margin Stock ................................................................................................................................... 35 4.17 Governmental Regulation .............................................................................................................. 36 4.18 OFAC, Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws .............................. 36 4.19 Employee and Labor Matters ......................................................................................................... 36 4.20 Use of Proceeds ............................................................................................................................... 36 4.21 Leases ............................................................................................................................................... 36
TABLE OF CONTENTS (continued) Page -iii- 4.22 Eligible Accounts ............................................................................................................................ 37 4.23 Term Loan Documents ................................................................................................................... 37 4.24 Hedge Agreements .......................................................................................................................... 37 4.25 Credit Card Arrangements ............................................................................................................ 37 4.26 Tax Consolidation and Payment of Taxes .................................................................................... 37 5. AFFIRMATIVE COVENANTS. ................................................................................................................ 37 5.1 Financial Statements, Reports, Certificates ................................................................................. 37 5.2 Reporting ......................................................................................................................................... 38 5.3 Existence .......................................................................................................................................... 38 5.4 Maintenance of Properties ............................................................................................................. 38 5.5 Taxes ................................................................................................................................................ 38 5.6 Insurance ......................................................................................................................................... 38 5.7 Inspection. ....................................................................................................................................... 39 5.8 Compliance with Laws ................................................................................................................... 39 5.9 Environmental ................................................................................................................................ 39 5.10 Disclosure Updates.......................................................................................................................... 40 5.11 Formation of Subsidiaries .............................................................................................................. 40 5.12 Further Assurances ........................................................................................................................ 41 5.13 Lender Meetings ............................................................................................................................. 41 5.14 Compliance with ERISA and the IRC .......................................................................................... 41 5.15 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws ............................. 42 5.16 Post-Sunshine Acquisition matters ............................................................................................... 42 5.17 Signatories to Australian Deposit Accounts ..................................................................................... 42 6. NEGATIVE COVENANTS. ....................................................................................................................... 44 6.1 Indebtedness .................................................................................................................................... 44 6.2 Liens ................................................................................................................................................. 44 6.3 Restrictions on Fundamental Changes ......................................................................................... 44 6.4 Disposal of Assets. ........................................................................................................................... 44 6.5 [Reserved] ........................................................................................................................................ 45 6.6 Prepayments and Amendments ..................................................................................................... 45
TABLE OF CONTENTS (continued) Page -iv- 6.7 Restricted Payments. ...................................................................................................................... 46 6.8 Fiscal Year; Accounting Methods ................................................................................................. 47 6.9 Investments ...................................................................................................................................... 47 6.10 Transactions with Affiliates ........................................................................................................... 47 6.11 Use of Proceeds ............................................................................................................................... 48 6.12 [Reserved] ........................................................................................................................................ 48 6.13 Credit Card Accounts..................................................................................................................... 49 6.14 Employee Benefits ........................................................................................................................... 49 6.15 Australian Tax Matters .................................................................................................................. 49 7. FINANCIAL COVENANTS. ...................................................................................................................... 49 8. EVENTS OF DEFAULT. ............................................................................................................................ 49 8.1 Payments .......................................................................................................................................... 49 8.2 Covenants ........................................................................................................................................ 50 8.3 Judgments ........................................................................................................................................ 50 8.4 Voluntary Bankruptcy, etc ............................................................................................................ 50 8.5 Involuntary Bankruptcy, etc .......................................................................................................... 50 8.6 Default Under Other Agreements ................................................................................................. 50 8.7 Representations, etc. ....................................................................................................................... 51 8.8 Guaranty .......................................................................................................................................... 51 8.9 Security Documents ........................................................................................................................ 51 8.10 Loan Documents ............................................................................................................................. 51 8.11 ERISA .............................................................................................................................................. 51 8.12 Change of Control........................................................................................................................... 51 8.13 Subordination; Intercreditor Agreement ..................................................................................... 51 9. RIGHTS AND REMEDIES. ....................................................................................................................... 52 9.1 Rights and Remedies ...................................................................................................................... 52 9.2 Remedies Cumulative ..................................................................................................................... 52 10. WAIVERS; INDEMNIFICATION. ........................................................................................................... 52 10.1 Demand; Protest; etc. ..................................................................................................................... 52 10.2 The Secured Parties’ Liability for Collateral ............................................................................... 53
TABLE OF CONTENTS (continued) Page -v- 10.3 Indemnification ............................................................................................................................... 53 11. NOTICES. .................................................................................................................................................... 54 12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION. ................................................................................................................................................ 55 13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. ................................................................ 55 13.1 Assignments and Participations. ................................................................................................... 55 13.2 Successors ........................................................................................................................................ 58 14. AMENDMENTS; WAIVERS. .................................................................................................................... 58 14.1 Amendments and Waivers. ............................................................................................................ 58 14.2 Replacement of Certain Lenders. .................................................................................................. 60 14.3 No Waivers; Cumulative Remedies .............................................................................................. 61 15. AGENT; THE LENDER GROUP. ............................................................................................................ 61 15.1 Appointment and Authorization of Administrative Agent ......................................................... 61 15.2 Delegation of Duties ........................................................................................................................ 62 15.3 Liability of Administrative Agent ................................................................................................. 62 15.4 Reliance by Administrative Agent ................................................................................................ 62 15.5 Notice of Default or Event of Default ............................................................................................ 62 15.6 Credit Decision ................................................................................................................................ 63 15.7 Costs and Expenses; Indemnification ........................................................................................... 63 15.8 Administrative Agent in Individual Capacity .............................................................................. 64 15.9 Successor Administrative Agent .................................................................................................... 64 15.10 Lender in Individual Capacity ...................................................................................................... 65 15.11 Collateral Matters. .......................................................................................................................... 65 15.12 Restrictions on Actions by Lenders; Sharing of Payments. ........................................................ 66 15.13 Agency for Perfection ..................................................................................................................... 67 15.14 Payments by Administrative Agent to the Lenders ..................................................................... 67 15.15 Concerning the Collateral and Related Loan Documents ........................................................... 67 15.16 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information ..................................................................................................................................... 67 15.17 Several Obligations; No Liability .................................................................................................. 68
TABLE OF CONTENTS (continued) Page -vi- 15.18 Joint Lead Arrangers, Joint Book Runners and Syndication Agent; Co-Collateral Agents. .. 68 15.19 Appointment of Australian Security Trustee; Australian Security Trust Deed. ...................... 69 15.20 Rights and remedies of the Australian Security Trustee. ........................................................... 70 15.21 Australian PPSA Provisions. ......................................................................................................... 70 16. WITHHOLDING TAXES. ......................................................................................................................... 71 16.1 Payments .......................................................................................................................................... 71 16.2 Exemptions. ..................................................................................................................................... 71 16.3 Reductions. ...................................................................................................................................... 74 16.4 Refunds ............................................................................................................................................ 74 17. GENERAL PROVISIONS. ......................................................................................................................... 74 17.1 Effectiveness .................................................................................................................................... 74 17.2 Section Headings ............................................................................................................................. 74 17.3 Interpretation .................................................................................................................................. 75 17.4 Severability of Provisions ............................................................................................................... 75 17.5 Bank Product Providers ................................................................................................................. 75 17.6 Debtor-Creditor Relationship ........................................................................................................ 75 17.7 Counterparts; Electronic Execution ............................................................................................. 75 17.8 Revival and Reinstatement of Obligations; Certain Waivers ..................................................... 76 17.9 Confidentiality. ............................................................................................................................... 76 17.10 Survival ............................................................................................................................................ 78 17.11 Patriot Act; Due Diligence ............................................................................................................. 78 17.12 Integration ....................................................................................................................................... 78 17.13 Australian Code of Banking Practice............................................................................................ 78 17.14 Thryv, Inc. as Agent for Borrowers .............................................................................................. 78 17.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions .......................... 79 17.16 Amendment and Restatement; No Novation ................................................................................ 79 17.17 Currency Indemnity ....................................................................................................................... 80 17.18 Acknowledgement Regarding Any Supported QFCs .................................................................. 80 17.19 Erroneous Payments ....................................................................................................................... 80
-vii- EXHIBITS AND SCHEDULES Exhibit A Form of Assignment and Acceptance Exhibit B Form of Borrowing Base Certificate Exhibit C Form of Compliance Certificate Exhibit D Form of Promissory Note Schedule A-1 Administrative Agent’s Account Schedule A-2 Authorized Persons Schedule C-1 Commitments Schedule D-1 Designated Account Schedule E-1 Existing Letters of Credit Schedule P-1 Permitted Investments Schedule P-2 Permitted Liens Schedule 1.1 Definitions Schedule 3.1 Conditions Precedent Schedule 3.6 Conditions Subsequent Schedule 4.1(b) Capitalization of Loan Parties Schedule 4.1(c) Capitalization of Loan Parties’ Subsidiaries Schedule 4.1(d) Subscriptions, Options, Warrants, Calls Schedule 4.6(b) Litigation Schedule 4.11 Environmental Matters Schedule 4.14 Permitted Indebtedness Schedule 4.25 Credit Card Arrangements Schedule 5.1 Financial Statements, Reports, Certificates Schedule 5.2 Collateral Reporting
4775516.6 AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), is entered into as of June 30, 2017 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”, as that term is hereinafter further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each Secured Party (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”) and as Australian security trustee for each Secured Party (in such capacity, together with its successors and assigns in such capacity, the “Australian Security Trustee”) , WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as joint lead arrangers (in such capacity, together with their successors and assigns in such capacity, the “Joint Lead Arrangers”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as joint book runners (in such capacity, together with their successors and assigns in such capacity, the “Joint Book Runners”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as co-collateral agents (in such capacity, together with their successors and assigns in such capacity, the “Co-Collateral Agents”), PNC BANK, NATIONAL ASSOCIATION, a national banking association, as syndication agent (“Syndication Agent”), THRYV, INC. (formerly known as DEX MEDIA, INC.), a Delaware corporation (“Thryv”) and any other Person that at any time becomes a party hereto as a US Borrower pursuant to Section 1.12 (such Persons together with Thryv are each individually referred to as a “US Borrower”, and individually and collectively, jointly and severally, referred to as the “US Borrowers”), THRYV AUSTRALIA HOLDINGS PTY LTD ACN 638 633 342 (formerly known as THRYV AUSTRALIA PTY LTD), an Australian proprietary limited company (“Thryv Ausco”), THRYV AUSTRALIA PTY LTD ACN 007 423 912 (formerly known as SENSIS PTY LTD), an Australian proprietary limited company (“Sensis”), AUSTRALIAN LOCAL SEARCH PTY LIMITED ACN 109 826 351, an Australian proprietary limited company (“ALSPL”, and together with Thryv Ausco, Sensis and any Person that at any time after the date hereof becomes an Australian Borrower pursuant to Section 1.12, referred to hereinafter each individually as an “Australian Borrower”, and individually and collectively, jointly and severally, as the “Australian Borrowers”; together with US Borrowers, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”), THRYV HOLDINGS, INC. (formerly known as DEX MEDIA HOLDINGS, INC.), a Delaware corporation (“Parent”), THRYV INTERNATIONAL HOLDING, LLC, a Delaware limited liability company (“TIH”) and LIFE EVENTS MEDIA PTY LIMITED ACN 118 014 298, an Australian proprietary limited company (“Life Events”) and each other US Guarantor and Australian Guarantor from time to time party hereto. Pursuant to the Credit Agreement dated as of December 15, 2016 (as amended by the First Amendment to Credit Agreement dated April 21, 2017, the “2016 Credit Agreement”) by and among Parent, Thryv, Administrative Agent, the Co-Collateral Agents and the lenders party thereto (the “Existing Lenders”), the Existing Lenders have agreed to make certain loans, advances and other extensions of credit available to Thryv, as borrower. The parties to this Agreement have agreed to amend and restate the 2016 Credit Agreement as set forth herein. In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree that the 2016 Credit Agreement is amended and restated in its entirety as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.
- 2 - 4775516.6 1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, that if Borrowers notify Administrative Agent that Borrowers request an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Administrative Agent notifies Borrowers that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such Accounting Change or in the application thereof, then Administrative Agent and Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such Accounting Change with the intent of having the respective positions of the Lenders and Borrowers after such Accounting Change conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred; provided further, that any change in GAAP after the Closing Date shall not cause any lease that was not or would not have been a Capitalized Lease Obligation prior to such change to be deemed a Capitalized Lease Obligation. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Parent” is used in respect of a financial covenant or a related definition, it shall be understood to mean Parent and its Subsidiaries on a consolidated basis, unless the context clearly requires otherwise. Notwithstanding anything to the contrary contained herein, (a) all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, and (b) the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is (i) unqualified, and (ii) does not include any explanation, supplemental comment, or other comment concerning the ability of the applicable Person to continue as a going concern or concerning the scope of the audit (except for qualifications relating to (i) changes in accounting principles or practices reflecting changes in GAAP or the upcoming maturity date of any Indebtedness being scheduled to occur within twelve months from the time such report is delivered, in each case, required or approved by such independent certified public accountants and/or (ii) the breach or anticipated breach of any financial covenant). 1.3 Code. Any terms used in this Agreement that are defined in the Code or the Australian PPSA shall be construed and defined as set forth in the Code or the Australian PPSA unless otherwise defined herein; provided, that to the extent that the Code or the Australian PPSA is used to define any term herein and such term is defined differently in different Articles of the Code or the Australian PPSA, the definition of such term contained in Article 9 of the Code or the Australian PPSA, as applicable, shall govern. 1.4 Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). 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. Any reference in this Agreement to Liens stated to be in favor of Administrative Agent shall be construed so as to include a reference to Liens granted in favor of Australian Security Trustee. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any premium applicable to the repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are unpaid regardless of whether demand has been made therefor, (iii) all fees or charges that
- 3 - 4775516.6 have accrued hereunder or under any other Loan Document (including the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, (c) in the case of obligations with respect to Bank Products (other than Hedge Obligations), providing Bank Product Collateralization, (d) the receipt by Administrative Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to Administrative Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Administrative Agent reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Hedge Agreements provided by Hedge Providers) other than (i) unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (iii) any Hedge Obligations that, at such time, are allowed by the applicable Hedge Provider to remain outstanding without being required to be repaid, and (f) the termination of all of the Commitments of the Lenders. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record. 1.5 Time References. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Eastern standard time or Eastern daylight saving time, as in effect in New York, New York on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided that, with respect to a computation of fees or interest payable to Administrative Agent, either Co-Collateral Agent, the Australian Security Trustee or any Lender, such period shall in any event consist of at least one full day. 1.6 Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference. 1.7 Co-Collateral Agent Determinations. With respect to any discretionary action or determination to be taken or made by Co-Collateral Agents hereunder or under any of the other Loan Documents, Co-Collateral Agents shall seek, in good faith, to reach a consensus decision for such discretionary action or determination; if, after consulting in good faith, Co-Collateral Agents are unable to agree on the discretionary action to be taken or the determination to be made, the determination or discretionary action shall be made by Co-Collateral Agents either asserting the most conservative credit judgment (including, without limitation, that would result in the least amount of credit being available to the Borrowers under this Agreement) or declining to permit the discretionary action for which consent is being sought by the Borrowers, as applicable. 1.8 Currency Translation. For purposes of this Agreement and the other Loan Documents, where the permissibility of a transaction or determinations of required actions or circumstances depend upon compliance with, or are determined by reference to, amounts stated in US Dollars, unless the context of this Agreement or any other Loan Document clearly requires otherwise, such amounts shall be deemed to refer to US Dollars or US Dollar Equivalents and any requisite currency translation shall be based on the Exchange Rate and the permissibility of actions already taken shall not be affected by subsequent fluctuations in the Exchange Rate; provided, that, if Indebtedness is incurred to refinance or renew other Indebtedness, and such refinancing or renewal would cause the applicable US Dollar denominated limitation to be exceeded if calculated at the Exchange Rate, such US Dollar denominated restriction shall be deemed not to have been exceeded so long as (a) such refinancing or renewal Indebtedness is denominated in the same currency as such Indebtedness being refinanced or renewed and (b) the principal amount of such refinancing or renewal Indebtedness does not exceed the principal amount of such Indebtedness being refinanced or renewed, except as permitted under Section 6.1. Unless otherwise provided herein, all certificates, reports and notices delivered under this Agreement shall express any amounts, calculations or determinations in US Dollars or the US Dollar Equivalent.
- 4 - 4775516.6 1.9 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time. 1.10 Australian Terms. Without prejudice to the generality of any provision of this Agreement, in this Agreement where it relates to an Australian Loan Party or any Australian Subsidiaries, a reference in this Agreement to: (a) “Account Debtor” also includes any “account debtor” as defined in section 10 of the Australian PPSA; (b) “Accounts” also includes any “account” as defined in section 10 of the Australian PPSA; (c) “Affiliate” has the meaning given to it in section 50AA of the Australian Corporations Act; (d) “Controller”, “receiver” or “receiver manager” has the meaning given to it in section 9 of the Australian Corporations Act; (e) “GAAP” means accounting principles and practices consistently applied which are generally accepted in Australian and are consistent with any applicable legislation, including instruments in force under section 334 of the Australian Corporations Act and provisions of such instruments; and (f) “Subsidiary” means a subsidiary within the meaning given in Part 1.2 Division 6 of the Australian Corporations Act. 1.11 Banking Code of Practice (Australia). The parties agree that the Australian Banking Association Banking Code of Practice does not apply to the Loan Documents nor the transactions under them. 1.12 Additional Borrowers. Notwithstanding anything in Section 14.1 to the contrary, following the Fifth Amendment Effective Date, Administrative Borrower may request that one or more of its Wholly-Owned Subsidiaries that is a US Subsidiary and/or Australian Subsidiary may be added as an additional Borrower under this Agreement by delivering to the Administrative Agent (or Australian Security Trustee, as applicable) a borrower joinder agreement in form and substance reasonably satisfactory to the Administrative Agent (or Australian Security Trustee, as applicable) executed by such subsidiary and Administrative Borrower. Subject to compliance with Section 5.11 hereof, such subsidiary shall for all purposes of this Agreement be a Borrower hereunder after the later of (i) 10 Business Days (or such shorter period as the Administrative Agent shall agree) after delivery of such borrower joinder agreement and (ii) receipt by the Lenders, the Issuing Bank and the Administrative Agent (or Australian Security Trustee, as applicable) of such documentation and other information reasonably requested by the Lenders, the Issuing Bank or the Administrative Agent (or Australian Security Trustee, as applicable) for purposes of complying with all necessary “know your customer” or other similar checks under applicable law, which documentation and information shall be reasonably satisfactory to Lenders; provided, that (a) each additional Borrower shall also be a Guarantor with respect to the Obligations of the other Borrowers and (b) the Equity Interests of any such additional Borrower shall be pledged pursuant to, and to the extent required by this Agreement. Any obligations in respect of borrowings by any additional Borrower under this Agreement will constitute “Obligations” for all purposes of the Loan Documents. 1.13 Rates. Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to Adjusted Daily Simple SOFR, SOFR or any other Benchmark, any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative, successor or replacement rate thereto
- 5 - 4775516.6 (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 2.12(c), will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, Adjusted Daily Simple SOFR, SOFR or any other Benchmark, prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of Adjusted Daily Simple SOFR, SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to a Borrower. Administrative Agent may select information sources or services in its reasonable discretion to ascertain Adjusted Daily Simple SOFR, SOFR, or any other Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to any Borrower, 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. 1.14 Certain Calculations. Notwithstanding anything to the contrary herein, for all purposes of calculating Consolidated EBITDA or the Fixed Charge Coverage Ratio (including any component definition thereof) under this Agreement as of any date: (a) for any period during which one or more Specified Transactions occurs, (i) such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement, (ii) there shall be included in determining Consolidated EBITDA for such period, without duplication, the Acquired EBITDA of any Person or business, or attributable to any property or asset, acquired by Parent or any Subsidiary during such period (but not the Acquired EBITDA of any related Person or business or any Acquired EBITDA attributable to any assets or property, in each case to the extent not so acquired) in connection with a Permitted Acquisition to the extent not subsequently sold, transferred, abandoned or otherwise disposed of by Parent or such Subsidiary during such period, based on the actual Acquired EBITDA of such acquired entity or business for such period (including the portion thereof occurring prior to such acquisition) and (iii) there shall be excluded in determining Consolidated EBITDA for such period, without duplication, the Disposed EBITDA of any Person or business, or attributable to any property or asset, disposed of by Parent or any Subsidiary during such period in connection with a Specified Disposition or discontinuation of operations, based on the Disposed EBITDA of such disposed entity or business or discontinued operations for such period (including the portion thereof occurring prior to such Disposition or discontinuation); provided, that the foregoing amounts shall be without duplication of any adjustments that are already included in the calculation of Consolidated EBITDA; and (b) in the event that Parent or any Subsidiary thereof incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement, discharge, defeasance or extinguishment) any Indebtedness included in the calculations of any financial ratio or test (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable measurement period or (ii) subsequent to the end of the applicable measurement period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the first day of the applicable measurement period (assuming that the entire amount of such Indebtedness is fully funded on such date but without netting any cash proceeds of such Indebtedness) and any such Indebtedness that is incurred (including by assumption or guarantee) that has a floating or formula rate of interest shall have an implied rate of interest for the applicable period determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination. 2. LOANS AND TERMS OF PAYMENT. 2.1 Revolving Loans.
- 6 - 4775516.6 (a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Revolving Lender agrees (severally, not jointly or jointly and severally) to make, from time to time, (i) revolving loans to US Borrowers in US Dollars (each, a “US Revolving Loan” and collectively, “US Revolving Loans”), and (ii) revolving loans to Australian Borrowers in US Dollars or Australian Dollars (each, an “Australian Revolving Loan” and collectively, “Australian Revolving Loans”, and together with US Revolving Loans, individually a “Revolving Loan” and collectively, “Revolving Loans”); provided, that: (A) any Revolving Loans shall be denominated in US Dollars (except with respect to Australian Bill Rate Loans, which shall be denominated in Australian Dollars), (B) Revolving Loans shall not be made, and shall not be required to be made, by any Lender in the event that, after giving effect to such Revolving Loans, the Total Revolver Usage would exceed the lesser of (1) the Revolver Commitments at such time, (2) the Total Borrowing Base (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Administrative Agent and Co-Collateral Agents) at such time and (3) the Trailing 90 Day Collections reflected on the then most recent Trailing 90 Day Collections Report, (C) US Revolving Loans shall not be made, and shall not be required to be made, by any Lender in the event that, after giving effect to such US Revolving Loans, the US Revolver Usage would exceed the lesser of (1) the Maximum US Loan Amount as then in effect, (2) the Total Borrowing Base at such time (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Administrative Agent and Co- Collateral Agents) and (3) the Trailing 90 Day Collections reflected on the then most recent Trailing 90 Day Collections Report, (D) Australian Revolving Loans shall not be made, and shall not be required to be made, by any Lender in the event that after giving effect to such Australian Revolving Loans, the Australian Revolver Usage would exceed the lesser of (1) the Maximum Australian Loan Amount as then in effect, (2) the Australian Borrowing Base at such time (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Administrative Agent and Co-Collateral Agents) and (3) the Trailing 90 Day Collections with respect to Accounts of Australian Borrowers reflected on the then most recent Trailing 90 Day Collections Report, and (E) Revolving Loans shall not be made, and shall not be required to be made, by any Lender in the event that after giving effect to such Revolving Loans, the Pro Rata Share of such Lender in the Total Revolver Usage would exceed such Lender’s Revolver Commitment. (b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon, shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on which they are declared due and payable pursuant to the terms of this Agreement. (c) Anything to the contrary in this Section 2.1 notwithstanding, Co-Collateral Agents shall have the right (but not the obligation), in the exercise of their Permitted Discretion, to establish and increase or decrease Receivable Reserves, Bank Product Reserves, Australian Priority Payables Reserves (solely with respect to the Australian Borrowing Base), and other Reserves against any Borrowing Base, the Trailing 90 Day Collections, the Maximum US Loan Amount (in the case of the US Borrowing Base), the Maximum Australian Loan Amount (in the case of the Australian Borrowing Base) or the Maximum Revolver Amount. The amount of any Receivable Reserve, Bank Product Reserve, Australian Priority Payables Reserve (solely with respect to the Australian Borrowing Base), or other Reserve established by Co-Collateral Agents shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for such reserve and shall not be duplicative of any other reserve established and currently maintained. Upon establishment or increase in reserves, Co-Collateral Agents agree to make themselves available to discuss the reserve or increase, and Borrowers may take such action as may be required so that the event, condition, circumstance, or fact that is the basis for such reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to Co-Collateral Agents in the exercise of their Permitted Discretion.
- 7 - 4775516.6 In no event shall such opportunity limit the right of Administrative Agent to establish or change such Receivable Reserve, Bank Product Reserve, Australian Priority Payables Reserve (solely with respect to the Australian Borrowing Base), or other Reserves, unless Co-Collateral Agents shall have determined, in their Permitted Discretion, that the event, condition, other circumstance, or fact that was the basis for such Receivable Reserve, Bank Product Reserve, Australian Priority Payables Reserve (solely with respect to the Australian Borrowing Base), or other Reserves or such change no longer exists or has otherwise been adequately addressed by Borrowers. 2.2 [Reserved]. 2.3 Borrowing Procedures and Settlements. (a) Procedure for Borrowing Revolving Loans. Each Borrowing shall be made by a written request by an Authorized Person delivered to Administrative Agent (which may be delivered through Administrative Agent’s electronic platform or portal) and received by Administrative Agent no later than 11:00 a.m. (i) on the Business Day that is the requested Funding Date in the case of a request for a Swing Loan, (ii) on the U.S. Government Securities Business Day that is five U.S. Government Securities Business Days prior to the requested Funding Date in the case of a request for a Daily Simple SOFR Loan that is not a Swing Loan, and (iii) on the Business Day that is four (4) Business Day prior to the requested Funding Date in the case of Australian Bill Rate Loans, in each case, specifying (A) the name of the applicable Borrower, (B) the Available Currency of the requested Revolving Loan, (C) whether the Revolving Loan requested will consist of a US Revolving Loan or an Australian Revolving Loan, (D) whether such Revolving Loans are to be Base Rate Loans, SOFR Loans or Australian Bill Rate Loans, (E) the amount of such Borrowing, and (F) the requested Funding Date (which shall be a Business Day); provided, that Administrative Agent may, in its sole discretion, elect to accept as timely requests that are received later than 11:00 a.m. on the applicable Business Day or U.S. Government Securities Business Day, as applicable. All Borrowing requests which are not made on-line via Administrative Agent’s electronic platform or portal shall be subject to (and unless Administrative Agent elects otherwise in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Administrative Agent’s authentication process (with results satisfactory to Administrative Agent) prior to the funding of any such requested Revolving Loan. (b) Making of Swing Loans. In the case of a request for a US Revolving Loan and so long as either (i) the aggregate amount of Swing Loans made since the last Settlement Date, minus all payments or other amounts applied to Swing Loans since the last Settlement Date, plus the amount of the requested Swing Loan does not exceed $25,000,000, or (ii) Swing Lender, in its sole discretion, agrees to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make a US Revolving Loan (any such US Revolving Loan made by Swing Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and all such US Revolving Loans being referred to as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds in the amount of such requested Borrowing to the Designated Account. Each Swing Loan shall be deemed to be a US Revolving Loan hereunder and shall be subject to all the terms and conditions (including Section 3) applicable to other US Revolving Loans, except that all payments (including interest) on any Swing Loan shall be payable to Swing Lender solely for its own account. Subject to the provisions of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3.2 will not be satisfied on the requested Funding Date for the applicable Borrowing, (ii) the requested Borrowing would exceed the Total Availability on such Funding Date or (iii) the requested Borrowing would exceed the US Availability on such Funding Date. Swing Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be secured by Agent’s Liens, constitute US Revolving Loans and Obligations, and bear interest at the rate applicable from time to time to US Revolving Loans that are SOFR Loans, (c) Making of Revolving Loans. (i) In the event that Swing Lender is not obligated to make a Swing Loan, then after receipt of a request for a Borrowing pursuant to Section 2.3(a), Administrative Agent shall notify the Lenders by
- 8 - 4775516.6 telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such notification to be sent on the Business Day that is one (1) Business Day prior to the requested Funding Date. If Administrative Agent has notified the Lenders of a requested Borrowing on the Business Day that is one (1) Business Day prior to the Funding Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Administrative Agent in immediately available funds, to Administrative Agent’s Account, not later than 10:00 a.m. on the Business Day that is the requested Funding Date. After Administrative Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Administrative Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Administrative Agent to the Designated Account; provided, that, subject to the provisions of Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving Loan, if (1) one or more of the applicable conditions precedent set forth in Section 3.2 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, (2) the requested Borrowing would exceed the Total Availability on such Funding Date, (3) the requested Borrowing would exceed the US Availability on such Funding Date or (4) the requested Borrowing would exceed the Australian Availability on such Funding Date. (ii) Unless Administrative Agent receives notice from a Lender prior to 9:30 a.m. on the Business Day that is the requested Funding Date relative to a requested Borrowing as to which Administrative Agent has notified the Lenders of a requested Borrowing that such Lender will not make available as and when required hereunder to Administrative Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Administrative Agent may assume that each Lender has made or will make such amount available to Administrative Agent in immediately available funds on the Funding Date and Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers a corresponding amount. If, on the requested Funding Date, any Lender shall not have remitted the full amount that it is required to make available to Administrative Agent in immediately available funds and if Administrative Agent has made available to Borrowers such amount on the requested Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Administrative Agent in immediately available funds, to Administrative Agent’s Account, no later than 10:00 a.m. on the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest accrued on such Lender’s portion of such Borrowing for the Funding Date shall be for Administrative Agent’s separate account). If any Lender shall not remit the full amount that it is required to make available to Administrative Agent in immediately available funds as and when required hereby and if Administrative Agent has made available to Borrowers such amount, then that Lender shall be obligated to immediately remit such amount to Administrative Agent, together with interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted. A notice submitted by Administrative Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error. If the amount that a Lender is required to remit is made available to Administrative Agent, then such payment to Administrative Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement. If such amount is not made available to Administrative Agent on the Business Day following the Funding Date, Administrative Agent will notify Borrowers of such failure to fund and, upon demand by Administrative Agent, Borrowers shall pay such amount to Administrative Agent for Administrative Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Revolving Loans composing such Borrowing. (d) Protective Advances and Optional Overadvances. (i) Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv), at any time (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) that any of the other applicable conditions precedent set forth in Section 3.2 are not satisfied, Administrative Agent and each Co-Collateral Agent hereby is authorized by Borrowers and the Lenders, from time to time, in Administrative Agent’s or such Co-Collateral Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the Revolving Lenders, that Administrative Agent or either Co-Collateral Agent, in its Permitted 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 (other than the Bank Product Obligations) (the Revolving Loans described in this Section 2.3(d)(i) shall be referred to as “Protective
- 9 - 4775516.6 Advances”). Administrative Agent shall endeavor to give Borrowers prompt written notice of the making of any Protective Advances, but a failure of Administrative Agent to so notify Borrowers shall not be a breach of this Agreement and shall not cause such Protective Advance to be ineffective. Notwithstanding the foregoing, the aggregate amount of all Protective Advances and all Overadvances outstanding at any one time shall not exceed five percent (5%) of the Maximum Revolver Amount. The Required Lenders may revoke the authorization of Administrative Agent and Co-Collateral Agents to make Protective Advances, it being agreed that any such revocation must be in writing and shall become effective prospectively thirty (30) days after receipt of written notice to Administrative Agent and Co-Collateral Agents. (ii) Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize Administrative Agent or Swing Lender, as applicable, and either Administrative Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or would be created thereby, so long as (A) after giving effect to such Revolving Loans and any outstanding Protective Advances, the outstanding Total Revolver Usage does not exceed the lesser of the Total Borrowing Base or the Trailing 90 Day Collections by more than five percent (5%) of the Maximum Revolver Amount, and (B) after giving effect to such Revolving Loans, the outstanding Total Revolver Usage (except for and excluding amounts charged to a Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the event Administrative Agent obtains actual knowledge that the Total Revolver Usage exceeds the amounts permitted by the immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Administrative Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to a Loan Account for interest, fees, or Lender Group Expenses) unless Administrative Agent determines that prior notice would result in imminent harm to the Collateral or its value, in which case Administrative Agent may make such Overadvances and provide notice as promptly as practicable thereafter), and the Lenders with Revolver Commitments thereupon shall, together with Administrative Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Revolving Loans to Borrowers to an amount permitted by the preceding sentence. In such circumstances, if any Lender with a Revolver Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. The foregoing provisions are meant for the benefit of the Lenders and Administrative Agent and are not meant for the benefit of Borrowers, which shall continue to be bound by the provisions of Section 2.4(e). Each Lender with a Revolver Commitment shall be obligated to settle with Administrative Agent as provided in Section 2.3(e) (or Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Administrative Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any Overadvances resulting from the charging to a Loan Account of interest, fees or Lender Group Expenses. (iii) Each Protective Advance and each Overadvance (each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan hereunder and, prior to Settlement therefor, all payments on the Extraordinary Advances shall be payable to Administrative Agent solely for its own account or for the account of Co-Collateral Agents, as applicable. The Extraordinary Advances shall be repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that are SOFR Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Administrative Agent, Co- Collateral Agents, Swing Lender, and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way. (iv) Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary: (A) no Extraordinary Advance may be made by Administrative Agent or a Co-Collateral Agent if such Extraordinary Advance would cause the aggregate principal amount of Extraordinary Advances outstanding to exceed an amount equal to 5% of the Maximum Revolver Amount; and (B) to the extent that the making of any Extraordinary Advance causes the aggregate Total Revolver Usage to exceed the Maximum Revolver Amount, such portion of such Extraordinary Advance shall be for Administrative Agent’s or Co-Collateral Agents’ sole and separate
- 10 - 4775516.6 account, as applicable, and not for the account of any Lender and shall be entitled to priority in repayment in accordance with Section 2.4(b). (e) Settlement. It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans. Such agreement notwithstanding, Administrative Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans, the Swing Loans, and the Extraordinary Advances shall take place on a periodic basis in accordance with the following provisions: (i) Administrative Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Administrative Agent in its sole discretion or, with respect to Protective Advances, as requested by the applicable Co-Collateral Agent (1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2) for itself or Co-Collateral Agents, as applicable, with respect to the outstanding Extraordinary Advances, and (3) with respect to Borrowers’ or any of their Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans, Swing Loans, and Extraordinary Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(g)): (y) if the amount of the Revolving Loans (including Swing Loans, and Extraordinary Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, then Administrative Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances), and (z) if the amount of the Revolving Loans (including Swing Loans and Extraordinary Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer in immediately available funds to Administrative Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances). Such amounts made available to Administrative Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Extraordinary Advances and, together with the portion of such Swing Loans or Extraordinary Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not made available to Administrative Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Administrative Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate. (ii) In determining whether a Lender’s balance of the Revolving Loans, Swing Loans, and Extraordinary Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans, Swing Loans, and Extraordinary Advances as of a Settlement Date, Administrative Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Administrative Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. (iii) Between Settlement Dates, Administrative Agent or Co-Collateral Agents, as applicable, to the extent Extraordinary Advances are outstanding, or Administrative Agent, to the extent Swing Loans are outstanding, may pay over to Administrative Agent, Co-Collateral Agents or Swing Lender, as applicable, any payments or other amounts received by Administrative Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Extraordinary Advances or Swing Loans. Between Settlement Dates, Administrative Agent, to the extent no Extraordinary Advances or Swing Loans
- 11 - 4775516.6 are outstanding, may pay over to Swing Lender any payments or other amounts received by Administrative Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to Swing Lender’s Pro Rata Share of the Revolving Loans. If, as of any Settlement Date, payments or other amounts of Borrowers or their Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Administrative Agent for the accounts of the Lenders, and Administrative Agent shall pay to the Lenders (other than a Defaulting Lender if Administrative Agent has implemented the provisions of Section 2.3(g)), to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each such Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Administrative Agent and Co-Collateral Agents, as applicable, with respect to Extraordinary Advances, and each Lender with respect to the Revolving Loans other than Swing Loans and Extraordinary Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Administrative Agent, Co-Collateral Agents, or the Lenders, as applicable. (iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Administrative Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g). (f) [Reserved]. (g) Defaulting Lenders. (i) Notwithstanding the provisions of Section 2.4(b)(iii), Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Administrative Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Administrative Agent shall transfer any such payments (A) first, to Swing Lender to the extent of any Swing Loans that were made by Swing Lender and that were required to be, but were not, paid by the Defaulting Lender, (B) second, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the Defaulting Lender, (C) third, to each Non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other Non-Defaulting Lender), (D) to a suspense account maintained by Administrative Agent, the proceeds of which shall be retained by Administrative Agent and may be made available to be re-advanced to or for the benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2) as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations) hereunder, and (E) from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(iii). Subject to the foregoing, Administrative Agent may hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Administrative Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided, that the foregoing shall not apply to any of the matters governed by Section 14.1(a)(i) through (iii). The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on which all of the Non- Defaulting Lenders, Administrative Agent, Issuing Bank, and Borrowers shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Administrative Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Administrative Agent, provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Administrative Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers). The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the
- 12 - 4775516.6 performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Administrative Agent, Issuing Bank, or to the Lenders other than such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their option, upon written notice to Administrative Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Administrative Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of its participation in the Letters of Credit); provided, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern. (ii) If any Swing Loan or Letter of Credit is outstanding at the time that a Lender becomes a Defaulting Lender then: (A) such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only to the extent (x) the sum of all Non-Defaulting Lenders’ Revolving Loan Exposures plus such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Revolver Commitments and (y) the conditions set forth in Section 3.2 are satisfied at such time; (B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall, without prejudice to any right or remedy available to it against such Defaulting Lender hereunder or under applicable law, within one Business Day following notice by Administrative Agent (x) first, prepay such Defaulting Lender’s Swing Loan Exposure (after giving effect to any partial reallocation pursuant to clause (A) above) and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (A) above), pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to Administrative Agent, for so long as such Letter of Credit Exposure is outstanding; provided, that Borrowers shall not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such Defaulting Lender is also the Issuing Bank; (C) if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit Fees to Administrative Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period such Letter of Credit Exposure is cash collateralized; (D) to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure; (E) to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been payable to
- 13 - 4775516.6 such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter of Credit Exposure shall instead be payable to the Issuing Bank until such portion of such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or reallocated; (F) so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to make any Swing Loan and the Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii) or (y) the Swing Lender or Issuing Bank, as applicable, has not otherwise entered into arrangements reasonably satisfactory to the Swing Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing Lender’s or Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Swing Loans or Letters of Credit; and (G) Administrative Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to the Issuing Bank and the Issuing Bank may apply any such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to Section 2.11(d). (h) Independent Obligations. All Revolving Loans (other than Swing Loans and Extraordinary Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder. 2.4 Payments; Reductions of Commitments; Prepayments. (a) Payments by Borrowers. (i) Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Administrative Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 1:30 p.m. on the date specified herein. Any payment received by Administrative Agent later than 1:30 p.m. shall be deemed to have been received (unless Administrative Agent, in its sole discretion, elects to credit it on the date received) on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day. (ii) Unless Administrative Agent receives notice from Borrowers prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Administrative Agent may assume that Borrowers have made (or will make) such payment in full to Administrative Agent on such date in immediately available funds and Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Administrative Agent on the date when due, each Lender severally shall repay to Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid. (b) Apportionment and Application. (i) So long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments received by Administrative Agent shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses received by Administrative Agent (other than fees or expenses that are for Administrative Agent’s separate account or for the
- 14 - 4775516.6 separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee or expense relates. (ii) Subject to Section 2.4(b)(v), Section 2.4(d), and Section 2.4(e), all payments to be made hereunder by Borrowers shall be remitted to Administrative Agent and all such payments, and all proceeds of Collateral received by Administrative Agent, shall be applied, so long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law. (iii) At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Administrative Agent and all proceeds of Collateral received by Administrative Agent shall be applied as follows: (A) first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to the Administrative Agent, the Co-Collateral Agents and/or the Australian Security Trustee under the Loan Documents, until paid in full, (B) second, to pay any fees or premiums then due to Administrative Agent under the Loan Documents until paid in full, (C) third, to pay interest due in respect of all Extraordinary Advances until paid in full, (D) fourth, to pay the principal of all Extraordinary Advances until paid in full, (E) fifth, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid in full, (F) sixth, ratably, to pay any fees or premiums then due to any of the Lenders under the Loan Documents until paid in full, (G) seventh, to pay interest accrued in respect of the Swing Loans until paid in full, (H) eighth, to pay the principal of all Swing Loans until paid in full, (I) ninth, ratably, to pay interest accrued in respect of the Revolving Loans (other than Protective Advances) until paid in full, (J) tenth, ratably i. ratably, to pay the principal of all Revolving Loans until paid in full, ii. to Administrative Agent, to be held by Administrative Agent, for the benefit of Issuing Bank (and for the ratable benefit of each of the Lenders that have an obligation to pay to Administrative Agent, for the account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to 105% of the Letter of Credit Usage (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash collateral held by Administrative Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof),
- 15 - 4775516.6 iii. ratably, up to the amount (after taking into account any amounts previously paid pursuant to this clause iii, during the continuation of the applicable Application Event) of the most recently established Bank Product Reserve, to (y) the Bank Product Providers based upon amounts then certified by the applicable Bank Product Provider to Administrative Agent (in form and substance satisfactory to Administrative Agent) to be due and payable to such Bank Product Providers on account of Bank Product Obligations, and (z) with any balance to be paid to Administrative Agent, to be held by Administrative Agent, for the ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may be released by Administrative Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Administrative Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof), (K) eleventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders, (L) twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and (M) thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law. (iv) Administrative Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e). (v) In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(ii) shall not apply to any payment made by Borrowers to Administrative Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document. (vi) For purposes of Section 2.4(b)(iii), “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including, as applicable, interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, and expense reimbursements, irrespective of whether any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. (vii) In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall control and govern, and if otherwise, then the terms and provisions of this Section 2.4 shall control and govern. (c) Reduction of Commitments. The Revolver Commitments shall terminate on the Maturity Date. Borrowers may reduce the Revolver Commitments, without premium or penalty, to an amount (which may be zero) not less than the sum of (A) the Total Revolver Usage as of such date, plus (B) the principal amount of all Revolving Loans not yet made as to which a request has been given by Borrowers under Section 2.3(a), plus (C) the amount of all Letters of Credit not yet issued as to which a request has been given by Borrowers pursuant to Section 2.11(a). Each such reduction shall be in an amount which is not less than $10,000,000 (unless the Revolver Commitments are being reduced to zero), shall be made by providing not less than five (5) Business Days prior written notice to Administrative Agent, and shall be irrevocable. Once reduced the Revolver Commitments may not
- 16 - 4775516.6 be increased. Each such reduction of the Revolver Commitments shall reduce the Revolver Commitments of each Lender proportionately in accordance with its ratable share thereof. (d) Optional Prepayments. Borrowers may at any time and from time to time prepay the principal of any Revolving Loan at any time, in whole or in part, without premium or penalty. (e) Mandatory Prepayments. If, at any time, (i)(A) the Total Revolver Usage on such date exceeds (B) the lesser of (1) the Maximum Revolver Amount, (2) the Total Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Administrative Agent and Co-Collateral Agents and (3) the Trailing 90 Day Collections reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co-Collateral Agents, (ii)(A) the US Revolver Usage on such date exceeds (B) the lesser of (1) the Maximum Revolver Amount, (2) the Total Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Administrative Agent and Co-Collateral Agents and (3) the Trailing 90 Day Collections with respect to Accounts reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co-Collateral Agents, or (iii)(A) the Australian Revolver Usage on such date exceeds (B) the lesser of (1) the Maximum Australian Loan Amount, (2) the Australian Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Administrative Agent and Co-Collateral Agents and (3) the Trailing 90 Day Collections with respect to Accounts of Australian Borrowers reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co-Collateral Agents, then, in each case, Borrowers shall promptly, but in any event, within one (1) Business Day prepay the Obligations in an aggregate amount equal to the amount of such excess. (f) Application of Payments. Each prepayment pursuant to Section 2.4(e) shall, (A) so long as no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount of the Revolving Loans until paid in full and second, to cash collateralize the Letters of Credit in an amount equal to 105% of the then outstanding Letter of Credit Usage, and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(iii). 2.5 Promise to Pay; Promissory Notes. (a) Borrowers agree to pay the Lender Group Expenses as set forth in Section 2.6(d). Borrowers promise to pay all of the Obligations (including principal, interest, premiums, if any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date on which the Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement. Borrowers agree that their obligations contained in the first sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations. (b) Any Lender may request that any portion of its Commitments or the Loans made by it be evidenced by one or more promissory notes. In such event, Borrowers shall execute and deliver to such Lender the requested promissory notes payable to such Lender in the form attached hereto as Exhibit D. Thereafter, the portion of the Commitments and Loans evidenced by such promissory notes and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the payee named therein. 2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations. (a) Interest Rates. Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit) that have been charged to the applicable Loan Account of the applicable Borrower pursuant to the terms hereof shall bear interest as follows: (i) unless otherwise specified herein, if the Obligation is a SOFR Loan, at a per annum rate equal to Adjusted Daily Simple SOFR plus the Applicable Margin applicable to SOFR Loans,
- 17 - 4775516.6 (ii) unless otherwise specified herein, if the Obligation is an Australian Bill Rate Loan, at a per annum rate equal to the Australian Bill Rate plus the Applicable Margin applicable to Australian Bill Rate Loans, and (iii) otherwise, at a per annum rate equal to the Base Rate plus the Applicable Margin applicable to Base Rate Loans. (b) Letter of Credit Fee. Borrowers shall pay Administrative Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”) (which fee shall be in addition to any fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a per annum rate equal to the Applicable Margin applicable to SOFR Loans times the undrawn amount of all outstanding Letters of Credit. (c) Default Rate. Upon the occurrence and during the continuation of an Event of Default and at the election of Administrative Agent or the Required Lenders, (i) all Obligations (except for undrawn Letters of Credit) that have been charged to the applicable Loan Account of the applicable Borrower pursuant to the terms hereof shall bear interest at a per annum rate equal to two (2) percentage points above the per annum rate otherwise applicable thereunder, and (ii) the Letter of Credit Fee shall be increased to two (2) percentage points above the per annum rate otherwise applicable hereunder. (d) Payment. Except to the extent provided to the contrary in Section 2.10 or Section 2.11(k), (i) all interest and all other fees payable hereunder or under any of the other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first day of each quarter; provided, that if an Event of Default has occurred and is continuing, such amounts shall be due and payable, in arrears, on the first day of each month, (ii) all Letter of Credit Fees payable hereunder, and all fronting fees and all commissions, other fees, charges and expenses provided for in Section 2.11(k) shall be due and payable, in arrears, on the first Business Day of each quarter; provided, that if an Event of Default has occurred and is continuing, such Letter of Credit Fees shall be due and payable, in arrears, on the first Business Day of each month, and (iii) all documented costs and expenses payable hereunder or under any of the other Loan Documents, and all Lender Group Expenses shall be due and payable within three (3) days after the date on which demand is made, along with reasonable documentation supporting such costs and expenses (it being acknowledged and agreed that in the event that any such amounts are not paid within such three (3) day period, Borrowers hereby authorize Administrative Agent to immediately, without notice, charge such amounts to any Loan Account). Notwithstanding anything to the contrary set forth in this Agreement, Borrowers hereby authorize Administrative Agent, from time to time without prior notice to Borrowers, to charge the applicable Loan Account (A) on the first day of each quarter (or, if an Event of Default has occurred and is continuing, on the first day of each month), all interest accrued during the prior quarter (or if an Event of Default has occurred and is continuing, during the prior month) on the Revolving Loans hereunder, (B) on the first Business Day of each quarter (or, if an Event of Default has occurred and is continuing, on the first Business Day of each month), all Letter of Credit Fees accrued or chargeable hereunder during the prior quarter (or, if an Event of Default has occurred and is continuing, during the prior month), (C) as and when incurred or accrued, all fees and costs provided for in Section 2.10(a) or (c), (D) on the first day of each quarter (or, if an Event of Default has occurred and is continuing, on the first day of each month), the Unused Line Fee accrued during the prior quarter (or if an Event of Default has occurred and is continuing, during the prior month) pursuant to Section 2.10(b), (E) as and when due and payable, all other fees payable hereunder or under any of the other Loan Documents, (F) as and when incurred or accrued, the fronting fees and all commissions, other fees, charges and expenses provided for in Section 2.11(k), (G) all other Lender Group Expenses as provided in clause (d)(ii) above, and (H) as and when due and payable all other payment obligations payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to the Bank Product Providers in respect of Bank Products). All amounts (including interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement) charged to (i) the US Loan Account shall thereupon constitute US Revolving Loans
- 18 - 4775516.6 hereunder and shall constitute Obligations hereunder accruing interest at the rate then applicable to US Revolving Loans that are SOFR Loans and (ii) the Australian Loan Account shall thereupon constitute Australian Revolving Loans hereunder and shall constitute Obligations hereunder accruing interest at the rate then applicable to Australian Revolving Loans that are SOFR Loans (if such Australian Revolving Loans are denominated in US Dollars) or Australian Bill Rate Loans (if such Australian Revolving Loans are denominated in Australian Dollars). For the purposes of this Section 2.6(d), if any circumstance or occurrence constitutes an Event of Default as defined in Sections 8.2, 8.7, 8.8, 8.9, 8.10 or 8.11 hereof, obligations shall continue to be due quarterly, and not be due monthly, until a Loan Party has knowledge of, or has received written notice of, such Event of Default. (e) Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year, in each case, for the actual number of days elapsed in the period during which the interest or fees accrue. The interest rate on Obligations shall increase or decrease by an amount equal to each increase or decrease in Adjusted Daily Simple SOFR in the case of SOFR Loans effective on the date of any change in Adjusted Daily Simple SOFR, and if at any time there are Base Rate Loans, an amount equal to each increase or decrease in the Base Rate effective on the date of any change in the Base Rate. (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, that, anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess. (g) Initial Benchmark Conforming Changes. In connection with the use or administration of any Benchmark, Administrative Agent will 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. Administrative Agent will promptly notify Administrative Borrower and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of any Benchmark. 2.7 Crediting Payments. The receipt of any payment item by Administrative Agent shall not be required to be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to Administrative Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Administrative Agent only if it is received into Administrative Agent’s Account on a Business Day on or before 1:30 p.m. If any payment item is received into Administrative Agent’s Account on a non-Business Day or after 1:30 p.m. on a Business Day (unless Administrative Agent, in its sole discretion, elects to credit it on the date received), it shall be deemed to have been received by Administrative Agent as of the opening of business on the immediately following Business Day. 2.8 Designated Account. Administrative Agent is authorized to make the Revolving Loans, and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d). Borrowers agree to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving Loans requested by Borrowers and made by Administrative Agent or the Lenders hereunder. Unless otherwise agreed by Administrative Agent and Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by Administrative Agent or the Lenders hereunder shall be made to the Designated Account.
- 19 - 4775516.6 2.9 Maintenance of Loan Account; Statements of Obligations. Administrative Agent shall maintain an account on its books in the name of US Borrowers (the “US Loan Account”) on which US Borrowers will be charged with all US Revolving Loans (including Extraordinary Advances and Swing Loans) made by Administrative Agent, Swing Lender, or the Lenders to US Borrowers or for US Borrowers’ account, the Letters of Credit issued or arranged by Issuing Bank for US Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. Administrative Agent shall maintain an account on its books in the name of Australian Borrowers (the “Australian Loan Account”) on which Australian Borrowers will be charged with all Australian Revolving Loans (including Extraordinary Advances) made by Administrative Agent, Swing Lender, or the Lenders to Australian Borrowers or for Australian Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.7, the US Loan Account will be credited with all payments received by Administrative Agent from US Borrowers or for US Borrowers’ account, and the Australian Loan Account will be credited with all payments received by Administrative Agent from Australian Borrowers or for Australian Borrowers’ account. Administrative Agent shall make available to Borrowers monthly statements regarding the applicable Loan Accounts, including the principal amount of the Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within ninety (90) days after Administrative Agent first makes such a statement available to Borrowers, Borrowers shall deliver to Administrative Agent written objection thereto describing the error or errors contained in such statement. 2.10 Fees. (a) Administrative Agent Fees. Borrowers shall pay to Administrative Agent, for the account of Administrative Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter. (b) Unused Line Fee. Borrowers shall pay to Administrative Agent, for the ratable account of the Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal to the Applicable Unused Line Fee Percentage per annum times the result of (i) the aggregate amount of the Revolver Commitments, less (ii) the average amount of the Total Revolver Usage during the immediately preceding quarter or month (or portion thereof), as applicable, which Unused Line Fee shall be due and payable, in arrears, on the first day of each quarter; provided, that if an Event of Default has occurred and is continuing, such Unused Line Fee shall be due and payable, in arrears, on the first day of each month, prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full; provided further, that for the purposes of this Section 2.10(b), if any circumstance or occurrence constitutes an Event of Default as defined in Sections 8.2, 8.7, 8.8, 8.9, 8.10 or 8.11 hereof, obligations shall continue to be due quarterly, and not be due monthly, until a Loan Party has knowledge of, or has received written notice of, such Event of Default. (c) Field Examination and Other Fees. Borrowers shall pay to the Co-Collateral Agents, field examination, appraisal, and valuation fees and charges, as and when incurred or chargeable, as follows (i) a fee of $1,000 per day, per examiner, plus out-of-pocket expenses (including travel, meals, and lodging) for each field examination of any Borrower performed by personnel employed by the Co-Collateral Agents, and (ii) the fees or charges paid or incurred by Co-Collateral Agents (but, in any event, no less than a charge of $1,000 per day, per Person, plus out-of-pocket expenses (including travel, meals, and lodging)) if it elects to employ the services of one or more third Persons to perform field examinations of any Borrower or its Subsidiaries, to establish electronic collateral reporting systems, to appraise the Collateral, or any portion thereof, or to assess any Borrower’s or its Subsidiaries’ business valuation; provided, that so long as no Event of Default shall have occurred and be continuing, Borrowers shall not be obligated to reimburse the Co-Collateral Agents for more than two (2) field examinations during any calendar year, plus an additional field examination during any calendar year in which a Reporting Trigger Period occurs.
- 20 - 4775516.6 2.11 Letters of Credit. (a) Subject to the terms and conditions of this Agreement, upon the request of Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue a requested Letter of Credit for the account of Borrowers in US Dollars or Australian Dollars. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be irrevocable and shall be made in writing by an Authorized Person and delivered to Issuing Bank via telefacsimile or other electronic method of transmission reasonably acceptable to Issuing Bank and reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance reasonably satisfactory to Issuing Bank and (i) shall specify (A) the amount and currency of such Letter of Credit (which may be US Dollars or Australian Dollars), (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, and (E) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as Administrative Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances. Issuing Bank’s records of the content of any such request will be conclusive, absent manifest error. Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a Letter of Credit that (i) supports the obligations of US Borrowers or US Guarantors in respect of (x) a lease of real property to the extent that the face amount of such Letter of Credit exceeds the highest rent (including all rent-like charges) payable under such lease for a period of one year, or (y) an employment contract to the extent that the face amount of such Letter of Credit exceeds the highest compensation payable under such contract for a period of one year and (ii) is in Australian Dollars if such Issuing Bank does not otherwise issue letters of credit in Australian Dollars. (b) Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested issuance: (i) the Letter of Credit Usage would exceed $25,000,000, or (ii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Revolving Loans (including Swing Loans), or (iii) the Letter of Credit Usage would exceed the lesser of the Total Borrowing Base or the Trailing 90 Day Collections at such time less the outstanding principal balance of the Revolving Loans (inclusive of Swing Loans) at such time. (c) In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, the Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii), or (ii) the Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrowers to eliminate the Issuing Bank’s risk with respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii). Additionally, Issuing Bank shall have no obligation to issue a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, or (B) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally, or (C) if amounts demanded to be paid under any Letter of Credit will or may not be in US Dollars or Australian Dollars.
- 21 - 4775516.6 (d) Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Administrative Agent in writing no later than the Business Day immediately following the Business Day on which such Issuing Bank issued any Letter of Credit; provided that (i) until Administrative Agent advises any such Issuing Bank that the provisions of Section 3.2 are not satisfied, or (ii) unless the aggregate amount of the Letters of Credit issued in any such week exceeds such amount as shall be agreed by Administrative Agent and such Issuing Bank, such Issuing Bank shall be required to so notify Administrative Agent in writing only once each week of the Letters of Credit issued by such Issuing Bank during the immediately preceding week as well as the daily amounts outstanding for the prior week, such notice to be furnished on such day of the week as Administrative Agent and such Issuing Bank may agree. Borrowers and the Lender Group hereby acknowledge and agree that all Existing Letters of Credit shall constitute Letters of Credit under this Agreement on and after the Closing Date with the same effect as if such Existing Letters of Credit were issued by Issuing Bank at the request of Borrowers on the Closing Date. Each Letter of Credit shall be in form and substance reasonably acceptable to Issuing Bank, including the requirement that the amounts payable thereunder must be payable in US Dollars or Australian Dollars. If Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to Administrative Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a US Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 3) and, initially, shall bear interest at the rate then applicable to US Revolving Loans that are SOFR Loans. If a Letter of Credit Disbursement is deemed to be a US Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically converted into an obligation to pay the resulting US Revolving Loan and such deemed US Revolving Loan shall be a SOFR Loan. Promptly following receipt by Administrative Agent of any payment from Borrowers pursuant to this paragraph, Administrative Agent shall distribute such payment to Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then to such Revolving Lenders and Issuing Bank as their interests may appear. (e) Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the amount thereof as a Revolving Loan in US Dollars or Australian Dollars, as applicable, and Administrative Agent shall promptly pay to Issuing Bank the amounts so received by it from the Revolving Lenders. By the issuance of a Letter of Credit (or an amendment, renewal, or extension of a Letter of Credit) and without any further action on the part of Issuing Bank or the Revolving Lenders, Issuing Bank shall be deemed to have granted to each Revolving Lender, and each Revolving Lender shall be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata Share of such Letter of Credit, and each such Revolving Lender agrees to pay to Administrative Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing Bank under the applicable Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to Administrative Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each Letter of Credit Disbursement made by Issuing Bank and not reimbursed by Borrowers on the date due as provided in Section 2.11(d), or of any reimbursement payment that is required to be refunded (or that Administrative Agent or Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason. Each Revolving Lender acknowledges and agrees that its obligation to deliver to Administrative Agent, for the account of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3. If any such Revolving Lender fails to make available to Administrative Agent the amount of such Revolving Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this Section, such Revolving Lender shall be deemed to be a Defaulting Lender and Administrative Agent (for the account of Issuing Bank) shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the Defaulting Lender Rate until paid in full. (f) Each Borrower agrees to indemnify, defend and hold harmless each member of the Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such Person’s respective
- 22 - 4775516.6 directors, officers, employees, attorneys’ and agents (each, including Issuing Bank, a “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of: (i) any Letter of Credit or any pre-advice of its issuance; (ii) any transfer, sale, delivery, surrender or endorsement of any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with any Letter of Credit; (iii) any action or proceeding arising out of, or in connection with, any Letter of Credit (whether administrative, judicial or in connection with arbitration), including any action or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful dishonor of, or honoring a presentation under, any Letter of Credit; (iv) any independent undertakings issued by the beneficiary of any Letter of Credit; (v) any unauthorized instruction or request made to Issuing Bank in connection with any Letter of Credit or requested Letter of Credit or error in computer or electronic transmission with respect to any Letter of Credit; (vi) an adviser, confirmer or other nominated person seeking to be reimbursed, indemnified or compensated with respect to any Letter of Credit; (vii) any third party seeking to enforce the rights of an applicant, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document with respect to any Letter of Credit; (viii) the fraud, forgery or illegal action with respect to any Letter of Credit of parties other than the Letter of Credit Related Person; (ix) Issuing Bank’s reasonable performance of the obligations of a confirming institution with respect to any Letter of Credit or entity that wrongfully dishonors a confirmation with respect to any Letter of Credit; or (x) the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the Letter of Credit Related Person; in each case, including that resulting from the Letter of Credit Related Person’s own negligence; provided, however, that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification under clauses (i) through (x) above to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Letter of Credit Related Person claiming indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity on demand from time to time all amounts owing under this Section 2.11(f). If and to the extent that the obligations of Borrowers under this Section 2.11(f) are unenforceable for any reason, Borrowers agree to make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable law. This indemnification provision shall survive termination of this Agreement and all Letters of Credit.
- 23 - 4775516.6 (g) The liability of Issuing Bank (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused by Issuing Bank’s gross negligence or willful misconduct in (i) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit or (iii) retaining Drawing Documents presented under a Letter of Credit. Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement. Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate amount paid by Borrowers to Issuing Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d), plus interest at the rate then applicable to SOFR Loans hereunder. Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit. Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of; and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Issuing Bank to effect a cure. (h) Borrowers are responsible for preparing or approving the final text of the Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by Borrowers. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes. With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing Bank, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want such Letter of Credit to be renewed, Borrowers will so notify Administrative Agent and Issuing Bank at least fifteen (15) calendar days before Issuing Bank is required to notify the beneficiary of such Letter of Credit or any advising bank of such nonrenewal pursuant to the terms of such Letter of Credit. (i) Borrowers’ reimbursement and payment obligations under this Section 2.11 are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including: (i) any lack of validity, enforceability or legal effect of any Letter of Credit or this Agreement or any term or provision therein or herein; (ii) payment against presentation of any draft, demand or claim for payment under any Drawing Document that does not comply strictly with the terms of the applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit; (iii) Issuing Bank or any of its branches or Affiliates being the beneficiary of any Letter of Credit; (iv) Issuing Bank or any correspondent honoring a drawing against a Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document claims an amount in excess of the amount available under the Letter of Credit; (v) the existence of any claim, set-off, defense or other right that any Loan Party or any of its Subsidiaries may have at any time against any beneficiary, any assignee of proceeds, Issuing Bank or any other Person;
- 24 - 4775516.6 (vi) any other event, circumstance or conduct whatsoever, whether or not similar to any of the foregoing that might, but for this Section 2.11(i), constitute a legal or equitable defense to or discharge of, or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and other payment obligations and liabilities, arising under, or in connection with, any Letter of Credit, whether against Issuing Bank, the beneficiary or any other Person; or (vii) the fact that any Default or Event of Default shall have occurred and be continuing; provided, however, that subject to Section 2.11(g) above, the foregoing shall not release Issuing Bank from such liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction against Issuing Bank following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising under, or in connection with, this Section 2.11 or any Letter of Credit. (j) Without limiting any other provision of this Agreement, Issuing Bank and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each drawing under each Letter of Credit shall not be impaired by: (i) honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary; (ii) honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the beneficiary; (iii) acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit; (iv) the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing Bank’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit); (v) acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized to give such instruction or request; (vi) any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to Borrowers; (vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates; (viii) assertion or waiver of any provision of the ISP or UCP that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place;
- 25 - 4775516.6 (ix) payment to any paying or negotiating bank (designated or permitted by the terms of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it; (x) acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be; (xi) honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have been honored; (xii) dishonor of any presentation that does not strictly comply with the terms and conditions of the applicable Letter of Credit or that is fraudulent, forged or otherwise not entitled to honor; or (xiii) honor of a presentation that is subsequently determined by Issuing Bank to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons. (k) Borrowers shall pay immediately upon demand to Administrative Agent for the account of Issuing Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such fees, commissions, and charges to any Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this Section 2.11(k)): (i) a fronting fee which shall be imposed by Issuing Bank upon the issuance of each Letter of Credit of one-half of one percent (0.50%) per annum of the face amount thereof, plus (ii) any and all other customary commissions, fees and charges then in effect imposed by, and any and all expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds, amendments, drawings, renewals or cancellations). Schedule 2.11(k) sets forth the fees of Wells Fargo as Issuing Bank in effect as of the Closing Date, which are subject to change from time to time by Wells Fargo without notice. Any obligation hereunder of the Borrowers to pay fees in connection with the issuance of the Existing Letters of Credit has been satisfied prior to the Closing Date. (l) If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any other member of the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto): (i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or (ii) there shall be imposed on Issuing Bank or any other member of the Lender Group any other condition regarding any Letter of Credit, and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank or any other member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Administrative Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within thirty (30) days after demand therefor, such amounts as Administrative Agent may specify to be necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to SOFR Loans hereunder; provided, that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred more than 180 days prior to the date on which the
- 26 - 4775516.6 demand for payment of such amounts is first made to Borrowers, and (B) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. The determination by Administrative Agent of any amount due pursuant to this Section 2.11(l), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. (m) Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP and the UCP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. (n) In the event of a direct conflict between the provisions of this Section 2.11 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.11 shall control and govern. 2.12 SOFR Loans and Australian Bill Rate. (a) Funding Losses. In connection with each SOFR Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense actually incurred by Agent or any Lender as a result of (i) the payment of any principal of any SOFR Loan, or (ii) the conversion of any SOFR Loan (such losses, costs, or expenses, “Funding Losses”). A certificate of Agent or a Lender delivered to Borrowers setting forth in reasonable detail any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error. Borrowers shall pay such amount to Agent or the Lender, as applicable, within 30 days of the date of its receipt of such certificate. (b) Special Provisions Applicable to SOFR Loans and Australian Bill Rate. Adjusted Daily Simple SOFR or the Australian Bill Rate may be adjusted by Administrative Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs (other than Taxes which shall be governed by Section 16), in each case, due to changes in applicable law occurring subsequent to (x) in the case of Daily Simple SOFR Loans, the making of, conversion to, or continuation of the applicable Daily Simple SOFR Loans and (y) in the case of Australian Bill Rate Loans, the making of, conversion to, or continuation of the applicable Australian Bill Rate Loans, or pursuant to any Change in Law or change in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at Adjusted Daily Simple SOFR or the Australian Bill Rate, as applicable. In any such event, the affected Lender shall give Borrowers and Administrative Agent notice of such a determination and adjustment and Administrative Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting Adjusted Daily Simple SOFR or the Australian Bill Rate, as applicable, and the method for determining the amount of such adjustment, or (B) repay the applicable Daily Simple SOFR Loans or Australian Bill Rate Loans of such Lender with respect to which such adjustment is made (together with any amounts due under Section 2.12(a)). (c) Subject to the provisions set forth in Section 2.12(d) below, in the event that any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain Loans with interest based on the Adjusted Daily Simple SOFR or the Australian Bill Rate or to continue such funding or maintaining, or to determine or charge interest rates based on the Adjusted Daily Simple SOFR, the Australian Bill Rate or SOFR, such Lender shall give notice of such changed circumstances to Administrative Agent and Borrowers and Administrative Agent promptly shall transmit the notice to each other Lender and (y) in the case of any SOFR Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the current month, and interest upon the such Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to request SOFR Loans or Australian Bill Rate Loans, as applicable,
- 27 - 4775516.6 (such that any request for a SOFR Loan or Australian Bill Rate Loan from Lenders shall be deemed to be a request for a Base Rate Loan) until such Lender determines that it would no longer be unlawful or impractical to do so. (d) Benchmark Replacement Setting. (i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event with respect to any Benchmark, Administrative Agent and Administrative Borrower may amend this Agreement to replace such Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after Administrative Agent has posted such proposed amendment to all affected Lenders and Administrative Borrower so long as Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. (ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, Administrative Agent will 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. (iii) Notices; Standards for Decisions and Determinations. Administrative Agent will promptly notify Administrative Borrower and the Lenders of (1) the implementation of any Benchmark Replacement and (2) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by Administrative Agent pursuant to this Section 2.12(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 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 2.12(d). (iv) Benchmark Unavailability Period. Upon Administrative Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, Administrative Agent may (a) declare that SOFR Loans will not thereafter be made by any Lender, such that any request for a SOFR Loan from Lenders shall be deemed to be a request for a Base Rate Loan and (b) require that all outstanding SOFR Loans be converted to Base Rate Loans immediately, in which event all outstanding SOFR Loans shall be so converted and shall bear interest at the Base Rate in effect from time to time, plus the Applicable Margin with respect to Base Rate Loans. The Base Rate in effect from time to time plus the Applicable Margin with respect to Base Rate Loans shall replace the then- current Benchmark for any determination of interest hereunder or under any other Loan Document during a Benchmark Unavailability Period. (e) No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Administrative Agent, nor any Lender, nor any of their Participants, is required actually to match fund any Obligation as to which interest accrues at Adjusted Daily Simple SOFR, SOFR or the Australian Bill Rate. 2.13 Capital Requirements; Illegality. (a) If, after the date hereof, Issuing Bank or any Lender determines that (i) any Change in Law regarding capital or reserve requirements for banks or bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any guideline, request or directive of any Governmental Authority regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital as a consequence of Issuing Bank’s or such Lender’s commitments hereunder to a level below that which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’ then existing policies with respect to capital adequacy and
- 28 - 4775516.6 assuming the full utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank or such Lender may notify Borrowers and Administrative Agent thereof. Following receipt of such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within thirty (30) days after presentation by Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, Issuing Bank or such Lender may use any reasonable averaging and attribution methods. Failure or delay on the part of Issuing Bank or any Lender to demand compensation pursuant to this Section shall not constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided that Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant to this Section for any reductions in return incurred more than 180 days prior to the date that Issuing Bank or such Lender notifies Borrowers of such Change in Law giving rise to such reductions and of such Lender’s intention to claim compensation therefor; provided further that if such claim arises by reason of the Change in Law that is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. (b) If Issuing Bank or any Lender requests additional or increased costs referred to in Section 2.11(l) or Section 2.12(b) or amounts under Section 2.13(a) or sends a notice under Section 2.12(b) relative to changed circumstances (such Issuing Bank or Lender, an “Affected Lender”), then, at the request of Administrative Borrower, such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l), Section 2.12(b) or Section 2.13(a), as applicable, or would eliminate the illegality or impracticality of funding or maintaining SOFR Loans, and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it. Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment. If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l), Section 2.12(b) or Section 2.13(a), as applicable, or to enable Borrowers to obtain SOFR Loans, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l), Section 2.12(b) or Section 2.13(a), as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l), Section 2.12(b) or Section 2.13(a), as applicable, or indicates that it is no longer unlawful or impractical to fund or maintain SOFR Loans, may designate a different Issuing Bank or substitute a Lender or prospective Lender, in each case, reasonably acceptable to Administrative Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and commitments, and upon such purchase by the Replacement Lender, which such Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement. (c) Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l), 2.12(b) and (c), and 2.13 shall be available to Issuing Bank and each Lender (as applicable) regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment, guideline, treaty or other change or condition which shall have occurred or been imposed, so long as it shall be customary for issuing banks or lenders affected thereby to comply therewith. Notwithstanding any other provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any. 2.14 [Reserved]
- 29 - 4775516.6 2.15 Joint and Several Liability of Borrowers. (a) Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations. (b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them. (c) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation until such time as all of the Obligations are paid in full. (d) The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.15(d)) or any other circumstances whatsoever. (e) Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Revolving Loans or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Administrative Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Administrative Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Administrative Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of Administrative Agent or any Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or Administrative Agent or any Lender. (f) Each Borrower represents and warrants to Administrative Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Administrative Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby acknowledges and agrees that no member of the
- 30 - 4775516.6 Lender Group shall have any obligation to keep such Borrower informed of any other Borrowers’ financial condition or of any other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations. (g) The provisions of this Section 2.15 are made for the benefit of Administrative Agent, each other Secured Party, and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Administrative Agent, any other Secured Party, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Administrative Agent or any other Secured Party upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made. (h) Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Administrative Agent or any other Secured Party with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Administrative Agent or any other Secured Party are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor. (i) Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Administrative Agent, and such Borrower shall deliver any such amounts to Administrative Agent for application to the Obligations in accordance with Section 2.4(b). 3. CONDITIONS; TERM OF AGREEMENT. 3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of each Lender to make the initial extension of credit provided for hereunder is subject to the fulfillment, to the satisfaction of Administrative Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extensions of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent ). 3.2 Conditions Precedent to all Extensions of Credit. The obligation of the Lender Group (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder) at any time shall be subject to the following conditions precedent: (a) the representations and warranties of each Borrower or its Subsidiaries contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which
- 31 - 4775516.6 case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date); (b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; (c) after giving effect to the requested Revolving Loan or other extension of credit hereunder, as applicable, (i) the Total Revolver Usage shall not exceed the lesser of (A) the Maximum Revolver Amount, (B) the Total Borrowing Base as then in effect and (C) the Trailing 90 Day Collections reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co-Collateral Agents, (ii) the US Revolver Usage shall not exceed the lesser of (A) the Maximum US Loan Amount, (B) the US Borrowing Base as then in effect and (C) the Trailing 90 Day Collections with respect to Accounts of US Borrowers reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co- Collateral Agents, and (iii) the Australian Revolver Usage shall not exceed the lesser of (A) the Maximum Australian Loan Amount, (B) the Australian Borrowing Base as then in effect and (C) the Trailing 90 Day Collections with respect to Accounts of Australian Borrowers reflected in the Trailing 90 Day Collection Report most recently delivered by Borrowers to Administrative Agent and the Co-Collateral Agents; and (d) in relation to Australian Revolving Loans, the fulfillment, to the satisfaction of Administrative Agent and each Lender, of each of the conditions set forth in Section 5.16. 3.3 Maturity. This Agreement shall continue in full force and effect for a term ending on the Maturity Date. 3.4 Effect of Maturity. On the Maturity Date, all commitments of the Lender Group to provide additional credit hereunder shall automatically be terminated and all of the Obligations immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the Obligations in full. No termination of the obligations of the Lender Group (other than payment in full of the Obligations and termination of the Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations have been paid in full and the Commitments have been terminated. When all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Administrative Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and liens previously filed by Administrative Agent. 3.5 Early Termination by Borrowers. Borrowers have the option, at any time upon five (5) Business Days prior written notice to Administrative Agent, to terminate this Agreement and terminate the Commitments hereunder by repaying to Administrative Agent all of the Obligations in full. The foregoing notwithstanding, (a) Borrowers may rescind termination notices relative to proposed payments in full of the Obligations with the proceeds of third party Indebtedness if the closing for such issuance or incurrence does not happen on or before the date of the proposed termination (in which case, a new notice shall be required to be sent in connection with any subsequent termination), and (b) Borrowers may extend the date of termination at any time with the consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed). 3.6 Conditions Subsequent. The obligation of the Lender Group (or any member thereof) to continue to make Revolving Loans (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of the conditions subsequent set forth on Schedule 3.6 (the failure by Borrowers to so perform or cause to be performed such conditions subsequent as and when required by the terms thereof (unless such date is extended, in writing, by Administrative Agent, which Administrative Agent may do without obtaining the consent of the other members of the Lender Group), shall constitute an Event of Default). To any extent that performance
- 32 - 4775516.6 contemplated on Schedule 3.6 is required pursuant to other terms of the Loan Documents, it shall not constitute a default or Event of Default that such performance remains unperformed before the date (as it may be extended pursuant to the foregoing sentence) required on Schedule 3.6. 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Secured Parties to enter into this Agreement, each Borrower makes the following representations and warranties to the Secured Parties which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the date of the making of each Revolving Loan (or other extension of credit) made thereafter, as though made on and as of the date of such Revolving Loan (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 4.1 Due Organization and Qualification; Subsidiaries. (a) Each Loan Party (i) is duly organized and existing and, other than in relation to the Australian Loan Parties, in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, and (iii) 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. (b) Set forth on Schedule 4.1(b) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement) is a complete and accurate description of the authorized Equity Interests of each Loan Party, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. No Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Equity Interests or any security convertible into or exchangeable for any of its Equity Interests. (c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement), is a complete and accurate list of the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of shares of each class of common and preferred Equity Interests authorized for each of such Subsidiaries, and (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Parent. All of the outstanding Equity Interests of each such Subsidiary has been validly issued and is fully paid and non-assessable. (d) Except as set forth on Schedule 4.1(d), there are no subscriptions, options, warrants, or calls relating to any shares of any Loan Party’s or any of its Subsidiaries’ Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument. 4.2 Due Authorization; No Conflict. (a) As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Loan Party.
- 33 - 4775516.6 (b) As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party do not (i) violate any material provision of federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of any Loan Party or its Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (iv) require any approval of any holder of Equity Interests of a Loan Party or any approval or consent of any Person under any material agreement of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect. 4.3 Governmental Consents. The execution, delivery, and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the consummation of the transactions contemplated by the Loan Documents do not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Administrative Agent for filing or recordation, as of the Closing Date. 4.4 Binding Obligations; Perfected Liens. (a) Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. (b) Agent’s Liens are validly created, perfected (to the extent that they may be perfected by the filing of financing statements, the entry into Control Agreements required hereby, or the recordation of security agreements with the United States Patent and Trademark Office or with the United States Copyright Office (or equivalent intellectual property registry), as applicable), and first priority Liens, subject only to the Intercreditor Agreement and Permitted Liens which by operation of law or pursuant to the express terms of the Loan Documents would have priority over the Liens securing the Obligations, permitted purchase money Liens, or the interests of lessors under Capital Leases. As of the Australian Joinder Effective Date, each of the Australian Security Trustee’s Liens are legal, valid and binding and are enforceable in accordance with the terms of the Australian Security Documents, subject to any stamping and perfection (within the meaning of the Australian PPSA) of any security interest within the meaning of the Australian PPSA or any other required registration requirements, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. 4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its Subsidiaries has (a) good, sufficient and legal title to (in the case of fee interests in Real Property), (b) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (c) good title to (in the case of all other personal property), all of their respective assets reflected in their most recent financial statements delivered pursuant to Section 5.1, in each case except for Permitted Liens and assets disposed of since the date of such financial statements to the extent permitted hereby. All of such assets are free and clear of Liens except for Permitted Liens. 4.6 Litigation. (a) There are no actions, suits, or proceedings pending or, to the knowledge of any Borrower, threatened in writing against a Loan Party or any of its Subsidiaries that (i) either individually or in the aggregate
- 34 - 4775516.6 could reasonably be expected to result in a Material Adverse Effect or (ii) involves any of the Loan Documents or the transactions contemplated by the Loan Documents. (b) Schedule 4.6(b) sets forth a complete and accurate description, with respect to each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably be expected to result in liabilities in excess of $1,000,000 that, as of the Closing Date, is pending or, to the knowledge of any Borrower, threatened against a Loan Party or any of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings, (ii) the nature of the dispute that is the subject of such actions, suits, or proceedings, (iii) the procedural status, as of the Closing Date, with respect to such actions, suits, or proceedings, and (iv) whether any liability of the Loan Parties’ and their Subsidiaries in connection with such actions, suits, or proceedings is covered by insurance. 4.7 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in violation of any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 4.8 No Material Adverse Effect. The historical financial statements relating to the Loan Parties and their Subsidiaries for the fiscal year ended December 31, 2016, and each financial statement delivered by Borrowers to Administrative Agent pursuant to Section 5.1 hereof, have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes, being subject to year-end audit adjustments and, in the case of financial statements relating to periods ending before March 31, 2017, any failure to be in accordance with GAAP in connection with the pending completion of the Prior Tax Calculation (as defined in the Reorganization Plan)) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended, subject to completion of the Prior Tax Calculation (as defined in the Reorganization Plan). Since December 31, 2016, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Effect with respect to the Loan Parties and their Subsidiaries. 4.9 Solvency. (a) Each Loan Party is Solvent. (b) No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party. 4.10 ERISA. During the five year period prior to the date on which this representation is made or deemed to be made with respect to any Plan or Multiemployer Plan, no ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability has occurred during such five year period or for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation Retirement Benefits) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan by an amount that would reasonably be expected to have a Material Adverse Effect, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation Retirement Benefits) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans by an amount that would reasonably be expected to have a Material Adverse Effect. 4.11 Environmental Condition. Except as set forth on Schedule 4.11 and any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the
- 35 - 4775516.6 Loan Parties (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any facts or circumstances which are reasonably likely to form the basis for any Environmental Liability. 4.12 Complete Disclosure. All factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Administrative Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement or the other Loan Documents true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. The Projections delivered to Administrative Agent on November 7, 2016 represent, and as of the date on which any other Projections are delivered to Administrative Agent, such additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered, of the Loan Parties’ and their Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Administrative Agent (it being understood that such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties and their Subsidiaries, and no assurances can be given that such Projections will be realized, and although reflecting Borrowers’ good faith estimate, projections or forecasts based on methods and assumptions which Borrowers believed to be reasonable at the time such Projections were prepared, are not to be viewed as facts, and that actual results during the period or periods covered by the Projections may differ materially from projected or estimated results). The information included in the Beneficial Ownership Certification most recently provided to the Administrative Agent and Lenders is true and correct in all respects. 4.13 Patriot Act. To the extent applicable, each Loan Party is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the proceeds of the loans made hereunder will be used by any Loan Party, directly or, to its knowledge after due care and inquiry, indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. 4.14 Indebtedness. Set forth on Schedule 4.14 is a true and complete list of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date. 4.15 Payment of Taxes. Except as otherwise permitted under Section 5.5, all Federal and all material state and local Tax returns and reports of each Loan Party and its Subsidiaries required to be filed by any of them have been timely filed (taking into account any applicable extensions), and all Taxes required to be paid by each Loan Party and its Subsidiaries have been paid by it or them, except (x) Taxes in an amount not exceeding $5,000,000 in the aggregate or (y) Taxes that are being contested by such Loan Party or such Subsidiary diligently, in good faith, and by appropriate proceedings and for which such Loan Party or Subsidiary has set aside on its books adequate reserves in accordance with GAAP. As of the Fifth Amendment Effective Date, no tax liens have been filed and no claims are being asserted with respect to any such Taxes. 4.16 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the loans made to Borrowers will be used to purchase or carry any Margin Stock or to
- 36 - 4775516.6 extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors. 4.17 Governmental Regulation. No Loan Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. No Loan Party nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940. 4.18 OFAC, Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. No Loan Party nor any of its Subsidiaries is in violation of any Sanctions. No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person, (b) has any assets located in any Sanctioned Country, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Countries. Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country, or otherwise used in any manner that would result in a violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender, Bank Product Provider, or other individual or entity participating in any transaction). 4.19 Employee and Labor Matters. There is (i) no unfair labor practice complaint pending or, to the knowledge of any Borrower, threatened against Parent or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against Parent or its Subsidiaries which arises out of or under any collective bargaining agreement, (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in writing against Parent or its Subsidiaries or (iii) to the knowledge of any Borrower, no union representation question existing with respect to the employees of Parent or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of Parent or its Subsidiaries, in each case of clauses (i) through (iii), that individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of Parent or its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of Parent and its Subsidiaries have not been in violation of the Fair Labor Standards Act, the Fair Work Act 2009 (Cth) of Australia or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments due from Parent or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Parent, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party is bound. 4.20 Use of Proceeds. The proceeds of the Revolving Loans and other extensions of credit under this Agreement have been and will be used in accordance with the provisions of Section 6.11. 4.21 Leases. Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating, and, subject to Permitted Protests, all of such material leases are valid and subsisting and no material default by the applicable Loan Party or its Subsidiaries exists under any of them.
- 37 - 4775516.6 4.22 Eligible Accounts. As to each Account that is identified by Borrowers as an Eligible Account in a Borrowing Base Certificate submitted to Administrative Agent and Co-Collateral Agents, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition of services to such Account Debtor in the ordinary course of the Borrowers’ business, (b) owed to a Borrower without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and (c) not excluded as ineligible by failing to satisfy one or more of the criteria (other than any Co-Collateral Agent’s discretionary criteria) set forth in the definition of Eligible Billed Accounts. 4.23 Term Loan Documents. Parent has delivered to Administrative Agent true, correct and complete copies of the Term Loan Documents. 4.24 Hedge Agreements. On each date as of which any Hedge Agreement is entered into between any Hedge Provider and any Loan Party, each Loan Party that is a counterparty to such Hedge Agreement satisfies all eligibility, suitability and other requirements under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity Futures Trading Commission regulations. 4.25 Credit Card Arrangements. Set forth on Schedule 4.25 is a list describing all arrangements to which any Borrower is a party with respect to the processing and/or payment to such Borrower of the proceeds of any credit card charges and debit card charges for sales made by such Borrower. 4.26 Tax Consolidation and Payment of Taxes. On and with effect from the time that they form an Australian Tax Consolidated Group, each Australian Loan Party is a member of an Australian Tax Consolidated Group for which the Head Company (as defined in the Income Tax Assessment Act 1997 (Cth) is Thryv Ausco. 5. AFFIRMATIVE COVENANTS. Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations: 5.1 Financial Statements, Reports, Certificates. Borrowers (a) will deliver to Administrative Agent (and if so requested by Administrative Agent, with copies to each Lender) each of the financial statements, reports, and other items set forth on Schedule 5.1 no later than the times specified therein, (b) agree that no Subsidiary of a Loan Party will have a fiscal year different from that of Parent, (c) agree to maintain a system of accounting that enables Borrowers to produce financial statements in accordance with GAAP, (d) agree that they will, and will cause each other Loan Party to, (i) keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales, and (ii) maintain their billing systems and practices substantially as in effect as of the Closing Date and shall only make material modifications thereto with notice to, and with the consent of, Administrative Agent, such consent not to be unreasonably withheld, conditioned or delayed, and (e) together with each Compliance Certificate delivered pursuant to Schedule 5.1, will deliver to Administrative Agent any changes in the information provided in the most recently delivered Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such Beneficial Ownership Certification and, promptly following Administrative Agent’s or any Lender’s request (via Administrative Agent) therefor, agree to provide any information and documentation reasonably requested for purposes of compliance with the Beneficial Ownership Regulation. Notwithstanding the foregoing, the obligations in clauses (a), (b) and (c) of Schedule 5.1 may instead be satisfied with respect to any financial statements of Parent and its Subsidiaries by furnishing (A) the applicable financial statements of Parent (or any other parent company of Parent) or (B) Parent’s (or any other parent company of Parent’s) Form 10-K or 10-Q, as applicable, filed with the SEC, in each case, within the time periods specified in such schedule and, so long as such filings are publicly available, without any requirement to provide notice of such filing to Administrative Agent or any Lender; provided, that (i) to the extent (x) such information relates to Parent (or a parent thereof) and (y) either (1) such Parent (or any other parent company that is a subsidiary of such parent company) has any material third party Indebtedness and/or material operations (as determined by Administrative
- 38 - 4775516.6 Borrower in good faith and other than any operations that are attributable solely to Parent’s (or such other parent company’s) ownership of Administrative Borrower and its Subsidiaries) or (2) there are material differences between the financial statements of Parent (or such other parent company) and its consolidated subsidiaries, on the one hand, and Administrative Borrower and its consolidated subsidiaries, on the other hand, such financial statements or Form 10-K or Form 10-Q, as applicable, shall be accompanied by unaudited consolidating information that summarizes in reasonable detail the differences between the information relating to Parent (or such other parent company) and its consolidated subsidiaries, on the one hand, and the information relating to Administrative Borrower and its Subsidiaries on a stand-alone basis, on the other hand, which consolidating information shall be certified by a Financial Officer of Administrative Borrower as having been fairly presented in all material respects and (ii) to the extent such information is in lieu of information required to be provided under clause (c) of Schedule 5.1, such materials are accompanied by a report and opinion of an independent public accountants of recognized national standing, which report and opinion shall satisfy the applicable requirements set forth in clause (c) of Schedule 5.1. Subject to the paragraph immediately above, any documents required to be delivered pursuant to Schedule 5.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent or Administrative Borrower posts such documents, or provides a link thereto on Parent’s or Administrative Borrower’s website on the Internet at the website address provided to Administrative Agent from time to time in writing; or (ii) on which such documents are posted on Parent’s or Administrative Borrowers’ behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by Administrative Agent). 5.2 Reporting. Borrowers (a) will deliver to Administrative Agent and Co-Collateral Agents, as applicable, (and if so requested by Administrative Agent, with copies for each Lender) each of the reports set forth on Schedule 5.2 at the times specified therein, and (b) agree to use commercially reasonable efforts in cooperation with Administrative Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth on such Schedule. 5.3 Existence. Except as otherwise permitted under Section 6.3 or Section 6.4, each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, preserve and keep in full force and effect such Person’s legal existence and, other than with respect to the Australian Loan Parties, good standing in its jurisdiction of organization and, except as could not reasonably be expected to result in a Material Adverse Effect, other than with respect to the Australian Loan Parties, good standing with respect to all other jurisdictions in which it is qualified to do business and take all reasonable action to maintain any rights, franchises, permits, licenses, authorizations, or other approvals material to the conduct of their businesses. 5.4 Maintenance of Properties. Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, maintain and preserve all of its property (other than Intellectual Property) that are material to the proper conduct of its business in good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted Dispositions excepted (and except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect). 5.5 Taxes. Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, pay in full before delinquency or before the expiration of any extension period all material Taxes imposed, levied, or assessed against it, or any of its assets or in respect of any of its income, businesses, or franchises, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings; provided, however, such Loan Party’s liability for such Taxes would not result in aggregate liabilities in excess of $5,000,000 and none of the Collateral would become subject to forfeiture or loss as a result of the contest (provided that this proviso shall not require the Loan Parties to pay any Taxes that are the subject of the Prior Tax Calculation (as defined in the Reorganization Plan) pending resolution of the Prior Tax Calculation) and (b) such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP. 5.6 Insurance. The Borrower will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurance companies (a) insurance in such amounts (with no greater risk retention) and against
- 39 - 4775516.6 such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance required to be maintained pursuant to the Loan Documents. The Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained. Subject to the terms of the Intercreditor Agreement, all property insurance policies covering the Collateral are to be made payable to Administrative Agent for the benefit of Administrative Agent and the Lenders, as their interests may appear, in case of loss, pursuant to a standard loss payable endorsement with a standard non contributory “lender” or “secured party” clause and are to contain such other provisions as Administrative Agent may reasonably require to fully protect the Lenders’ interest in the Collateral and to any payments to be made under such policies. All certificates of property and general liability insurance are to be delivered to Administrative Agent, with the loss payable (but only in respect of Collateral) and additional insured endorsements in favor of Administrative Agent and shall provide for not less than thirty (30) days (ten (10) days in the case of non-payment) prior written notice to Administrative Agent of the exercise of any right of cancellation. If any Borrower or its Subsidiaries fails to maintain such insurance, Administrative Agent may arrange for such insurance, but at Borrowers’ expense and without any responsibility on Administrative Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Borrowers shall give Administrative Agent prompt notice of any loss exceeding $500,000 covered by their or their Subsidiaries’ casualty or business interruption insurance. Upon the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the sole right to file claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies. 5.7 Inspection. (a) Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, permit Administrative Agent, Co-Collateral Agents, any Lender, and each of their respective duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees (provided an authorized representative of a Borrower shall be allowed to be present) at such reasonable times and intervals as Administrative Agent or any Lender, as applicable, may designate and, so long as no Default or Event of Default has occurred and is continuing, with reasonable notice to Borrowers and during regular business hours. (b) Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, permit Administrative Agent and Co-Collateral Agents and each of their duly authorized representatives or agents to conduct appraisals and valuations at such reasonable times and intervals as Administrative Agent may designate and, so long as no Default or Event of Default has occurred and is continuing, with reasonable prior notice to Borrowers. So long as no Default or Event of Default has occurred and is continuing, Administrative Agent agrees to provide Borrowers with a copy of the report for any such valuation upon request by Borrowers so long as (i) such report exists, (ii) the third person employed by Administrative Agent to perform such valuation consents to such disclosure, and (iii) Borrowers execute and deliver to Administrative Agent a non-reliance letter reasonably satisfactory to Administrative Agent. 5.8 Compliance with Laws. Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to, comply in all material respects with the requirements of all laws, rules, regulations, and orders of any Governmental Authority applicable to it, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. 5.9 Environmental. Each Borrower will, and will cause each of its Subsidiaries and each Guarantor to,
- 40 - 4775516.6 (a) Keep any property either owned or operated by any Borrower or its Subsidiaries free of any Environmental Liens that could reasonably be expected to result in a Material Adverse Effect, or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) Comply, in all respects, with Environmental Laws applicable to it, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and provide to Administrative Agent documentation of such compliance which Administrative Agent reasonably requests, (c) Promptly notify Administrative Agent of any release of which any Borrower has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Borrower or its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect and take any remedial actions required to abate said release or otherwise to come into compliance, in all material respects, with applicable Environmental Law, and (d) Promptly, but in any event within five (5) Business Days of its receipt thereof, provide Administrative Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of a Borrower or its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against a Borrower or its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, and (iii) written notice of a violation, citation, or other administrative order that could reasonably be expected to result in a Material Adverse Effect from a Governmental Authority. 5.10 Disclosure Updates. Each Borrower will, promptly and in no event later than five (5) Business Days after obtaining knowledge thereof, notify Administrative Agent if any representation made to Administrative Agent or the Lenders in any Loan Document constituted, at the time it was made, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto. 5.11 Formation of Subsidiaries. Subject to the Intercreditor Agreement and Section 5.16 with respect to the Australian Subsidiaries, Administrative Borrower will, promptly, but in any event within fifteen (15) Business Days (or such later date as permitted by Administrative Agent in its sole discretion), notify Administrative Agent after any Loan Party (i) forms any direct or indirect Subsidiary (other than an Excluded Subsidiary), (ii) acquires any direct or indirect Subsidiary (other than an Excluded Subsidiary) and/or (iii) designates any Discretionary Guarantor in accordance with the definition thereof after the Closing Date, and, within forty-five (45) days after such formation, acquisition or designation (or in the case of any Australian Subsidiary formed or acquired after the Closing Date, such later date upon which any applicable “Whitewash” transaction or similar applicable legal requirements have been satisfied) (or such later date as permitted by Administrative Agent in its sole discretion) (a) cause such new Subsidiary to provide to Co-Collateral Agents a joinder to the Guaranty and Security Agreement (in the case of any US Subsidiary) or the Australian General Security Deed (in the case of an Australian Subsidiary), together with such other security agreements, as well as appropriate financing statements, all in form and substance reasonably satisfactory to Co-Collateral Agents (including being sufficient to grant Administrative Agent and/or Australian Security Trustee, as applicable, a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary or such Discretionary Guarantor); provided, that the joinder to the Guaranty and Security Agreement or the Australian General Security Deed (as the case may be), and such other security agreements shall not be required to be provided to Co-Collateral Agents with respect to any Excluded Subsidiary, (b) provide, or cause the applicable Loan Party to provide, to Co-Collateral Agents a pledge agreement (or an addendum to the Guaranty and Security Agreement or the Australian General Security Deed, as the case may be) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to Co-Collateral Agents; provided, that only 65% of the
- 41 - 4775516.6 total outstanding voting Equity Interests of any Foreign Subsidiary (other than any Australian Subsidiary) shall be required to be pledged, and (c) provide to Administrative Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Co-Collateral Agents, which, in their opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 5.11 shall constitute a Loan Document. 5.12 Further Assurances. Each Borrower will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Administrative Agent or Co-Collateral Agents, execute or deliver to Administrative Agent and Co-Collateral Agents any and all financing statements, fixture filings, security agreements, pledges, assignments, opinions of counsel, and all other documents (the “Additional Documents”) that Administrative Agent or Co-Collateral Agents may reasonably request in form and substance reasonably satisfactory to Co-Collateral Agents, to create, perfect, and continue perfection of Agent’s Liens in all of the assets of Parent, each Borrower and their Subsidiaries of the type that constitute Collateral (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal); provided that the foregoing shall not apply to, or to the Equity Interests of, any Subsidiary of Parent or a Borrower that is a Foreign Subsidiary (other than an Australian Subsidiary). In furtherance of, and not in limitation of, the foregoing, each Loan Party shall take such actions as Administrative Agent or Co- Collateral Agents may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of Parent, each Borrower and its Subsidiaries of a type that constitute Collateral. Notwithstanding anything to the contrary contained herein (including Section 5.11 hereof and this Section 5.12) or in any other Loan Document, (x) Administrative Agent shall not accept delivery of any Mortgage from any Loan Party unless each of the Lenders has received 45 days prior written notice thereof and Administrative Agent has received confirmation from each Lender that such Lender has completed its flood insurance diligence, has received copies of all flood insurance documentation and has confirmed that flood insurance compliance has been completed as required by the Flood Laws or as otherwise satisfactory to such Lender and (y) Administrative Agent shall not accept delivery of any joinder to any Loan Document with respect to any Subsidiary of any Loan Party that is not a Loan Party, if such Subsidiary that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation unless such Subsidiary has delivered a Beneficial Ownership Certification in relation to such Subsidiary and Administrative Agent has completed its Patriot Act searches, OFAC/PEP searches and customary individual background checks for such Subsidiary, the results of which shall be satisfactory to Administrative Agent. 5.13 Lender Meetings. Parent will, during any calendar year, at the request of Administrative Agent or of the Required Lenders and upon reasonable prior notice, hold a call (at a mutually agreeable time or, at the option of Administrative Agent, by meeting at a mutually agreeable location), with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of Parent and its Subsidiaries and the projections presented for the current fiscal year of Parent. 5.14 Compliance with ERISA and the IRC. In addition to and without limiting the generality of Section 5.8, (a) comply with the applicable provisions of ERISA and the IRC with respect to all Employee Benefit Plans except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, (b) without the prior written consent of Administrative Agent and the Required Lenders, not take any action (other than to pay contributions or premiums payable in the ordinary course) or fail to take action the result of which could result in a Loan Party or ERISA Affiliate incurring a liability to the PBGC or to a Multiemployer Plan except where such liability, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, (c) allow any facts or circumstances to exist with respect to one or more Employee Benefit Plans that, in the aggregate, reasonably could be expected to result in a Material Adverse Effect, (d) not participate in any prohibited transaction that could result in a civil penalty, excise tax, fiduciary liability or correction obligation under ERISA or the IRC that, individually or in the aggregate, reasonably could be expected to result in a Material Adverse Effect, (e) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under the IRC (including Section 4980B of the IRC) except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, and (f) furnish to Administrative Agent upon Administrative Agent’s written request such additional information about any Employee Benefit Plan for which any Loan Party or ERISA Affiliate could reasonably expect to incur any material liability.
- 42 - 4775516.6 With respect to each Plan (other than a Multiemployer Plan), the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to ERISA, except, in each such case, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. 5.15 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. Each Loan Party will, and will cause each of its Subsidiaries to comply with all applicable Sanctions, Anti-Corruption Laws and Anti- Money Laundering Laws. Each of the Loan Parties and its Subsidiaries shall implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. 5.16 Post-Sunshine Acquisition matters. (a) Each Borrower shall, no later than ninety (90) days following the Sunshine Acquisition Effective Date (or such later date as the Administrative Agent may reasonably agree), ensure that the Administrative Agent receives each item specified below with respect to each of Thryv Ausco and each of the Australian Sunshine Entities (the date of satisfaction of each of the below conditions, the “Australian Joinder Effective Date”): (i) a certificate from an authorized officer of Thryv Ausco to the effect that all Australian Whitewash Documents have been lodged with ASIC; (ii) the following documents (i) a joinder to this Agreement, as applicable, (ii) the Australian General Security Deed, (iii) the Australian Featherweight Security Deed, (iv) the Australian Specific Security Deed, (v) the Australian Security Trust Deed, (vi) the Acknowledgement to the Intercreditor Agreement and (vii) each other document required by this Agreement, in each case, in substantially the form agreed on or prior to the date hereof, duly authorized, executed and delivered by the parties to each document; and (iii) any original title documents, notices and acknowledgments, share transfer forms in respect of relevant capital stock in those Australian Loan Parties, executed in blank and other ancillary documents, in each case, to the extent required to be provided under the aforementioned. (b) No later than ninety (90) days following the Fifth Amendment Effective Date, the Administrative Agent shall have received: (i) satisfactory search results of the ASIC register and the ‘register’ as defined in the Australian PPSA in relation to the Australian Loan Parties; and (ii) a customary legal opinion from Norton Rose Fulbright Australia, Australian legal counsel to the Administrative Agent and Lenders regarding the enforceability and perfection of security interests under Australian law and due authorization and execution by each of the Australian Loan Parties. 5.17 Signatories to Australian Deposit Accounts. If, (a) for a period of ten (10) consecutive Business Days or more, Total Excess Availability is less than or equal to the lesser of (i) twenty five percent (25%) of the Maximum Revolver Amount at such time and (ii) twenty five percent (25%) of the Total Borrowing Base at such time and (b) the Administrative Agent so requests in writing at any time after such ten (10) consecutive Business Day period (unless, at any time after such ten (10) consecutive Business Day period and prior to any such written request by Administrative Agent, Total Excess Availability has been greater than the lesser of (i) twenty five percent (25%) of the Maximum Revolver Amount at such time and (ii) twenty five percent (25%) of the Total Borrowing Base for not less than thirty (30) consecutive Business Days), the Borrowers shall, within five (5) Business Days after any such request, appoint any one or more persons nominated by the Administrative Agent as an authorized signatory to
- 43 - 4775516.6 each Deposit Account held at such time by an Australian Borrower that is subject to a Lien in favor of any Secured Party, including (without limitation) each Deposit Account described below: BSB Account number Account name Accountholder 033005 480040 Sensis Accounts Receivable Thryv Australia Pty Ltd ACN 007 423 912 034002 458336 Sensis Cheque Payments Thryv Australia Pty Ltd ACN 007 423 912 033001 163806 Aus Local Search - Rec Australian Local Search Pty Limited ACN 109 826 351 033005 480024 Sensis Acc Payable Thryv Australia Pty Ltd ACN 007 423 912 032099 378930 Life Events Media Life Events Media Pty Ltd ACN 118 014 298 034002 458344 Non-Cheque Payable Account Thryv Australia Pty Ltd ACN 007 423 912 033001 163814 Payments Account Australian Local Search Pty Limited ACN 109 826 351 033005 480032 Thryv Australia Thryv Australia Pty Ltd ACN 007 423 912 N/A 0009260571 Term Deposit Thryv Australia Pty Ltd ACN 007 423 912 N/A 0009260572 Term Deposit Thryv Australia Pty Ltd ACN 007 423 912 N/A 0009260573 Term Deposit Thryv Australia Pty Ltd ACN 007 423 912 N/A 0009260575 Term Deposit Thryv Australia Pty Ltd ACN 007 423 912” If any one or more persons nominated by the Administrative Agent is appointed as an authorized signatory pursuant to this Section 5.17 to each Deposit Account held at such time by an Australian Borrower that is subject to a Lien in favor of any Secured Party, the Borrowers may remove such Persons as authorized signatory upon written notice to the Administrative Agent (and the Administrative Agent shall cooperate with the Borrowers to effectuate such removal) if for a period of not less than sixty (60) consecutive Business Days prior to such removal, Total Excess Availability is greater than the lesser of (i) twenty five percent (25%) of the Maximum Revolver Amount at such
- 44 - 4775516.6 time and (ii) twenty five percent (25%) of the Total Borrowing Base at such time; provided, that, the removal of such Persons as contemplated above shall not be permitted to occur more than three (3) times during the term of this Agreement. 6. NEGATIVE COVENANTS. Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations (other than contingent indemnification obligations for which no claim has been asserted): 6.1 Indebtedness. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to create, incur, assume, suffer to exist any Indebtedness, except for Permitted Indebtedness. 6.2 Liens. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to create, incur, assume, or suffer to exist any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, except for Permitted Liens. 6.3 Restrictions on Fundamental Changes. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to: (a) merge, consolidate, amalgamate or enter into any similar combination with (including by division), or enter into any Disposition of all or substantially all of its assets (whether in a single transaction or a series of transactions) with, any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), except: (i) any Subsidiary may be merged, amalgamated or consolidated with or into (or transfer all or substantially all of its assets to) the Parent (other than any Borrower) or any Borrower in a transaction in which the Parent or such Borrower, as applicable, is the surviving entity; (ii) any Subsidiary may be merged, amalgamated or consolidated with or into (or transfer all or substantially all of its assets to) any Subsidiary in any transaction in which the surviving entity is a Wholly-Owned Subsidiary and, solely if any party to such merger, amalgamation, consolidation or sale of substantially all assets is a Loan Party, the surviving entity is a Loan Party (or, if a Borrower is party thereto, the surviving entity is a Borrower); (iii) Dispositions permitted pursuant to Section 6.4; (iv) any Subsidiary may merge or consolidate with any other Person in order to effect a Permitted Acquisition, and (v) any Subsidiary (other than the Borrowers) may liquidate, wind-up or dissolve (or suffer any liquidation or dissolution) if Administrative Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrowers and is not materially disadvantageous to the Lenders, (b) engage to any material extent in any business other than a Permitted Business, or (c) suspend or cease operating a substantial portion of its or their business, except as permitted pursuant to clause (a) above or in connection with a transaction permitted under Section 6.4. 6.4 Disposal of Assets. (a) Other than Permitted Dispositions or transactions expressly permitted by Sections 6.3 or 6.9, each Borrower will not, and will not permit any of its Subsidiaries or Parent to make any Disposition (including by
- 45 - 4775516.6 an allocation of assets among newly divided limited liability companies pursuant to a “plan of division” if any assets become the assets of a different Person as a result of such allocation). (b) Each Borrower will not, and will not permit any of its Subsidiaries or Parent to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except (i) any such sale of any fixed or capital assets that is made for cash consideration in an amount not less than the cost of such fixed or capital asset and is consummated within ninety (90) days after such Borrower, such Subsidiary or Parent acquires or completes the construction of such fixed or capital asset, to the extent all Capitalized Lease Obligations, Attributable Debt and Liens associated with such sale and leaseback transaction are permitted by clause (e) of the definition of Permitted Indebtedness and clause (e) of the definition of Permitted Liens (treating the property subject thereto as being subject to a Lien securing the related Attributable Debt, in the case of a sale and leaseback not accounted for as a Capitalized Lease Obligation) and (ii) sale and leaseback transactions with respect to real property or equipment having a fair market value in the aggregate not to exceed $25,000,000. To the extent that any Collateral is disposed of as expressly permitted by Section 6.3 or this Section 6.4, and upon receipt by Administrative Agent of a certificate from an Authorized Person certifying that such Disposition is expressly permitted under Section 6.3 or this Section 6.4 (which certificate may be relied upon by the Administrative Agent without further investigation or action), the Liens on such Collateral created by the Loan Documents shall be automatically released upon the consummation of such Disposition without need for further action by any Person. In addition, Administrative Agent (and Australian Security Trustee, if applicable) will, at Administrative Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the applicable Loan Documents, or to release a Loan Party from its obligations under the Guaranty and Security Agreement, the Australian General Security Deed and each other applicable Loan Document, in each case, in connection with a transaction that is expressly permitted under Section 6.3 or Section 6.4; provided, further, that in the case of a Disposition from a Loan Party to another Loan Party permitted under this Agreement, the transferee Loan Party shall as promptly as practicable take all necessary actions to cause the relevant assets (other any assets excluded from the Collateral pursuant to the Loan Documents) disposed to it to become part of its Collateral. 6.5 [Reserved] 6.6 Prepayments and Amendments. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to, (a) Except in connection with Refinancing Indebtedness permitted by Section 6.1, (i) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Parent, any Borrower or its Subsidiaries (it being understood and agreed that no mandatory prepayment of the Term Loan pursuant to Section 2.4(b) of the Term Loan Credit Agreement shall be restricted under this Section 6.6(a)(i)), other than: (A) the Obligations in accordance with this Agreement, (B) Indebtedness under Hedge Agreements, (C) Permitted Intercompany Advances, (D) any optional prepayment of the Term Loan pursuant to Section 2.4(a) of the Term Loan Credit Agreement, so long as, after giving effect to such prepayment, each of the Term Loan Payment Conditions is satisfied,
- 46 - 4775516.6 (E) any Term Loan Debt Buyback, so long as, after giving effect to such repurchase, each of the Term Loan Payment Conditions is satisfied, (F) the conversion of any Junior Indebtedness to Qualified Equity Interests of Parent, and (G) any optional prepayment of any other Indebtedness not provided for in clauses (A) through (F) above so long as, as of the date of any such payment, and after giving effect thereto, each of the Payment Conditions shall have been satisfied, (ii) [Reserved], or (iii) make any payment on account of Indebtedness that has been contractually subordinated in right of payment to the Obligations, if such payment is not permitted at such time under the subordination terms and conditions governing such Indebtedness. (b) Directly or indirectly, amend, modify, or change any of the terms or provisions of (i) any agreement, instrument, document, indenture, or other writing evidencing or concerning Material Indebtedness, other than (A) the Obligations in accordance with this Agreement, (B) Permitted Intercompany Advances, (C) the Indebtedness under the Term Loan Documents, and (D) other Material Indebtedness if the effect thereof would materially and adversely affect the rights or interests of the Administrative Agent, Co- Collateral Agents or Lenders hereunder, taken as a whole, or would violate the subordination terms thereof, (ii) any Term Loan Document, if prohibited by the Intercreditor Agreement, or (iii) the Governing Documents of any Loan Party or any of its Subsidiaries in a manner materially adverse to the rights or interests of the Lenders, taken as a whole. 6.7 Restricted Payments. (a) Each Borrower will not, and will not permit any of its Subsidiaries or Parent to make any Restricted Payment, except: (i) (A) a Borrower, or any other Subsidiary of Parent, may make a Restricted Payment to Parent or to any other Subsidiary of Parent that is a Loan Party and (B) any Subsidiary of Parent that is not a Loan Party may make a Restricted Payment to any other Subsidiary that is not a Loan Party (and, if applicable, to the other holders of their outstanding Qualified Equity Interests on a pro rata basis), (ii) Parent (in connection with Restricted Payments otherwise permitted to be made under Section 6.7) or any Subsidiaries of Parent may declare and pay dividends or distributions ratably with respect to their Equity Interests, (iii) Restricted Payments deemed to have occurred in connection with cashless exercise of warrants and options in respect of Equity Interests shall be permitted, (iv) so long as no Event of Default shall have occurred and is continuing or would result therefrom, Borrower may make Restricted Payments to any present, former or future director, officer, employee, member of management or consultant of Parent of any of its Subsidiaries (or their respective estates, heirs, family members, spouses or former spouses) pursuant to any management equity or stock option plan or any other management or employee benefit plan or agreement or arrangement or upon such person’s death, disability, retirement or termination of employment, in an aggregate amount not to exceed $4,000,000 in any fiscal year,
- 47 - 4775516.6 (v) other Restricted Payments in an aggregate amount not exceeding $25,000,000 during any fiscal year of the Borrowers so long as, after giving effect to such payment, each of the Payment Conditions has been satisfied; (vi) [Reserved]; and (vii) the Borrower may declare and make (and each Subsidiary of the Borrower may declare and make to enable the Borrower to do the same) Restricted Payments to Parent, so that Parent may, and Parent shall be permitted to: (A) pay any income Taxes which are due and payable by the Loan Parties as part of a consolidated group to the extent such income Taxes are attributable to the income, operations and activities of the Subsidiaries of Parent which are Loan Parties; provided, that, the amount of such payments in any fiscal year does not exceed the amount that the Loan Parties would be required to pay in respect of income Taxes for such fiscal year were the Loan Parties to pay such taxes separately from any such parent company; and (B) pay corporate operating (including directors’ fees and expenses and any costs associated with compliance with the requirements of the Sarbanes-Oxley Act of 2002 (or any similar applicable law under any applicable jurisdiction) and the rules and regulations promulgated in connection therewith, costs relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, and the rules of national securities exchanges, as applicable to companies with listed equity or debt securities, listing fees, costs relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance, in each case, to the extent arising as a result of becoming, or otherwise associated with or attributable to being, a public company and which are consistent with past practice of Parent and its Subsidiaries or otherwise typical for public companies) and overhead expenses (including rent, utilities and salary), in each case, in the ordinary course of business and reasonable fees and expenses of attorneys, accountants, appraisers and the like. (b) Each Borrower will not, and will not permit any or its Subsidiaries or Parent to, furnish any funds to, make any Investment in, or provide other consideration to any other Person for purposes of enabling such Person to, or otherwise permit any such Person to, make any Restricted Payment or other payment or distribution restricted by this Section that could not be made directly by the Borrower in accordance with the provisions of this Section. 6.8 Fiscal Year; Accounting Methods. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to modify or change its fiscal year for accounting and financial reporting purposes to end on any date other than December 31 or change its method of accounting (other than as may be required to conform to GAAP). 6.9 Investments. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment, except for Permitted Investments. 6.10 Transactions with Affiliates. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to, directly or indirectly, sell, lease, license, sublicense or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates involving consideration in the aggregate for all such transactions in excess of $5,000,000, except: (a) transactions on terms not less favorable, considered as a whole, to the Credit Parties or their respective Subsidiaries than could be obtained in a comparable arm’s-length transaction from unrelated third parties as determined by Parent in good faith and, other than Term Loan Debt Buybacks and as not prohibited by Section 6.6, approved by a majority of Disinterested Members of the Board of Directors of Parent or such Borrower or Subsidiary;
- 48 - 4775516.6 (b) transactions between or among the Loan Parties not involving any other Affiliate, (c) any transaction permitted by Sections 6.1, 6.2, 6.3, 6.4, 6.6(a), 6.7 and 6.9, (d) transactions among Parent, the Borrowers and/or one or more Subsidiaries to the extent not prohibited hereunder, (e) the non-exclusive licensing or sublicensing of Intellectual Property, (f) (i) employment, severance and other similar compensation arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business and (ii) payment of customary fees and reasonable out of pocket costs to, and indemnities for the benefit of, directors (or equivalent governing body), officers and employees of Parent, the Borrowers and their Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of Parent, the Borrowers and their Subsidiaries, (g) consummation of the Fifth Amendment Transactions and payment of the Specified Charges with respect thereto and any reasonable out-of-pocket expenses pursuant to any financial advisory, financing, underwriting, or placement agreement or in respect of other investment banking activities, including in connection with Acquisitions or Dispositions that are permitted by this Agreement, and (h) to the extent not otherwise prohibited by this Agreement or the other Loan Documents, the issuance by Parent or any Subsidiary of Equity Interests to, or the receipt of any capital contribution from, Parent or any Subsidiary. For purposes of this Section 6.10, the term “Disinterested Member” means a member of the Board of Directors of Parent, a Borrower or any Subsidiary, as applicable, who does not have a financial interest in the relevant transaction or arrangement (or series of related transactions or arrangements), excluding in all cases, a financial interest in such transaction or arrangement (or series of related transactions or arrangements) solely as an equity holder or member of the Board of Directors of Parent, such Borrower and/or such Subsidiary. 6.11 Use of Proceeds. Each Borrower will not, and will not permit any of its Subsidiaries or Parent to, use the proceeds of any Revolving Loan or other extension of credit made hereunder (a) for any purpose other than to provide for the ongoing general corporate and working capital needs of Borrowers (provided, that (i) for the avoidance of doubt, the proceeds of the Revolving Loans or other extensions of credit made hereunder may be used to finance other Restricted Payments subject to limits set forth in Section 6.7, finance Investments subject to the limits set forth in Section 6.9, prepay the Term Loan and/or make a Term Loan Debt Buyback, (ii) no part of the proceeds of the Loans will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors, (iii) except as permitted by applicable Sanctions, no part of the proceeds of any Loan or Letter of Credit will be used, directly or to the Borrowers’ knowledge indirectly, to make any payments to a Sanctioned Country or a Sanctioned Person, to fund any investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctioned Country or a Sanctioned Person, to fund any operations, activities or business of a Sanctioned Country or a Sanctioned Person, or in any other manner that would result in a violation of Sanctions by any Person, and (iv) that no part of the proceeds of any Loan or Letter of Credit will be used, directly or to the Borrowers’ knowledge indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Sanctions, Anti-Corruption Laws or Anti-Money Laundering Laws.) or (b) in violation of any restriction contained in the Term Loan Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time. 6.12 [Reserved].
- 49 - 4775516.6 6.13 Credit Card Accounts. Each Borrower will not close or cause to be closed any deposit account into which Credit Card Accounts are deposited without the prior written consent of the Co-Collateral Agents. 6.14 Employee Benefits. Each Loan Party will not: (a) Fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Employee Benefit Plan, agreement relating thereto or applicable law, any Loan Party or ERISA Affiliate is required to pay if such failure could reasonably be expected to have a Material Adverse Effect. (b) Amend, or permit any ERISA Affiliate to amend, a Plan resulting in a material increase in current liability such that a Loan Party or ERISA Affiliate is required to provide security to such Plan under the IRC. 6.15 Australian Tax Matters. No Loan Party will, nor permit any Australian Subsidiary to, become a member of an Australian Tax Consolidated Group without entering into an Australian TSA and an Australian TFA. The Australian TSA and Australian TFA may be amended or replaced from time to time, to the extent necessary, to ensure it remains a valid Australian TSA or an Australian TFA. 7. FINANCIAL COVENANTS. Each of Parent and each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations: (a) Fixed Charge Coverage Ratio. Parent will have a Fixed Charge Coverage Ratio, measured on a quarter-end basis of at least the required amount set forth in the following table for the applicable period set forth opposite thereto: Applicable Period Applicable Ratio Six months ending June 30, 2017 1.00 to 1.00 Nine months ending September 30, 2017 1.00 to 1.00 Twelve months ending December 31, 2017 and on a trailing twelve months basis as of the last day of each fiscal quarter thereafter 1.00 to 1.00 (b) Excess Availability. Borrowers will have, at all times, (i) Total Excess Availability of at least $14,000,000 and (ii) US Excess Availability of at least $10,000,000. 8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement: 8.1 Payments. If Borrowers fail to pay when due and payable, or when declared due and payable in accordance herewith, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Secured Parties, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of three (3) Business Days or (b) all or any portion of the principal of the Loans or (c) if there is not sufficient Total Availability for Borrowers’ obligation to reimburse
- 50 - 4775516.6 Issuing Bank for a payment under a Letter of Credit to be made as a Revolving Loan pursuant to Section 2.11(d), any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit; 8.2 Covenants. If any Loan Party or any of its Subsidiaries: (a) fails to perform or observe any covenant or other agreement contained in any of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if any Borrower is not in good standing in its jurisdiction of organization), 5.6, 5.7 (solely if any Borrower refuses to allow Administrative Agent or its representatives or agents to visit any Borrower’s properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss Borrowers’ affairs, finances, and accounts with officers and employees of any Borrower), 5.10, 5.11, 5.13 or 5.14 of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 7 of the Guaranty and Security Agreement; (b) fails to perform or observe any covenant or other agreement contained in any of Sections 5.3 (other than if any Borrower is not in good standing in its jurisdiction of organization), 5.4, 5.5, 5.8, and 5.12 of this Agreement and such failure continues for a period of ten (10) Business Days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) the date on which written notice thereof is given to Borrowers by Administrative Agent; or (c) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of thirty (30) days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) the date on which written notice thereof is given to Borrowers by Administrative Agent; 8.3 Judgments. If one or more judgments, orders, or awards for the payment of money involving an aggregate amount of $20,000,000, or more (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a) there is a period of 30 consecutive days at any time after the entry of any such judgment, order, or award during which (1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (2) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced upon such judgment, order, or award; 8.4 Voluntary Bankruptcy, etc. If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries; 8.5 Involuntary Bankruptcy, etc. If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief shall have been issued or entered therein; 8.6 Default Under Other Agreements. If there is (a) a default in one or more agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to a Loan Party’s or any of its Subsidiaries’ Material Indebtedness, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder (after giving effect to any notice or lapse of time if required thereunder), (b) a default in or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party involving an aggregate amount of $25,000,000 or more or (c) an “Event of Default”, as such term is defined in the Term Loan Credit Agreement (as amended from time to time), shall occur;
- 51 - 4775516.6 8.7 Representations, etc. If any warranty, representation or certificate made herein or in any other Loan Document or delivered in writing to Administrative Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof; 8.8 Guaranty. If the obligation of any Guarantor under the guaranty contained in the Guaranty and Security Agreement or the Australian General Security Deed is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement); 8.9 Security Documents. If the Guaranty and Security Agreement, the Australian General Security Deed and any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent of Permitted Liens which by operation of law or pursuant to the express terms of the Loan Documents would have priority over the Liens securing the Obligations, permitted purchase money Liens, or the interests of lessors under Capital Leases and subject to the Intercreditor Agreement, first priority Lien on the Collateral covered thereby, except (a) as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement, (b) with respect to Collateral other than ABL Priority Collateral the aggregate value of which, for all such Collateral, does not exceed at any time, $5,000,000, (c) with respect to ABL Priority Collateral the aggregate value of which, for all such Collateral, does not exceed at any time, $1,000,000, or (d) as the result of an action or failure to act on the part of Administrative Agent; 8.10 Loan Documents. The validity or enforceability of any Loan Document shall at any time for any reason (other than solely as the result of an action or failure to act on the part of Administrative Agent) be declared to be null and void by any Loan Party or its Subsidiaries or by any Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, or a proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that such Loan Party or its Subsidiaries has any liability or obligation purported to be created under any Loan Document; or 8.11 ERISA. (i) An ERISA Event shall have occurred, (ii) a trustee shall be appointed by a United States district court to administer any Plan(s), (iii) the PBGC shall institute proceedings to terminate any Plan, or (iv) any Loan Party or ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability in a timely and appropriate manner; and in each cases (i) through (iv) above, such event or condition, in the opinion of the Required Lenders, when taken together with all other such events or conditions, if any, could reasonably be expected to result in a Material Adverse Effect. 8.12 Change of Control. A Change of Control shall occur, whether directly or indirectly. 8.13 Subordination; Intercreditor Agreement. (a) The provisions of the Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the Term Loans (other than as a result of the Discharge of Term Obligations (as defined in the Intercreditor Agreement)), or (b) the subordination provisions of the documents evidencing or governing any Subordinated Indebtedness (together with similar provisions of the Intercreditor Agreement, collectively, the “Subordination Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of such Subordinated Indebtedness and such Subordinated Indebtedness does not otherwise constitute Permitted Indebtedness under any category of that definition which does not require such Indebtedness to be subordinate to the Obligations; or (c) any Borrower or any other Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Loan Parties, or (C) that all payments of principal of or premium and interest on the Term Loan Credit Agreement or the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any Subordination Provisions applicable thereto.
- 52 - 4775516.6 9. RIGHTS AND REMEDIES. 9.1 Rights and Remedies. Upon the occurrence and during the continuation of an Event of Default, Administrative Agent (or the Australian Security Trustee, as the case may be) may, and, at the instruction of the Required Lenders, shall (in each case under clauses (a) or (b) by written notice to Borrowers), in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following: (a) (i) declare the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower, and (ii) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice Borrowers will provide) Letter of Credit Collateralization to Administrative Agent to be held as security for Borrowers’ reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters of Credit; (b) declare the Commitments terminated, whereupon the Commitments shall immediately be terminated together with (i) any obligation of any Revolving Lender to make Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans, and (iii) the obligation of Issuing Bank to issue Letters of Credit; and (c) exercise all other rights and remedies available to Administrative Agent, the Australian Security Trustee or the Lenders under the Loan Documents, under applicable law, or in equity. The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Secured Parties, the Commitments shall automatically terminate and the Obligations (other than the Bank Product Obligations), inclusive of the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents, shall automatically become and be immediately due and payable and Borrowers shall automatically be obligated to repay all of such Obligations in full (including Borrowers being obligated to provide (and Borrowers agree that they will provide) (1) Letter of Credit Collateralization to Administrative Agent to be held as security for Borrowers’ reimbursement obligations in respect of drawings that may subsequently occur under issued and outstanding Letters of Credit and (2) Bank Product Collateralization to be held as security for Borrowers’ or their Subsidiaries’ obligations in respect of outstanding Bank Products), without presentment, demand, protest, or notice or other requirements of any kind, all of which are expressly waived by Borrowers and Guarantors. 9.2 Remedies Cumulative. The rights and remedies of the Secured Parties under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Secured Parties shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Secured Parties of one right or remedy shall be deemed an election, and no waiver by the Secured Parties of any Event of Default shall be deemed a continuing waiver. No delay by the Secured Parties shall constitute a waiver, election, or acquiescence by it. 10. WAIVERS; INDEMNIFICATION. 10.1 Demand; Protest; etc. Each Borrower waives demand (other than any demand that is specifically required pursuant to Section 8.2(b)), and waives protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Secured Parties on which any Borrower may in any way be liable.
- 53 - 4775516.6 10.2 The Secured Parties’ Liability for Collateral. Each Borrower hereby agrees that: (a) so long as Administrative Agent complies with its obligations, if any, under the Code, the Secured Parties shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers, except to the extent such loss, damage or destruction is determined by a final non-appealable judgment of a court of competent jurisdiction to have resulted from the Administrative Agent’s and Lenders’ gross negligence or willful misconduct. 10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable and documented fees and disbursements of attorneys’, experts, or consultants and all other documented costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery (provided that Borrowers shall not be liable for costs and expenses (including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Parent’s and its Subsidiaries’ compliance with the terms of the Loan Documents (provided, that the indemnification in this clause (a) shall not extend to (i) disputes solely between or among the Lenders that do not involve any acts or omissions of any Loan Party, or (ii) disputes solely between or among the Lenders and their respective Affiliates that do not involve any acts or omissions of any Loan Party; it being understood and agreed that the indemnification in this clause (a) shall extend to Administrative Agent (but not the Lenders) relative to disputes between or among Administrative Agent on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to Taxes, which shall be governed by Section 16), (b) with respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any other Loan Document, the making of any Loans or issuance of any Letters of Credit hereunder, or the use of the proceeds of the Loans or the Letters of Credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Borrower or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities or remedial actions related in any way to any such assets or properties of any Borrower or any of its Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no Borrower shall have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person or its officers, directors, employees, attorneys’, or agents. This provision shall survive the termination of this Agreement and the repayment in full of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON; provided, however, that such indemnity shall not be available to any Indemnified Person claiming indemnification under this Section 10.3 to the extent that such Indemnified Liabilities are finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Person claiming indemnity.
- 54 - 4775516.6 11. NOTICES. Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile. In the case of notices or demands to Parent, any Borrower or Administrative Agent, as the case may be, they shall be sent to the respective address set forth below: If to any Loan Party: c/o Thryv, Inc. 2200 West Airfield Drive P.O. Box 619810 DFW Airport, Texas 75261 Attn: KJ Christopher E-mail: Kj.Christopher@thryv.com with copies to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attn: Andrew Colao, Esq. Fax No: (212) 310-8007 E-mail: andrew.colao@weil.com If to Administrative Agent or Lenders: Wells Fargo Bank, National Association 150 East 42nd MAC J0149-030 New York, New York 10017 Attn: Relationship Manager for Thryv, Inc. (Dex) Fax No.: (212) 545-4283 with copies to: PNC Bank, National Association 340 Madison Avenue, 11th Floor New York, New York 10173 Attn: Relationship Manager for Thryv, Inc. (Dex) Fax No.: (212) 303-0060 Otterbourg, P.C. 230 Park Avenue New York, New York 10169-0075 Attn: Thomas P. Duignan, Esq. Fax No.: (212) 682-6104 Blank Rome LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174-0208 Attn: Robert B. Stein, Esq. Fax No.: (917) 332-3750 Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other parties. All notices or demands sent in accordance with this
- 55 - 4775516.6 Section 11, shall be deemed received on the earlier of the date of actual receipt or three (3) Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient) and (c) notices by electronic 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 email or other written acknowledgment). 12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION. (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b). (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A "CLAIM"). EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. 13.1 Assignments and Participations. (a) (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender may assign and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations owed to it and its Commitments, which assignment of Commitments shall be a pro rata portion of such Lender’s interests in the
- 56 - 4775516.6 US Revolving Loans and in the Australian Revolving Loans) to one or more assignees so long as such prospective assignee is an Eligible Transferee (each, an “Assignee”), with the prior written consent (such consent not be unreasonably withheld or delayed) of: (A) Borrowers; provided, that no consent of Borrowers shall be required (1) if an Event of Default has occurred and is continuing, or (2) in connection with an assignment to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender; and (B) Administrative Agent, Swing Lender, and Issuing Bank. (ii) Assignments shall be subject to the following additional conditions: (A) no assignment may be made (i) so long as no Event of Default has occurred and is continuing, to a Competitor, or (ii) to a natural person, (B) no assignment may be made to a Loan Party or an Affiliate of a Loan Party, (C) the amount of the Commitments and the other rights and obligations of the assigning Lender hereunder and under the other Loan Documents subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Administrative Agent) shall be in a minimum amount (unless waived by Administrative Agent) of $5,000,000 (except such minimum amount shall not apply to (I) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000), (D) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, (E) the parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Acceptance; provided, that Borrowers and Administrative Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee until written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrowers and Administrative Agent by such Lender and the Assignee, (F) unless waived by Administrative Agent, the assigning Lender or Assignee has paid to Administrative Agent, for Administrative Agent’s separate account, a processing fee in the amount of $3,500, and (G) the assignee, if it is not a Lender, shall deliver to Administrative Agent an Administrative Questionnaire in a form approved by Administrative Agent (the “Administrative Questionnaire”). (b) From and after the date that Administrative Agent receives the executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender under the Loan Documents (and for the avoidance of doubt, shall have no greater rights under Section 16 than the assigning Lender), and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided, that
- 57 - 4775516.6 nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a). (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Administrative Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Administrative Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Administrative Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) Immediately upon Administrative Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto. (e) The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at one of its offices, a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time, including the Swing Loans owing to Swing Lender and Extraordinary Advances owing to Administrative Agent and each Co-Collateral Agent, if any (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (f) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Administrative Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating,
- 58 - 4775516.6 (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decreases the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, (v) no participation shall be sold to a natural person, (vi) no participation shall be sold to (x) a Loan Party or an Affiliate of a Loan Party or (y) the Term Loan Agent, any Term Loan Lender, or an Affiliate of Term Loan Agent or any Term Loan Lender unless any such Person described in this clause (vi)(y) is an Eligible Transferee, and (vii) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Administrative Agent, Borrowers, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103- 1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. (g) In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9, disclose all documents and information which it now or hereafter may have relating to Parent, any Borrower and its Subsidiaries and their respective businesses. (h) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 13.2 Successors. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to Section 13.1, no consent or approval by any Borrower is required in connection with any such assignment. 14. AMENDMENTS; WAIVERS. 14.1 Amendments and Waivers.
- 59 - 4775516.6 (a) No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect to any departure by Parent or any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Administrative Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following: (i) increase the amount of or extend the expiration date of any Commitment of any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c)(i), (ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document, (iii) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except (y) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders), and (z) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii)), (iv) amend, modify, or eliminate this Section or any provision of this Agreement providing for consent or other action by all Lenders, (v) amend, modify, or eliminate Section 3.1 or 3.2, (vi) amend, modify, or eliminate Section 15.11, (vii) other than as permitted by Section 15.11, release Agent’s Lien in and to any of the Collateral, (viii) amend, modify, or eliminate the definitions of “Cash Dominion Trigger Period”, “Reporting Trigger Period”, “Required Lenders”, “Supermajority Lenders”, or “Pro Rata Share”, (ix) contractually subordinate all or substantially all of Agent’s Liens (other than a subordination of the Agent’s Lien on Term Priority Collateral (as defined in the Intercreditor Agreement) in connection with a Term DIP Financing (as defined in the Intercreditor Agreement) as expressly provided in Section 6.1(b) of the Intercreditor Agreement), (x) other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents, or (xi) amend, modify, or eliminate any of the provisions of Section 2.4(b)(i), (ii) or (iii) or Section 2.4(e) or (f). (b) No amendment, waiver, modification, or consent shall amend, modify, waive, or eliminate, (i) the definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of Administrative Agent and Borrowers (and shall not require the written consent of any of the Lenders),
- 60 - 4775516.6 (ii) any provision of Section 15 pertaining to Administrative Agent, or any other rights or duties of Administrative Agent under this Agreement or the other Loan Documents, without the written consent of Administrative Agent, Borrowers, and the Required Lenders; (c) No amendment, waiver, modification, elimination, or consent shall amend, without written consent of Administrative Agent, Borrowers and the Supermajority Lenders, modify, or eliminate the definition of Total Borrowing Base, US Borrowing Base, Australian Borrowing Base or any of the defined terms (including the definitions of Eligible Accounts) that are used in such definition to the extent that any such change results in more credit being made available to Borrowers based upon the Total Borrowing Base, US Borrowing Base and Australian Borrowing Base, but not otherwise, or the definitions of Trailing 90 Day Collections, Maximum Revolver Amount, Maximum US Loan Amount or Maximum Australian Loan Amount, or change Section 2.1(c); (d) No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under this Agreement or the other Loan Documents, without the written consent of Issuing Bank, Administrative Agent, Borrowers, and the Required Lenders; (e) No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Swing Lender, or any other rights or duties of Swing Lender under this Agreement or the other Loan Documents, without the written consent of Swing Lender, Administrative Agent, Borrowers, and the Required Lenders; and (f) Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, elimination, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of any Loan Party, shall not require consent by or the agreement of any Loan Party, (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender other than any of the matters governed by Section 14.1(a)(i) through (iii) that affect such Lender, (iii) any amendment contemplated by Section 2.12(d)(iii) of this Agreement in connection with a Benchmark Transition Event shall be effective as contemplated by such Section 2.12(d)(iii) hereof and (iv) any amendment contemplated by Section 2.6(g) of this Agreement in connection with the use or administration of Adjusted Daily Simple SOFR shall be effective as contemplated by such Section 2.6(g). 14.2 Replacement of Certain Lenders. (a) If (i) any action to be taken by the Secured Parties or Administrative Agent hereunder requires the consent, authorization, or agreement of all Lenders or of all Lenders affected thereby and if such action has received the consent, authorization, or agreement of the Required Lenders (without giving effect to clause (ii) in the proviso set forth in the definition thereof) but not of all Lenders or all Lenders affected thereby, (ii) any Lender makes a claim for compensation under Section 16 or (iii) any Lender is a Defaulting Lender, then Borrowers or Administrative Agent, upon at least five (5) Business Days prior notice, may permanently replace any Lender that failed to give its consent, authorization, or agreement (a “Non-Consenting Lender”), any Lender that made a claim for compensation (a “Tax Lender”) or any Defaulting Lender with one or more Replacement Lenders, and the Non- Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall have no right to refuse to be replaced hereunder. Such notice to replace the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall specify an effective date for such replacement, which date shall not be later than fifteen (15) Business Days after the date such notice is given. (b) Prior to the effective date of such replacement, the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender or Tax Lender, as applicable, being repaid in full its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but including (i) all interest,
- 61 - 4775516.6 fees and other amounts that may be due in payable in respect thereof, (ii) an assumption of its Pro Rata Share of participations in the Letters of Credit), and (iii) Funding Losses. If the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Administrative Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, and irrespective of whether Administrative Agent executes and delivers such Assignment and Acceptance, the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be made in accordance with the terms of Section 13.1. Until such time as one or more Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, hereunder and under the other Loan Documents, the Non-Consenting Lender, Defaulting Lender or Tax Lender, as applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of participations in such Letters of Credit. 14.3 No Waivers; Cumulative Remedies. No failure by Administrative Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Administrative Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Administrative Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Administrative Agent or any Lender on any occasion shall affect or diminish Administrative Agent’s and each Lender’s rights thereafter to require strict performance by Parent and Borrowers of any provision of this Agreement. Administrative Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Administrative Agent or any Lender may have. 15. AGENT; THE LENDER GROUP. 15.1 Appointment and Authorization of Administrative Agent. Each Lender hereby designates and appoints Wells Fargo as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to designate, appoint, and authorize) Administrative Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Administrative Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Administrative Agent agrees to act as agent for and on behalf of the Lenders (and the Bank Product Providers) on the conditions contained in this Section 15. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, nor shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product Provider), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Administrative Agent. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties. Each Lender hereby further authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral. Except as expressly otherwise provided in this Agreement, Administrative Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Administrative Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Administrative Agent, Lenders agree that Administrative Agent shall have the right to exercise the following powers as long as this Agreement remains in
- 62 - 4775516.6 effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, payments and proceeds of Collateral, and related matters, (b) 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, (c) make Revolving Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Administrative Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce any and all other rights and remedies of the Secured Parties with respect to any Loan Party or their Subsidiaries, the Obligations, the Collateral, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Administrative Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents. 15.2 Delegation of Duties. Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct. 15.3 Liability of Administrative Agent. None of the Agent-Related Persons shall (a) be liable 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 (or Bank Product Providers) for any recital, statement, representation or warranty made by Parent, any Borrower or any of its 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 Administrative 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 Parent, any Borrower or its 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 (or Bank Product Providers) 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 Parent, any Borrower or its Subsidiaries. 15.4 Reliance by Administrative Agent. Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Administrative Agent. Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Administrative Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Administrative Agent shall act, or refrain from acting, as it deems advisable. If Administrative Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product Providers) against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Administrative 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 (and Bank Product Providers). 15.5 Notice of Default or Event of Default. Administrative 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 Administrative Agent for the account of the Lenders and, except with respect to Events of Default of which Administrative Agent has actual knowledge, unless
- 63 - 4775516.6 Administrative Agent shall have received written notice from a Lender or Borrowers referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Administrative Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Administrative Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Administrative Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Administrative 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 Section 9; provided, that unless and until Administrative Agent has received any such request, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable. 15.6 Credit Decision. Each Lender (and Bank Product Provider) acknowledges that none of the Agent- Related Persons has made any representation or warranty to it, and that no act by Administrative Agent hereinafter taken, including any review of the affairs of Parent, any Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender (or Bank Product Provider). Each Lender represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) to Administrative Agent that it has, independently and without reliance upon any Agent-Related Person 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 each Borrower or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) that it will, independently and without reliance upon any Agent- Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Administrative Agent, Administrative Agent shall not have any duty or responsibility to provide any Lender (or Bank Product Provider) 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 (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that Administrative Agent does not have any duty or responsibility, either initially or on a continuing basis (except to the extent, if any, that is expressly specified herein) to provide such Lender (or Bank Product Provider) 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 Administrative Agent's or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement (or such Bank Product Provider entered into a Bank Product Agreement). 15.7 Costs and Expenses; Indemnification. Administrative Agent may incur and pay Lender Group Expenses to the extent Administrative Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Administrative Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Administrative Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Administrative Agent to reimburse Administrative Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders (or Bank Product Providers). In the event Administrative Agent is not reimbursed for such costs and expenses by Parent, Borrowers or their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Administrative Agent such Lender’s ratable thereof. Whether or not the transactions contemplated hereby are consummated, each of the Lenders, on a ratable basis, shall indemnify and defend the Agent-
- 64 - 4775516.6 Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Administrative Agent upon demand for such Lender’s ratable share of any costs or out of pocket expenses (including attorneys’, accountants, advisors, and consultants fees and expenses) incurred by Administrative 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 Administrative 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 Administrative Agent. 15.8 Administrative Agent in Individual Capacity. Wells Fargo and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Parent, any Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Document as though Wells Fargo were not Administrative Agent hereunder, and, in each case, without notice to or consent of the other Secured Parties. The Secured Parties acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding a Loan Party or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Loan Party or such other Person and that prohibit the disclosure of such information to the other Secured Parties (or Bank Product Providers), and the Secured Parties acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Administrative Agent will use its reasonable best efforts to obtain), Administrative Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include Wells Fargo in its individual capacity. 15.9 Successor Administrative Agent. Administrative Agent may resign as Administrative Agent upon thirty (30) days (ten (10) days if an Event of Default has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the Required Lenders) and Borrowers (unless such notice is waived by Borrowers) and without any notice to the Bank Product Providers. If Administrative Agent resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a successor Administrative Agent for the Lenders (and the Bank Product Providers). If, at the time that Administrative Agent’s resignation is effective, it is acting as Issuing Bank or the Swing Lender, such resignation shall also operate to effectuate its resignation as Issuing Bank or the Swing Lender, as applicable, and it shall automatically be relieved of any further obligation to issue Letters of Credit, or to make Swing Loans. If no successor Administrative Agent is appointed prior to the effective date of the resignation of Administrative Agent, Administrative Agent may appoint, after consulting with the Lenders and Borrowers, a successor Administrative Agent. If Administrative Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Administrative Agent with a successor Administrative Agent from among the Lenders with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned). In any such event, upon the acceptance of its appointment as successor Administrative Agent hereunder, such successor Administrative Agent shall succeed to all the rights, powers, and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor Administrative Agent and the retiring Administrative Agent’s appointment, powers, and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative
- 65 - 4775516.6 Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as the Lenders appoint a successor Administrative Agent as provided for above. 15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Parent, any Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other Secured Parties (or the Bank Product Providers). The Secured Parties acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding a Loan Party or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Loan Party or such other Person and that prohibit the disclosure of such information to the other Secured Parties, and the other Secured Parties acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them. 15.11 Collateral Matters. (a) The Secured Parties hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent to (1) release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all of the Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrowers certify to Administrative Agent that the sale or disposition is permitted under Section 6.4 (and Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Loan Party or their Subsidiaries owned any interest at the time Agent’s Lien was granted nor at any time thereafter, (iv) constituting property leased or licensed to a Loan Party or its Subsidiaries under a lease or license that has expired or is terminated in a transaction permitted under this Agreement, or (v) in connection with a credit bid or purchase authorized under this Section 15.11 and (2) to release any Borrower or Guarantor (other than Parent) from its obligations under the Loan Documents if such Borrower or Guarantor ceases to be a Subsidiary of Parent pursuant to a transaction not prohibited by this Agreement. The Loan Parties and the Secured Parties hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent, based upon the instruction of the Required Lenders, to (a) consent to the sale of, credit bid, or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (b) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted or consented to by Administrative Agent in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy. In connection with any such credit bid or purchase, (i) the Obligations owed to the Bank Product Providers and the other Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not impair or unduly delay the ability of Administrative Agent to credit bid or purchase at such sale or other disposition of the Collateral and, if such contingent or unliquidated claims cannot be estimated without impairing or unduly delaying the ability of Administrative Agent to credit bid at such sale or other disposition, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the Collateral that is the subject of such credit bid or purchase) and the Bank Product Providers and the other Secured Parties whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the Collateral that is the subject of such credit bid or purchase (or in the Equity Interests of the any entities that are used to consummate such credit bid or
- 66 - 4775516.6 purchase), and (ii) Administrative 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 Administrative Agent may reduce the Obligations owed to Bank Product Providers and the other Secured Parties (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. Except as provided above, Administrative Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders (without requiring the authorization of the Bank Product Providers or other Secured Parties), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product Providers). Upon request by either Administrative Agent or Borrowers at any time, the Lenders will (and if so requested, the Bank Product Providers and other Secured Parties will) confirm in writing Administrative Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.11; provided, that (1) anything to the contrary contained in any of the Loan Documents notwithstanding, Administrative Agent shall not be required to execute any document or take any action necessary to evidence such release on terms that, in Administrative Agent’s opinion, could expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly released) upon (or obligations of Borrowers in respect of) any and all interests retained by any Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. Each Secured Party further hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to irrevocably authorize) Administrative Agent, at its option and in its sole discretion, to subordinate any Lien granted to or held by Administrative Agent under any Loan Document to the holder of any Permitted Lien on such property if such Permitted Lien secures Indebtedness permitted by clause (e) of the definition of Permitted Indebtedness. (b) Administrative Agent shall have no obligation whatsoever to any of the Secured Parties (i) to verify or assure that the Collateral exists or is owned by a Loan Party or their 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 Administrative 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, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion given Administrative Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Administrative Agent shall have no other duty or liability whatsoever to any Secured Party as to any of the foregoing, except as otherwise expressly provided herein. 15.12 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each of the Lenders agrees that it shall not, without the express written consent of Administrative Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Administrative Agent, set off against the Obligations, any amounts owing by such Lender to a Loan Party or its Subsidiaries or any deposit accounts of any Loan Party or its Subsidiaries 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 Administrative Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against any Loan Party or any other Guarantor or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral. (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Administrative Agent pursuant to the terms of this Agreement, or
- 67 - 4775516.6 (ii) payments from Administrative Agent in excess of such Lender’s Pro Rata Share of all such distributions by Administrative Agent, such Lender promptly shall (A) turn the same over to Administrative Agent, in kind, and with such endorsements as may be required to negotiate the same to Administrative Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. 15.13 Agency for Perfection. Each Secured Party hereby appoints Administrative Agent and each Lender (and each Bank Product Provider) as its agent (and Administrative Agent and each Lender hereby accepts (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to accept) 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 Code can be perfected by possession or control. Should Administrative Agent or any Lender obtain possession or control of any such Collateral, such Lender shall notify Administrative Agent and Co-Collateral Agents thereof, and, promptly upon either Co-Collateral Agent’s request therefor shall deliver possession or control of such Collateral to Administrative Agent or in accordance with such Co-Collateral Agent’s instructions. 15.14 Payments by Administrative Agent to the Lenders. All payments to be made by Administrative Agent to the Lenders (or Bank Product Providers) shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Administrative Agent. Concurrently with each such payment, Administrative Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations. 15.15 Concerning the Collateral and Related Loan Documents. Each Secured Party authorizes and directs Administrative Agent and Co-Collateral Agents to enter into this Agreement and the other Loan Documents. Each Secured Party agrees (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to agree) that any action taken by Administrative Agent or by either Co-Collateral Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Administrative Agent or either Co-Collateral Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Secured Parties (and such Bank Product Provider). 15.16 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, Administrative Agent and each Lender: (a) is deemed to have requested that Co-Collateral Agents furnish Administrative Agent and such Lender, promptly after it becomes available, a copy of each field examination report respecting Parent, any Borrower or its Subsidiaries (each, a “Report”) prepared by or at the request of either Co-Collateral Agent, and Co- Collateral Agents shall so furnish Administrative Agent and each Lender with such Reports, (b) expressly agrees and acknowledges that Co-Collateral Agents do not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report, (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Co-Collateral Agents or other party performing any field examination will inspect only specific information regarding Parent, Borrowers and their Subsidiaries and will rely significantly upon Parent’s, Borrowers’ and their Subsidiaries’ books and records, as well as on representations of Borrowers’ personnel,
- 68 - 4775516.6 (d) agrees to keep all Reports and other material, non-public information regarding Parent, Borrowers and their Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.9, and (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Co-Collateral Agents, Administrative Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Co-Collateral Agents and Administrative Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by Co-Collateral Agents, Administrative Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. (f) In addition to the foregoing, (x) any Lender may from time to time request of Co-Collateral Agents or Administrative Agent in writing that Co-Collateral Agents or Administrative Agent provide to such Lender a copy of any report or document provided by Parent, any Borrower or its Subsidiaries to Co-Collateral Agents or Administrative Agent that has not been contemporaneously provided by Parent, such Borrower or such Subsidiary to such Lender, and, upon receipt of such request, Co-Collateral Agents or Administrative Agent, as applicable, promptly shall provide a copy of same to such Lender, (y) to the extent that Co-Collateral Agents are, or Administrative Agent is, entitled, under any provision of the Loan Documents, to request additional reports or information from Parent, any Borrower or its Subsidiaries, any Lender may, from time to time, reasonably request Co-Collateral Agents or Administrative Agent to exercise such right as specified in such Lender’s notice to Co- Collateral Agents or Administrative Agent, as applicable, whereupon Co-Collateral Agents or Administrative Agent, as applicable, promptly shall request of Borrowers the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Parent, such Borrower or such Subsidiary, Co-Collateral Agents or Administrative Agent, as applicable, promptly shall provide a copy of same to such Lender, and (z) any time that Administrative Agent renders to Borrowers a statement regarding a Loan Account, Administrative Agent shall send a copy of such statement to each Lender. 15.17 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Administrative Agent, in its capacity as such, and not by or in favor of any Lender, any and all obligations on the part of Administrative Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender (or Bank Product Provider) to fulfill its obligations to make credit available hereunder, nor to advance for such Lender (or Bank Product Provider) or on its behalf, nor to take any other action on behalf of such Lender (or Bank Product Provider) hereunder or in connection with the financing contemplated herein. 15.18 Joint Lead Arrangers, Joint Book Runners and Syndication Agent; Co-Collateral Agents. (a) Each of the Joint Lead Arrangers, Joint Book Runners and Syndication Agent, in such capacities, shall not have any right, power, obligation, liability, responsibility, or duty under this Agreement other than those applicable to it in its capacity as a Lender, as Administrative Agent, as Co-Collateral Agent, as Swing
- 69 - 4775516.6 Lender, or as Issuing Bank. Without limiting the foregoing, each of the Joint Lead Arrangers, Joint Book Runners and Syndication Agent, in such capacities, shall not have or be deemed to have any fiduciary relationship with any Lender or any Loan Party. Each Lender, Administrative Agent, Co-Collateral Agent, Swing Lender, Issuing Bank, and each Loan Party acknowledges that it has not relied, and will not rely, on the Joint Lead Arrangers, Joint Book Runners or Syndication Agent in deciding to enter into this Agreement or in taking or not taking action hereunder. Each of the Joint Lead Arrangers, Joint Book Runners and Syndication Agent, in such capacities, shall be entitled to resign at any time by giving notice to Administrative Agent and Borrowers. (b) The parties hereto agree that for purposes of the Guaranty and Security Agreement and certain other Loan Documents, Wells Fargo shall serve as the agent under the Guaranty and Security Agreement, notwithstanding the fact that Wells Fargo and PNC are Co-Collateral Agents hereunder. 15.19 Appointment of Australian Security Trustee; Australian Security Trust Deed. (a) Upon the execution of the Australian Security Trust Deed, the Secured Parties appoint the Australian Security Trustee under the terms of the Australian Security Trust Deed to act as their trustee under and in relation to the Australian Security Documents and to hold the assets subject to the security thereby created as trustee for the Secured Parties on trust and on the terms contained in the Australian Security Documents and each Secured Party authorizes the Australian Security Trustee under the terms of the Australian Security Trust Deed to exercise such rights, remedies, powers and discretions as are specifically delegated to the Australian Security Trustee by the terms of the Australian Security Documents, together with all such rights, remedies, powers and discretions as are incidental thereto and the Australian Security Trustee hereby accepts that appointment. (b) Upon the execution of the Australian Security Trust Deed, each Secured Party: (i) acknowledges that it is aware of, and consents to, the terms of the Australian Security Trust Deed; (ii) agrees to comply with and be bound by the Australian Security Trust Deed as a Beneficiary (to be defined in the Australian Security Trust Deed); (iii) acknowledges that it has received a copy of the Australian Security Trust Deed together with the other information which it has required in connection with the Australian Security Trust Deed and the Fifth Amendment; (iv) without limiting the general application of paragraph (i) above, acknowledges and agrees: (A) to the limitations and releases of the Australian Security Trustee’s liabilities; (B) that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with the Australian Security Trust Deed and Australian Security Documents; (C) that it, its assigns and successors, is bound by each consent, approval, waiver, amendment or other decision by the Administrative Agent or any instruction to the Australian Security Trustee by the Administrative Agent unless revoked in accordance with terms of the Australian Security Trust Deed; (D) to provide the indemnities contained in the Australian Security Trust Deed; and (v) without limiting the general application of paragraph (i) above, for consideration received, irrevocably appoints as its attorney each person who under the terms of the Australian Security Trust Deed
- 70 - 4775516.6 is appointed an attorney of a Beneficiary (to be defined in the Australian Security Trust Deed) on the same terms and for the same purposes as contained in the Australian Security Trust Deed. (c) The Administrative Agent shall provide a copy of the execution form of the Australian Security Trust Deed to each Secured Party prior to execution of that document by the parties to it. (d) The Administrative Agent may resign from its capacity as Australian Security Trustee at any time in accordance with the Australian Security Trust Deed. (e) This Section is executed as a deed poll in favor of the Australian Security Trustee and each Beneficiary (to be defined in the Australian Security Trust Deed) from time to time. The law of New South Wales governs this Section 15.19 and the parties submit to the non-exclusive jurisdiction of the courts of New South Wales and of the Commonwealth of Australia in relation to this Section 15.19. 15.20 Rights and remedies of the Australian Security Trustee. (a) In this Agreement, any rights and remedies exercisable by, any documents to be delivered to, or any other indemnities or obligations in favor of Administrative Agent shall be, as the case may be, exercisable by, delivered to, or be indemnities or other obligations in favor of Administrative Agent (or any other Person acting in such capacity) in its capacity as Australian Security Trustee to the extent that the rights, remedies, deliveries, indemnities or other obligations relate to, the Australian Loan Parties, the Australian Security Agreements or the security thereby created. Any obligations of Administrative Agent (or any other Person acting in such capacity) in this Agreement shall be obligations of Administrative Agent in its capacity as Australian Security Trustee or the security thereby created to the extent that such obligations relate to the Australian Security Agreements or the security thereby created. Additionally, in its capacity as Australian Security Trustee, Administrative Agent (or any other Person acting in such capacity) shall have: (i) all the rights, remedies and benefits in favor of the Administrative Agent contained in the provisions of the whole of this Section 15.19 and Section 9; (ii) all the powers of an absolute owner of the security constituted by the Australian Security Agreements; and (iii) all the rights, remedies and powers granted to it and be subject to all the obligations and duties owned by it under the Australian Security Documents. 15.21 Australian PPSA Provisions. (a) Where Administrative Agent, a Co-Collateral Agent, a member of the Lender Group or a Bank Product Provider has a security interest (as defined in the Australian PPSA) under any Loan Document, to the extent the law permits: (i) for the purposes of sections 115(1) and 115(7) of the Australian PPSA: (A) Administrative Agent, a Co-Collateral Agent, a member of the Lender Group or a Bank Product Provider with the benefit of the security interest need not comply with sections 95, 118, 121(4), 125, 130, 132(3)(d) or 132(4) of the Australian PPSA; and (B) sections 142 and 143 of the Australian PPSA are excluded; (ii) for the purposes of section 115(7) of the Australian PPSA, Administrative Agent, a Co-Collateral Agent, a member of the Lender Group or a Bank Product Provider with the benefit of the security interest need not comply with sections 132 and 137(3);
- 71 - 4775516.6 (iii) each party to this Agreement waives its right to receive from Administrative Agent, a Co-Collateral Agent, a member of the Lender Group or a Bank Product Provider any notice required under the Australian PPSA (including a notice of a verification statement); and (iv) if Administrative Agent, a Co-Collateral Agent, a member of the Lender Group or a Bank Product Provider with the benefit of a security interest exercises a right, power or remedy in connection with it, that exercise is taken not to be an exercise of a right, power or remedy under the Australian PPSA unless the Administrative Agent or such Lender states otherwise at the time of exercise. However, this clause does not apply to a right, power or remedy which can only be exercised under the Australian PPSA. (b) This does not affect any rights a person has or would have other than by reason of the Australian PPSA and applies despite any other clause in any Loan Document. 16. WITHHOLDING TAXES. 16.1 Payments. Any and all payments by or on account of any obligation of Borrowers hereunder or under any other Loan Document will be made free and clear of, and without deduction or withholding for, any present or future Taxes, except as required by applicable law; provided that if the applicable withholding agent shall be required by applicable law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then (a) if such Taxes are Indemnified Taxes, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender, Issuing Bank or Participant (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the applicable withholding agent shall make such deductions and (c) the applicable withholding agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. As soon as practicable after any payment of Taxes by a Borrower pursuant to this Section 16.1, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. In addition, without duplication of any other amounts paid pursuant to this Section 16.1, the Borrowers shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or, at the option of the Administrative Agent, timely reimburse it for the payment thereof. 16.2 Exemptions. (a) For purposes of this Section 16.2, the term “Lender” includes any Issuing Bank. Any Lender that is entitled to an exemption from or reduction of withholding Tax under applicable law with respect to payments under this Agreement shall deliver to the Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding and will also, if reasonably requested by the Borrowers or the Administrative Agent, provide any documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in this Section 16.2(a), the completion, execution and submission of such documentation (other than such documentation set forth in Section 16.2(b)(i), (ii), and (iv) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (b) Without limiting the generality of the foregoing: (i) any Lender that is a “United states person” within the meaning IRC Section 7701(a)(30) shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower
- 72 - 4775516.6 or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax; (ii) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), whichever of the following is applicable: (A) if such Foreign Lender is claiming the benefits of an exemption from United States withholding tax pursuant to the portfolio interest exception under Section 881(c) of the IRC, (x) a certificate of the Lender or Participant that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a “10 percent shareholder” (within the meaning of Section 871(h)(3)(B) of the IRC) of Parent, or (III) a controlled foreign corporation that is a “related person” (within the meaning of Section 864(d)(4) of the IRC) with respect to Borrowers (a “U.S. Tax Compliance Certificate”), and (y) a properly completed and executed IRS Form W-8BEN or Form W- 8BEN-E; (B) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (C) if such Foreign Lender is entitled to claim that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, a properly completed and executed copy of IRS Form W-8ECI; or (D) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; (iii) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (iv) 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 IRC, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.
- 73 - 4775516.6 Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. (c) Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrowers and Administrative Agent in writing of its legal inability to do so. (d) If a Lender or Participant claims exemption from, or reduction of, withholding tax in a jurisdiction other than the United States or Australia and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender or Participant, such Lender or Participant agrees to notify Administrative Agent (or, in the case of a sale of a participation interest, to the Lender granting the participation only) of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such Lender or Participant. To the extent of such percentage amount, Administrative Agent will treat such Lender’s or such Participant’s documentation provided pursuant to this Section 16.2 as no longer valid. With respect to such percentage amount, such Participant or Assignee may provide new documentation, pursuant to this Section 16.2, if applicable. Borrowers agree that each Participant shall be entitled to the benefits of this Section 16 with respect to its participation in any portion of the Commitments and the Obligations to the same extent as if it were a Lender and had acquired its interest by assignment so long as such Participant complies with the obligations set forth in this Section 16 with respect thereto (it being understood that the documentation required under this Section 16.2 shall be delivered to the participating Lender). (e) If a Lender or Participant is entitled to claim an exemption from withholding tax in Australia, such Lender or such Participant agrees to deliver to the Australian Borrowers any such form or forms or appropriate tax file number or Australian Business Number or other information or evidence, as may be required under the laws of Australia or its jurisdiction of organization or incorporation as a condition to exemption from, or reduction of, Australian IWT before receiving its first payment under this Agreement, but only if such Lender or such Participant is legally able to deliver such forms, information or evidence; provided, that nothing in this Section 16.2(e) shall require a Lender or Participant to disclose any information that it deems to be confidential (including without limitation, its tax returns). Where the Lender or Participant is entitled to exemption from Australian IWT under a treaty, such documentation shall include a written notification to be provided by the relevant Lender or Participant representing and warranting that it qualifies for an exemption from Australian IWT under a treaty, which in the case of Lenders that are not Foreign Lenders shall be in the form set out in Schedule 16.2 and in the case of any Foreign Lender shall be in any form reasonably required by the Australian Borrowers to satisfy itself such exemption is available. Each Lender and each Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and to promptly notify the Australian Borrowers of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (f) If a Lender or Participant claims, or in the case of Australian IWT is entitled to, an exemption from, or reduction of, withholding tax and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender or Participant, such Lender or Participant agrees to notify Agent (or, in the case of a sale of a participation interest, to the Lender granting the participation only) of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such Lender or Participant. To the extent of such percentage amount, Agent will treat such Lender’s or such Participant’s documentation provided pursuant to Section 16.2(b), 16.2(d) or 16.2(e) as no longer valid. With respect to such percentage amount, such Participant or Assignee may provide new documentation, pursuant to Section 16.2(b), 16.2(d) or 16.2(e), if applicable. Borrowers agree that each Participant shall be entitled to the benefits of this Section 16 with respect to its participation in any portion of the Commitments and the Obligations so long as such Participant complies with the obligations set forth in this Section 16 with respect thereto. (g) On or before the date that and any successor Administrative Agent becomes the Administrative Agent pursuant to Section 15.9, it shall deliver to Borrowers two duly executed originals of either (i) IRS Form W-9 or (ii) a U.S. branch withholding certificate on IRS Form W-8IMY evidencing its agreement with the Borrowers to be treated as a US Person (with respect to amounts received on account of any Lender) and IRS Form
- 74 - 4775516.6 W-8ECI (or any successor form) (with respect to amounts received on its own account), with the effect that, in any case, the Borrowers will be entitled to make payments hereunder to the Administrative Agent without withholding or deduction on account of U.S. federal withholding Tax. 16.3 Reductions. (a) If a Lender or a Participant is subject to an applicable withholding tax, Administrative Agent (or, in the case of a Participant, the Lender granting the participation) may withhold from any payment to such Lender or such Participant an amount equivalent to the applicable withholding tax. If the forms or other documentation required by Section 16.2 are not delivered to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation), then Administrative Agent (or, in the case of a Participant, to the Lender granting the participation) may withhold from any payment to such Lender or such Participant not providing such forms or other documentation an amount equivalent to the applicable withholding tax. (b) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Administrative Agent (or, in the case of a Participant, to the Lender granting the participation) did not properly withhold tax from amounts paid to or for the account of any Lender or any Participant due to a failure on the part of the Lender or any Participant (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Administrative Agent (or such Participant failed to notify the Lender granting the participation) of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Administrative Agent harmless (or, in the case of a Participant, such Participant shall indemnify and hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by Administrative Agent (or, in the case of a Participant, to the Lender granting the participation), as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) under this Section 16, together with all costs and expenses (including attorneys’ fees and expenses). The obligation of the Lenders and the Participants under this subsection shall survive the payment of all Obligations and the resignation or replacement of Administrative Agent. 16.4 Refunds. If Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes to which Borrowers have paid additional amounts pursuant to this Section 16, so long as no Default or Event of Default has occurred and is continuing, it shall pay over such refund to Borrowers (but only to the extent of payments made, or additional amounts paid, by Borrowers under this Section 16 with respect to Indemnified Taxes giving rise to such a refund), net of all out-of-pocket expenses of Administrative Agent or such Lender and without interest (other than any interest paid by the applicable Governmental Authority with respect to such a refund); provided, that Borrowers, upon the request of Administrative Agent or such Lender, agrees to repay the amount paid over to Borrowers (plus any penalties, interest or other charges, imposed by the applicable Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful misconduct or gross negligence of Administrative Agent hereunder) to Administrative Agent or such Lender in the event Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything in this Agreement to the contrary, this Section 16 shall not be construed to require Administrative Agent or any Lender to make available its tax returns (or any other information which it deems confidential) to Borrowers or any other Person. 17. GENERAL PROVISIONS. 17.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by Parent, each Borrower, Administrative Agent, and each Lender whose signature is provided for on the signature pages hereof. 17.2 Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.
- 75 - 4775516.6 17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or any Loan Party, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. 17.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 17.5 Bank Product Providers. Each Bank Product Provider in its capacity as such shall be deemed a third party beneficiary hereof and of the provisions of the other Loan Documents for purposes of any reference in a Loan Document to the parties for whom Administrative Agent is acting. Administrative Agent hereby agrees to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the applicable Bank Product Provider shall be automatically deemed to have appointed Administrative Agent as its agent and to have accepted the benefits of the Loan Documents. It is understood and agreed that the rights and benefits of each Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to Administrative Agent and the right to share in payments and collections out of the Collateral as more fully set forth herein. In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to have agreed that Administrative Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or release reserves in respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Administrative Agent to determine or insure whether the amount of any such reserve is appropriate or not. In connection with any such distribution of payments or proceeds of Collateral, Administrative Agent shall be entitled to assume no amounts are due or owing to any Bank Product Provider unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to Administrative Agent as to the amounts that are due and owing to it and such written certification is received by Administrative Agent a reasonable period of time prior to the making of such distribution. Administrative Agent shall have no obligation to calculate the amount due and payable with respect to any Bank Products, but may rely upon the written certification of the amount due and payable from the applicable Bank Product Provider. In the absence of an updated certification, Administrative Agent shall be entitled to assume that the amount due and payable to the applicable Bank Product Provider is the amount last certified to Administrative Agent by such Bank Product Provider as being due and payable (less any distributions made to such Bank Product Provider on account thereof). Borrowers may obtain Bank Products from any Bank Product Provider, although Borrowers are not required to do so. Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole and absolute discretion of such Bank Product Provider. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors. 17.6 Debtor-Creditor Relationship. The relationship between the Lenders and Administrative Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein. 17.7 Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Execution of any such counterpart may be by means of (a) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, as in effect from time to time, state
- 76 - 4775516.6 enactments of the Uniform Electronic Transactions Act, as in effect from time to time, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Administrative Agent reserves the right, in its discretion, to accept, deny, or condition acceptance of any electronic signature on this Agreement. Any party delivering an executed counterpart of this Agreement by faxed, scanned or photocopied manual signature shall also deliver an original manually executed counterpart, but the failure to deliver an original manually executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement. The foregoing shall apply to each other Loan Document, and any notice delivered hereunder or thereunder, mutatis mutandis. 17.8 Revival and Reinstatement of Obligations; Certain Waivers. If any member of the Lender Group or any Bank Product Provider repays, refunds, restores, or returns in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such member of the Lender Group or such Bank Product Provider in full or partial satisfaction of any Obligation or on account of any other obligation of any Loan Party under any Loan Document or any Bank Product Agreement, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such member of the Lender Group or Bank Product Provider elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such member of the Lender Group or Bank Product Provider elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as to all reasonable costs, expenses, and attorneys’ fees of such member of the Lender Group or Bank Product Provider related thereto, (i) the liability of the Loan Parties with respect to the amount or property paid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist and (ii) Agent’s Liens securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) Agent’s Liens shall have been released or terminated or (B) any provision of this Agreement shall have been terminated or cancelled, Agent’s Liens, or such provision of this Agreement, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Loan Party in respect of such liability or any Collateral securing such liability. 17.9 Confidentiality. (a) Administrative Agent, the Co-Collateral Agents, the Australian Security Trustee and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Parent, Borrowers and their Subsidiaries, their operations, assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by Administrative Agent, the Co-Collateral Agents, the Australian Security Trustee and the Lenders in a confidential manner, and shall not be disclosed by Administrative Agent, the Co-Collateral Agents, the Australian Security Trustee and the Lenders to Persons who are not parties to this Agreement, except: (i) to attorneys’ for and other advisors, accountants, auditors, and consultants to any member of the Lender Group and to employees, directors and officers of any member of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know” basis in connection with this Agreement and the transactions contemplated hereby and on a confidential basis, (ii) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers); provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 17.9, (iii) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided that (x) prior to any disclosure under this clause (iv), the disclosing party agrees to provide Administrative Borrower with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Borrowers pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure under this clause (iv) shall be limited to the portion of the Confidential
- 77 - 4775516.6 Information as may be required by such statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process; provided, that, (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide Borrowers with prior written notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior written notice to Borrowers pursuant to the terms of the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Administrative Agent the Co-Collateral Agents, the Australian Security Trustee or the Lenders or the Lender Group Representatives), (viii) in connection with any assignment, participation or pledge of any Lender’s interest under this Agreement; provided that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information either subject to the terms of this Section 17.9 or pursuant to confidentiality requirements substantially similar to those contained in this Section 17.9 (and such Person may disclose such Confidential Information to Persons employed or engaged by them as described in clause (i) above), (ix) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, that, prior to any disclosure to any Person (other than any Loan Party, Administrative Agent, the Co-Collateral Agents, the Australian Security Trustee any Lender, any of their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation involving any Person (other than any Borrower, Administrative Agent, the Co-Collateral Agents, the Australian Security Trustee any Lender, any of their respective Affiliates, or their respective counsel), the disclosing party agrees to provide Borrowers with prior written notice thereof, and (x) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor remedy under this Agreement or under any other Loan Document. (b) Anything in this Agreement to the contrary notwithstanding, Administrative Agent may disclose information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services or in its marketing or promotional materials, with such information to consist of deal terms and other information customarily found in such publications or marketing or promotional materials and may otherwise use the name, logos, and other insignia of any Borrower or the other Loan Parties and the Commitments provided hereunder in any “tombstone” or other advertisements, on its website or in other marketing materials of Administrative Agent. (c) Each Loan Party agrees that Administrative Agent may make materials or information provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) available to the Lenders by posting the Borrower Materials on IntraLinks, SyndTrak or a substantially similar secure electronic transmission system (the “Platform”). The Platform is provided “as is” and “as available.” Administrative Agent does not warrant the accuracy or completeness of the Borrower Materials, or the adequacy of the Platform and expressly disclaims liability for errors or omissions in the communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by Administrative Agent in connection with the Borrower Materials or the Platform. In no event shall Administrative Agent or any of the Agent-Related Persons have any liability to the Loan Parties, any Lender or any other person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or Administrative Agent’s transmission of communications through the Internet, except to the extent the liability of such Person is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Person’s gross negligence or willful misconduct. Each Loan Party further agrees that certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”). The Loan Parties shall be deemed to have authorized Administrative Agent and its Affiliates and the Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not containing any material non-public information with respect to the Loan Parties or their securities for purposes of United States federal and state securities laws. All Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform
- 78 - 4775516.6 designated as “Public Investor” (or another similar term). Administrative Agent and its Affiliates and the Lenders shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” or that are not at any time filed with the SEC as being suitable only for posting on a portion of the Platform not marked as “Public Investor” (or such other similar term). 17.10 Survival. All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Administrative Agent, Issuing Bank, or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of, or any accrued interest on, any Loan or any fee or any other amount payable under this Agreement is outstanding or unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or been terminated. 17.11 Patriot Act; Due Diligence. Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act. In addition, Administrative Agent and each Lender shall have the right to periodically conduct due diligence on all Loan Parties, their senior management and key principals and legal and beneficial owners. Each Loan Party agrees to cooperate in respect of the conduct of such due diligence and further agrees that the reasonable costs and charges for any such due diligence by Administrative Agent shall constitute Lender Group Expenses hereunder and be for the account of Borrowers. 17.12 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. The foregoing to the contrary notwithstanding, all Bank Product Agreements, if any, are independent agreements governed by the written provisions of such Bank Product Agreements, which will remain in full force and effect, unaffected by any repayment, prepayments, acceleration, reduction, increase, or change in the terms of any credit extended hereunder, except as otherwise expressly provided in such Bank Product Agreement. 17.13 Australian Code of Banking Practice. Each of the parties hereto agrees that the Australian Code of Banking Practice does not apply to this Agreement and the transactions in connection herewith. 17.14 Thryv, Inc. as Agent for Borrowers. Each Borrower hereby irrevocably appoints Thryv, Inc. as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Administrative Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes Administrative Borrower (a) to provide Administrative Agent with all notices with respect to Revolving Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents (and any notice or instruction provided by Administrative Borrower shall be deemed to be given by Borrowers hereunder and shall bind each Borrower), (b) to receive notices and instructions from members of the Lender Group (and any notice or instruction provided by any member of the Lender Group to Administrative Borrower in accordance with the terms hereof shall be deemed to have been given to each Borrower), and (c) to take such action as Administrative Borrower deems appropriate on its behalf to obtain Revolving Loans and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Accounts and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur
- 79 - 4775516.6 liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Accounts and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (i) the handling of the Loan Accounts and Collateral of Borrowers as herein provided or (ii) the Lender Group’s relying on any instructions of Administrative Borrower, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 17.14 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be. 17.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any parties hereto, each of the parties hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-in Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. 17.16 Amendment and Restatement; No Novation. This Agreement constitutes an amendment and restatement of the 2016 Credit Agreement effective from and after the Closing Date. The execution and delivery of this Agreement shall not constitute a novation of any indebtedness or other obligations owing to any Secured Party under the 2016 Credit Agreement or the other “Loan Documents” (as defined in the 2016 Credit Agreement) or be deemed to be a repayment of all or any portion of such indebtedness or obligations. On the Closing Date, (a) the credit facilities described in the 2016 Credit Agreement shall be amended and supplemented by the credit facilities described herein, (b) all “Loans,” “Letters of Credit,” and other obligations of the “Borrowers” and “Loan Parties” (in each case as defined in the 2016 Credit Agreement) outstanding as of such date under the 2016 Credit Agreement shall be deemed to be Loans, Letters of Credit, and other obligations of the Borrowers and Loan Parties outstanding under the corresponding facilities described herein, and (c) any reference to the 2016 Credit Agreement in any Loan Document shall be a reference to this Agreement. Unless otherwise provided in this Agreement or in any other Loan Document, any fees and interest accrued under the 2016 Credit Agreement shall accrue up to (but not including) the Closing Date at the rates and in the manner provided in the 2016 Credit Agreement but shall be due and payable at the times and in the manner provided under this Agreement. All costs and expenses which were due and owing under the 2016 Credit Agreement and related Loan Documents shall continue to be due and owing under, and shall be due and payable in accordance with, this Agreement.
- 80 - 4775516.6 17.17 Currency Indemnity. If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any of the other Loan Documents, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due under this Agreement or under any of the other Loan Documents in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the exchange rate at which Administrative Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency at the spot selling rate on the Business Day before the day on which judgment is given. In the event that there is a change in the rate of exchange rate prevailing between the Business Day before the day on which the judgment is given and the date of receipt by Administrative Agent of the amount due, the applicable Borrowers will, on the date of receipt by Administrative Agent, pay such additional amounts, if any, as may be necessary to ensure that the amount received by Administrative Agent on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by Administrative Agent is the amount then due under this Agreement or such other of the Loan Documents in the Currency Due. If the amount of the Currency Due which Administrative Agent is able to purchase is less than the amount of the Currency Due originally due to it, the applicable Loan Parties shall indemnify and save Administrative Agent harmless from and against loss arising as a result of such deficiency. The indemnity contained herein shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Loan Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by Administrative Agent from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any of the other Loan Documents or under any judgment or order. 17.18 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”), in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States). In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. 17.19 Erroneous Payments. (a) Each Lender, each Issuing Bank, each other Bank Product Provider and any other party hereto hereby severally agrees that if (i) Administrative Agent notifies (which such notice shall be conclusive absent manifest error) such Lender or Issuing Bank or any Bank Product Provider (or the Lender which is an Affiliate of a Lender, Issuing Bank or Bank Product Provider) or any other Person that has received funds from Administrative Agent or any of its Affiliates, either for its own account or on behalf of a Lender, Issuing Bank or Bank Product Provider (each such recipient, a “Payment Recipient”) that Administrative Agent has determined in its sole discretion
- 81 - 4775516.6 that any funds received by such Payment Recipient were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Payment Recipient) or (ii) any Payment Recipient receives any payment from Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as applicable, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as applicable, or (z) that such Payment Recipient otherwise becomes aware was transmitted or received in error or by mistake (in whole or in part) then, in each case, an error in payment shall be presumed to have been made (any such amounts specified in clauses (i) or (ii) of this Section 17.19(a), whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise; individually and collectively, an “Erroneous Payment”), then, in each case, such Payment Recipient is deemed to have knowledge of such error at the time of its receipt of such Erroneous Payment; provided that nothing in this Section shall require Administrative Agent to provide any of the notices specified in clauses (i) or (ii) above. Each Payment Recipient agrees that it shall not assert any right or claim to any Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by Administrative Agent for the return of any Erroneous Payments, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine. (b) Without limiting the immediately preceding clause (a), each Payment Recipient agrees that, in the case of clause (a)(ii) above, it shall promptly notify Administrative Agent in writing of such occurrence. (c) In the case of either clause (a)(i) or (a)(ii) above, such Erroneous Payment shall at all times remain the property of Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of Administrative Agent, and upon demand from Administrative Agent such Payment Recipient shall (or, shall cause any Person who received any portion of an Erroneous Payment on its behalf to), promptly, but in all events no later than one Business Day thereafter, return to Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds and in the currency so received, together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to Administrative Agent at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. (d) In the event that an Erroneous Payment (or portion thereof) is not recovered by Administrative Agent for any reason, after demand therefor by Administrative Agent in accordance with immediately preceding clause (c), from any Lender that is a Payment Recipient or an Affiliate of a Payment Recipient (such unrecovered amount as to such Lender, an “Erroneous Payment Return Deficiency”), then at the sole discretion of Administrative Agent and upon Administrative Agent’s written notice to such Lender (i) such Lender shall be deemed to have made a cashless assignment of the full face amount of the portion of its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Loans”) to Administrative Agent or, at the option of Administrative Agent, Administrative Agent’s applicable lending affiliate (such assignee, the “Agent Assignee”) in an amount that is equal to the Erroneous Payment Return Deficiency (or such lesser amount as Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Loans, the “Erroneous Payment Deficiency Assignment”) plus any accrued and unpaid interest on such assigned amount, without further consent or approval of any party hereto and without any payment by Agent Assignee as the assignee of such Erroneous Payment Deficiency Assignment. Without limitation of its rights hereunder, following the effectiveness of the Erroneous Payment Deficiency Assignment, Administrative Agent may make a cashless reassignment to the applicable assigning Lender of any Erroneous Payment Deficiency Assignment at any time by written notice to the applicable assigning Lender and upon such reassignment all of the Loans assigned pursuant to such Erroneous Payment Deficiency Assignment shall be reassigned to such Lender without any requirement for payment or other consideration. The parties hereto acknowledge and agree that (1) any assignment contemplated in this clause (d) shall be made without any requirement for any payment or other consideration paid by the applicable assignee or received by the assignor, (2) the provisions of this clause (d) shall
- 82 - 4775516.6 govern in the event of any conflict with the terms and conditions of Section 13 and (3) Administrative Agent may reflect such assignments in the Register without further consent or action by any other Person. (e) Each party hereto hereby agrees that (x) in the event an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, Administrative Agent (1) shall be subrogated to all the rights of such Payment Recipient and (2) is authorized to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Loan Document, or otherwise payable or distributable by Administrative Agent to such Payment Recipient from any source, against any amount due to Administrative Agent under this Section 17.19 or under the indemnification provisions of this Agreement, (y) the receipt of an Erroneous Payment by a Payment Recipient shall not for the purpose of this Agreement be treated as a payment, prepayment, repayment, discharge or other satisfaction of any Obligations owed by the Borrowers or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by Administrative Agent from the Borrowers or any other Loan Party for the purpose of making for a payment on the Obligations and (z) to the extent that an Erroneous Payment was in any way or at any time credited as payment or satisfaction of any of the Obligations, the Obligations or any part thereof that were so credited, and all rights of the Payment Recipient, as the case may be, shall be reinstated and continue in full force and effect as if such payment or satisfaction had never been received. (f) Each party’s obligations under this Section 17.19 shall survive the resignation or replacement of Administrative Agent or any transfer of right or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document. (g) The provisions of this Section 17.19 to the contrary notwithstanding, (i) nothing in this Section 17.19 will constitute a waiver or release of any claim of any party hereunder arising from any Payment Recipient’s receipt of an Erroneous Payment and (ii) there will only be deemed to be a recovery of the Erroneous Payment to the extent that Administrative Agent has received payment from the Payment Recipient in immediately available funds the Erroneous Payment Return, whether directly from the Payment Recipient, as a result of the exercise by Administrative Agent of its rights of subrogation or set off as set forth above in clause (e) or as a result of the receipt by Agent Assignee of a payment of the outstanding principal balance of the Loans assigned to Agent Assignee pursuant to an Erroneous Payment Deficiency Assignment, but excluding any other amounts in respect thereof (it being agreed that any payments of interest, fees, expenses or other amounts (other than principal) received by Agent Assignee in respect of the Loans assigned to Agent Assignee pursuant to an Erroneous Payment Deficiency Assignment shall be the sole property of Agent Assignee and shall not constitute a recovery of the Erroneous Payment). [Signature pages to follow.]
4775516.6 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written. BORROWERS: THRYV, INC., a Delaware corporation By: Name: Title:
4775516.6 GUARANTORS: THRYV HOLDINGS, INC., a Delaware corporation By: Name: Title: THRYV INTERNATIONAL HOLDING, LLC, a Delaware limited liability company By: Name: Title:
4775516.6 WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent, as Joint Lead Arranger, as Joint Book Runner, as Co-Collateral Agent, as a Lender and as Australian Security Trustee By: Name: Title:
4775516.6 PNC BANK, NATIONAL ASSOCIATION, a national banking association, as Joint Lead Arranger, Joint Bookrunner, Syndication Agent, Co-Collateral Agent and as a Lender By: Name: Title:
4775516.6 CIT BANK, N.A., a national banking association, as a Lender By: Name: Title:
4775516.6 Schedule 1.1 to Credit Agreement As used in the Agreement, the following terms shall have the following definitions: “ABL Priority Collateral” has the meaning specified therefor in the Intercreditor Agreement. “Account” means an account (as that term is defined in the Code) and all Credit Card Accounts and all rights to payment, including those arising in connection with bank and non-bank credit cards. “Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible, including any Credit Card Issuer or Credit Card Processor. “Accounting Changes” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions). “Acquired EBITDA” means, with respect to any Person or business acquired pursuant to an Acquisition for any period, the amount for such period of Consolidated EBITDA of any such Person or business so acquired (determined using such definitions as if references to Parent and its Subsidiaries therein were to such Person or business), as calculated by the Borrower in good faith and which shall be factually supported by historical financial statements or a quality of earnings report prepared by an independent third party accounting firm that is reasonably acceptable to the Administrative Agent; provided, that, notwithstanding the foregoing to the contrary, in determining Acquired EBITDA for any Person or business that does not have historical financial accounting periods which coincide with that of the financial accounting periods of Parent and its Subsidiaries (a) references to Reference Period in any applicable definitions shall be deemed to mean the same relevant period as the applicable period of determination for Parent and its Subsidiaries and (b) to the extent the commencement of any such Reference Period shall occur during a fiscal quarter of such acquired Person or business (such that only a portion of such fiscal quarter shall be included in such Reference Period), Acquired EBITDA for the portion of such fiscal quarter so included in such Reference Period shall be deemed to be an amount equal to (x) Acquired EBITDA otherwise attributable to the entire fiscal quarter (determined in a manner consistent with the terms set forth above) multiplied by (y) a fraction, the numerator of which shall be the number of months of such fiscal quarter included in the relevant Reference Period and the denominator of which shall be actual months in such fiscal quarter. “Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all of the Equity Interests of any other Person. “Additional Documents” has the meaning specified therefor in Section 5.12 of the Agreement. “Adjusted Daily Simple SOFR” means, for any day (a “Simple SOFR Rate Day”), a rate per annum equal to the greater of (a) the sum of (i) SOFR for the day (such day, a “Simple SOFR Determination Day”) that is (x) with respect to a Swing Loan, two (2) U.S. Government Securities Business
- 2 - 7446933.5 Days or (y) otherwise, five (5) U.S. Government Securities Business Days prior to (A) if such Simple SOFR Rate Day is a U.S. Government Securities Business Day, such Simple SOFR Rate Day or (B) if such Simple SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such Simple SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided that if by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any Simple SOFR Determination Day, SOFR in respect of such Simple SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to Adjusted Daily Simple SOFR has not occurred, then SOFR for such Simple SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided further that SOFR as determined pursuant to this proviso shall be utilized for purposes of calculation of Adjusted Daily Simple SOFR for no more than three (3) consecutive Simple SOFR Rate Days and (ii) the Simple SOFR Adjustment and (b) zero. Any change in Adjusted Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to any Borrower. “Administrative Agent” has the meaning specified therefor in the preamble to the Agreement. “Administrative Agent’s Account” means the Deposit Account of Administrative Agent identified on Schedule A-1 to this Agreement (or such other Deposit Account of Administrative Agent that has been designated as such, in writing, by Administrative Agent to Borrowers and the Lenders). “Administrative Borrower” has the meaning specified therefor in Section 17.14 of the Agreement. “Administrative Questionnaire” has the meaning specified therefor in Section 13.1(a) of the Agreement. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affected Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement. “Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Equity Interests, by contract, or otherwise; provided, that, for purposes of the definition of Eligible Accounts and Section 6.10 of the Agreement: (a) any Person which owns directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person. “Agent’s Liens” means the Liens granted by each Loan Party and their Subsidiaries to Administrative Agent (including Australian Security Trustee) under the Loan Documents and securing the Obligations.
- 3 - 7446933.5 “Agent-Related Persons” means Administrative Agent, either Co-Collateral Agent, and their respective officers, directors, employees, attorneys, and agents. “Agreed Currencies” means US Dollars and Australian Dollars. “Agreement” means the Credit Agreement to which this Schedule 1.1 is attached. “Alpha Accounts” means Accounts due from AT&T or any of its Affiliates (other than any Loan Party or its Subsidiaries) from the sale of Accounts by any Loan Party to AT&T or any of its Affiliates (other than any Loan Party or its Subsidiaries) pursuant to the terms of the Billing and Collection Agreement. “Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business. “Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto. “Applicable Margin” means, as of any date of determination (a) with respect to Base Rate Loans, two percent (2.00%) and (b) with respect to SOFR Loans and Australian Bill Rate Loans, three percent (3.00%). “Applicable Unused Line Fee Percentage” means 0.375%. “Application Event” means the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Administrative Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of the Agreement. “ASIC” means the Australian Securities and Investments Commission. “Assignee” has the meaning specified therefor in Section 13.1(a) of the Agreement. “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A to the Agreement. “AT&T” means AT&T Inc. “Attributable Debt” means, on any date, in respect of any lease of Parent or any Subsidiary entered into as part of a sale and leaseback transaction subject to Section 6.4(b), (a) if such lease is a Capitalized Lease Obligation, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and (b) if such lease is not a Capitalized Lease Obligation, the capitalized amount of the remaining lease payments under such lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capitalized Lease Obligation. “Australia” means the Commonwealth of Australia.
- 4 - 7446933.5 “Australian Availability” means, as of any date of determination, the amount that Australian Borrowers are entitled to borrow as Australian Revolving Loans under Section 2.1 of the Agreement (after giving effect to the then outstanding Australian Revolver Usage). “Australian Bill Rate” means, for any day, the rate per annum for the Australian Bank Bill Swap Rate as administered by ASX Benchmarks Pty Limited (or any other Person that takes over the administration of such rate) for a tenor equal to three (3) months displayed on page BBSY of the Thomson Reuters screen (the “Australian Bill Rate Screen Rate”) (or, in the event such rate does not appear on a Thomson Reuters page or screen, on any successor or substitute page on such screen or service that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion and applied generally by the Administrative Agent to other credit facilities for which it acts as administrative agent for purposes of determining such rate) at or about 11:00am (Sydney, Australia time) (or such other time at which such rate customarily appears on that page, including if corrected, as recalculated and republished by the relevant administrator) on any relevant day (and, if such rate is below zero, the Australian Bill Rate shall be deemed to be zero). When interest is determined in relation to Australian Bill Rate, each change in the interest rate will become effective each Business Day that Administrative Agent determines that the Australian Bill Rate has changed. “Australian Bill Rate Loan” means a Revolving Loan denominated in Australian Dollars that bears interest at a rate determined by reference to the Australian Bill Rate. “Australian Bill Rate Screen Rate” has the meaning specified in the definition of “Australian Bill Rate”. “Australian Borrower” and “Australian Borrowers” have the respective meanings specified therefor in the preamble to the Agreement. “Australian Borrowing Base” means, as of any date of determination, as to Australian Borrowers, the result of: (a) the sum of (i) 85% of the amount of Eligible Billed Accounts of such Australian Borrowers, plus (ii) 65% of the amount of Eligible Installment Accounts of such Australian Borrowers, plus (iii) 85% of the amount of Eligible Credit Card Accounts of such Australian Borrowers, plus (iv) 85% of the amount of Eligible Telstra Accounts, minus (b) without duplication of any reserves established under the US Borrowing Base, the aggregate amount of reserves, if any, established by Administrative Agent under Section 2.1(c) of the Agreement. Notwithstanding anything to the contrary set forth in the Agreement, (A) the amount of the Australian Borrowing Base shall be deemed to be zero dollars ($0) at all times until the occurrence of each of the following: (1) the Australian Joinder Effective Date with respect to Thryv Ausco and each of the
- 5 - 7446933.5 Australian Sunshine Entities, (2) the Administrative Agent has received evidence, in form and substance satisfactory to Administrative Agent, that the Australian Security Trustee has a first priority Lien in the Collateral (except to the extent of Permitted Liens which by operation of law or pursuant to the express terms of the Loan Documents would have priority over the Liens securing the Obligations, permitted purchase money Liens, or the interests of lessors under Capital Leases and subject to the Intercreditor Agreement) of Thryv Ausco and each of the Australian Sunshine Entities and (3) Co-Collateral Agents have completed an appraisal and field examination with respect to the Accounts of the Australian Borrowers, in each case, reasonably satisfactory to Co-Collateral Agents and (4) Lenders shall have received all documentation and other information that is requested by and satisfactory to such Lenders in connection with Thryv Ausco and each of the Australian Sunshine Entities for purposes of complying with all necessary “know your customer” and applicable anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, and (B) in no event shall the sum of clause (a)(ii) above plus clause (a)(ii) of the definition of US Borrowing Base exceed seventy-five percent (75%) of the Maximum Revolver Amount. “Australian Corporations Act” means the Corporations Act 2001 (Cth) of Australia. “Australian Dollars” or “AUS$” means the lawful currency of Australia. “Australian Excess Availability” means, as of any date of determination, the amount equal to Australian Availability minus the aggregate amount, if any, of all trade payables of Australian Borrowers and their Subsidiaries aged in excess of 60 days past their due date. “Australian Featherweight Security Deed” means the featherweight security deed to be entered on or about the Australian Joinder Effective Date between Thryv Ausco, each Australian Sunshine Entity and the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian General Security Deed” means the general security deed to be entered on or about the Australian Joinder Effective Date between Thryv Ausco, each Australian Sunshine Entity and the Australian Security Trustee, in form and substance reasonably satisfactory to Administrative Agent. “Australian Guarantors” means collectively (together with their respective successors and assigns), any Person incorporated under the laws of Australia that at any time after the Fifth Amendment Effective Date becomes an Australian Guarantor (including Thryv Ausco and the Australian Sunshine Entities effective as of the Australian Joinder Effective Date), and “Australian Guarantor” means any one of them. “Australian IWT” means any Taxes required to be withheld or deducted from any interest payment under Division 11A of Part III of the Australian Tax Act or Subdivision 12-F of Schedule 1 to the Taxation Administration Act 1953 (Cth). “Australian Joinder Effective Date” has the meaning specified therefor in Section 5.16 of the Agreement. “Australian Loan Account” has the meaning specified therefor in Section 2.9 of the Agreement. “Australian Loan Party” means any Australian Borrower or Australian Guarantor. “Australian Obligations” means all Obligations of the Australian Loan Parties.
- 6 - 7446933.5 “Australian Pension Plan” means a superannuation, retirement benefit or pension fund (whether established by deed or under any statute of Australia or any state or territory of Australia) contributed to by, or to which there is or may be an obligation to contribute by, any Loan Party in respect of its Australian employees and officers or former employees and officers. “Australian PPSA” means the Personal Property Securities Act 2009 (Cth) of Australia. “Australian Priority Payables Reserves” means, solely with respect to the Australian Borrowing Base, those reserves that Co-Collateral Agents deems necessary or appropriate, in their Permitted Discretion and subject to Section 2.1(c) with respect to amounts secured by any Liens, choate or inchoate, or with respect to any rights, whether imposed by applicable law in Australia or elsewhere (and including rights to the payment or reimbursement of any costs, charges or other amounts in connection with any insolvency proceeding), which rank or are capable of ranking in priority to (or pari passu) the Liens on the Collateral in favor of Administrative Agent or the Australian Security Trustee including, without limitation, to the extent applicable by operation of law, any such amounts due or which may become due and not paid for wages, long service leave, retrenchment, payment in lieu of notice, or vacation pay (including in all respects amounts protected by or payable pursuant to the Fair Work Act 2009 (Cth)) of Australia, any preferential claims as set out in the Australian Corporations Act, amounts due or which may become due and not paid under any legislation relating to workers’ compensation or to employment insurance, all amounts deducted or withheld and not paid and remitted when due under the Taxation Administration Act 1953 (Cth) (but excluding Pay as You Go income withholding tax) and amounts in the future, currently or past due and not contributed, remitted or paid in respect of any Australian Pension Plan, together with any charges which may be levied by a Governmental Authority as a result of any default in payment obligations in respect of any Australian Pension Plan. “Australian Revolver Usage” means, as of any date of determination, the amount of outstanding Australian Revolving Loans. “Australian Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the Agreement. “Australian Security Agreements” means (a) the Australian General Security Deed, (b) the Australian Featherweight Security Deed, (c) the Australian Specific Security Deed and (d) any other security document executed subsequent to the Fifth Amendment Effective Date by any Australian Loan Party to secure the Obligations, in each case, together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements thereto and thereof. “Australian Security Documents” means each Australian Security Agreement, together with all agreements, instruments, licenses, registrations, filings, authorizations, title deeds or other incidental, collateral or supplementary documents executed, prepared and/or delivered in connection with the Collateral or an Australian Security Agreement. “Australian Security Trust Deed” means the security trust deed to be entered into on or about the Australian Joinder Effective Date, executed by, among others, TIH, Thryv Ausco, each Australian Sunshine Entity and the Australian Security Trustee. “Australian Security Trustee” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.
- 7 - 7446933.5 “Australian Specific Security Deed” means the specific security deed (marketable securities), to be entered on or about the Australian Joinder Effective Date, executed by TIH in favor of the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian Subsidiary” means a Subsidiary that is organized or incorporated under the laws of Australia. “Australian Sunshine Entities” means each of (a) [reserved], (b) [reserved], (c) [reserved], (d) [reserved], (e) [reserved], (f) Thryv Australia Pty Ltd ACN 007 423 912 (formerly known as Sensis Pty Ltd), (g) [reserved], (i) Australian Local Search Pty Limited ACN 109 826 351, and (j) Life Events Media Pty Limited ACN 118 014 298. “Australian Tax Act” shall mean the Income Tax Assessment Act 1936 (Cth) of Australia. “Australian Tax Consolidated Group” shall mean a “consolidated group” or an “MEC group” as defined in the Australian Tax Act. “Australian TFA” means any tax funding agreement for Australian tax consolidation purposes. “Australian TSA” means an agreement between the members of an Australian Tax Consolidated Group which takes effect as a tax sharing agreement under section 721-25 of the applicable Australian Tax Act and complies with the applicable Australian Tax Act and any applicable law, official directive, request, guideline or policy (whether or not having the force of law) issued in connection with the applicable Australian Tax Act. “Australian Whitewash Documents” means all documents (including all resolutions, notices of meeting, explanatory statements and forms) that are required to be lodged with ASIC in connection with the Australian Whitewash Transaction. “Australian Whitewash Transaction” means the transaction by which Thryv Ausco and each Australian Sunshine Entity, among others: (i) passes all resolutions that are required to be passed in accordance with section 260B of the Australian Corporations Act to approve the giving of financial assistance in connection with the entry into and performance of obligations under each Loan Document to which it is proposed to be a party within the required time periods; and (ii) lodges all its relevant Australian Whitewash Documents with ASIC in accordance with section 260B of the Australian Corporations Act. “Authorized Person” means any one of the individuals identified on Schedule A-2 to the Agreement, as such schedule is updated from time to time by written notice from Borrowers to Administrative Agent. “Available Currency” means with respect to (a) Revolving Loans to be made to (and Letters of Credit issued for the account of) US Borrower, US Dollars, (b) Revolving Loans to be made to Australian Borrowers, US Dollars and Australian Dollars, and (c) with respect to Eligible Accounts, US Dollars and Australian Dollars, as applicable. “Available Tenor” means, as of any date of determination and with respect to any then- current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark or (b) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such
- 8 - 7446933.5 date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.12(d). “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings). “Bank Product” means any one or more of the following financial products or accommodations extended to a Loan Party or any of their Subsidiaries by a Bank Product Provider: (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p- cards”)), (b) credit card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, or (f) transactions under Hedge Agreements. “Bank Product Agreements” means those agreements entered into from time to time by a Loan Party or any of their Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products. “Bank Product Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Co-Collateral Agents) to be held by Administrative Agent for the benefit of the Bank Product Providers (other than the Hedge Providers) in an amount determined by Administrative Agent in its reasonable discretion as sufficient to satisfy the reasonably estimated credit exposure with respect to the then existing Bank Product Obligations (other than Hedge Obligations). “Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by each Loan Party and its Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Administrative Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Administrative Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to a Loan Party or one of its Subsidiaries. “Bank Product Provider” means Wells Fargo or any of its Affiliates, including each of the foregoing in its capacity, if applicable, as a Hedge Provider. “Bank Product Provider Agreement” means an agreement, in form and substance reasonably satisfactory to Administrative Agent, duly executed by the applicable Bank Product Provider, Loan Party, and Administrative Agent. “Bank Product Reserves” means, as of any date of determination, those reserves that the Co-Collateral Agents deems necessary or appropriate, in the exercise of their Permitted Discretion, to
- 9 - 7446933.5 establish based upon the Bank Product Providers’ determination of the liabilities and obligations of each Loan Party and its Subsidiaries in respect of Bank Product Obligations then provided or outstanding. “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time. “Base Rate” means the greatest of (a) the Federal Funds Rate plus ½%, (b) Adjusted Daily Simple SOFR, plus one percentage point; provided that this clause (b) shall not be applicable during any period in which Adjusted Daily Simple SOFR is unavailable or unascertainable, and (c) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’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 may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero). “Base Rate Loan” means each portion of the Revolving Loans that bears interest at a rate determined by reference to the Base Rate. “Benchmark” means, initially, Adjusted Daily Simple SOFR or the Australian Bill Rate Screen Rate, as applicable; provided that if a Benchmark Transition Event has occurred with respect to Adjusted Daily Simple SOFR, Australian Bill Rate Screen Rate or the applicable 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 2.12(d). “Benchmark Administrator” means, initially, the Federal Reserve Bank of New York, or any successor administrator of the then-current Benchmark or any insolvency or resolution official with authority over such administrator (or its equivalent in Australia). “Benchmark Replacement” means the sum of: (a) the alternate rate of interest that has been selected by Agent as the replacement for the then-current Benchmark; and (b) 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 Administrative Agent, in each case, giving due consideration to (i) any selection or recommendation by the Relevant Governmental Body at such time for a replacement rate, the mechanism for determining such a rate, the methodology or conventions applicable to such rate, or the spread adjustment, or method for calculating or determining such spread adjustment, for such rate, or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the then-current Benchmark, the methodology or conventions applicable to such rate, or the spread adjustment, or method for calculating or determining such spread adjustment, for such alternate rate for U.S. dollar- denominated syndicated or bilateral credit facilities at such time; provided, that, if the Benchmark Replacement as determined as provided above would be less than zero, then the Benchmark Replacement shall be deemed to be zero. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, prepayment provisions, 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 the Benchmark Replacement exists, in such other manner of
- 10 - 7446933.5 administration as Agent decides is reasonably necessary in connection with the administration of this Agreement). “Benchmark Replacement Date” means the earliest to occur of the following events with respect to any then-current Benchmark: (a) in the case of clause (a) 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 Benchmark Administrator permanently or indefinitely ceases to provide the Benchmark; or (b) in the case of clause (b) of the definition of “Benchmark Transition Event”, the first date on which the Benchmark has been determined and announced by the regulatory supervisor for the Benchmark Administrator to be no longer representative of underlying markets; provided, that such non- representativeness will be determined by reference to the most recent statement or publication referenced in such clause (b) and even if the Benchmark continues to be provided on such date. “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: a public statement or publication of information by or on behalf of the Benchmark Administrator or a regulatory supervisor for the Benchmark Administrator announcing that (a) the Benchmark Administrator has ceased or will cease to provide the Benchmark permanently or indefinitely or (b) the Benchmark is no longer representative. “Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the then-current Benchmark and solely to the extent that the Benchmark has not been replaced with a Benchmark Replacement, the period (a) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the Benchmark for all purposes hereunder in accordance with Section 2.12(d) and (b) ending at the time that a Benchmark Replacement has replaced the Benchmark for all purposes hereunder pursuant to Section 2.12(d). “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “BHC Act Affiliate” of a Person means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such Person. “Billing and Collection Agreement” means the Second Amended and Restated Agreement for AT&T Billing Solution Services, dated as of June 20, 2017, among YP LLC and Print Media LLC, individually and collectively as the customer, and AT&T Services, Inc., on behalf of Pacific Bell Telephone Company d/b/a AT&T California, Nevada Bell Telephone Company d/b/a AT&T Nevada, Illinois Bell Telephone Company d/b/a AT&T Illinois, Indiana Bell Telephone Company, Incorporated d/b/a AT&T Indiana, Michigan Bell Telephone Company d/b/a AT&T Michigan, The Ohio Bell Telephone Company d/b/a AT&T Ohio, Wisconsin Bell, Inc. d/b/a AT&T Wisconsin, and/or BellSouth Telecommunications, Inc. d/b/a AT&T Alabama, AT&T Florida, AT&T Georgia, AT&T Kentucky, AT&T Louisiana, AT&T Mississippi, AT&T North Carolina, AT&T South Carolina and AT&T Tennessee. “Board of Directors” means, as to any Person, the board of directors (or comparable managers) of such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).
- 11 - 7446933.5 “Board of Governors” means the Board of Governors of the Federal Reserve System of the United States (or any successor). “Borrower Materials” has the meaning specified therefor in Section 17.9(c) of the Agreement. “Borrowers” means, collectively, US Borrowers and Australian Borrowers, and “Borrower” means any one of them. “Borrowing” means a borrowing consisting of Revolving Loans made on the same day to the same Borrower or Borrowers in the same currency by the Lenders (or Administrative Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Administrative Agent in the case of an Extraordinary Advance. “Borrowing Base” means the Australian Borrowing Base and the US Borrowing Base, individually or collectively, as the context requires. “Borrowing Base Certificate” means a certificate in the form of Exhibit B. “Business Day” means any day that is not a Saturday, Sunday or other day on which the Federal Reserve Bank of New York is closed, except that, if a determination of a Business Day shall relate to a Australian Bill Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in deposits in the applicable Available Currency. “Capital Expenditures” means, for any period, without duplication, the additions to property, plant and equipment and other capital expenditures of Parent and its consolidated Subsidiaries for such period, determined in accordance with GAAP. “Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. “Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP. “Cash Dominion Trigger Period” means the period (a) commencing on the day that (i) an Event of Default occurs and is continuing or (ii) Total Excess Availability is less than or equal to the lesser of (A) twelve and one-half percent (12.5%) of the Maximum Revolver Amount at such time or (B) twelve and one-half percent (12.5%) of the Total Borrowing Base at such time and (b) continuing until the date that during the previous ninety (90) consecutive days, (i) no Event of Default has existed or (ii) Total Excess Availability has been greater than the lesser of (A) twelve and one-half percent (12.5%) of the Maximum Revolver Amount at such time or (B) twelve and one-half percent (12.5%) of the Total Borrowing Base at such time; provided, however, that the Cash Dominion Trigger Period may not be cured as contemplated by clause (b) more than two (2) times in any fiscal year or five (5) times during the term of this Agreement; provided, further, that up to two and one-half percent (2.50%) of suppressed Total Availability (that is, the amount by which the Total Borrowing Base exceeds the Maximum Revolver Amount) may be used in calculating Total Excess Availability for purposes of this definition. “Cash Equivalents” means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such
- 12 - 7446933.5 obligations are backed by the full faith and credit of the United States of America), in each case, maturing or allowing for liquidation at the original par value at the option of the holder within one year from the date of acquisition thereof; (b) investments in commercial paper (other than commercial paper issued by Parent or any of its Affiliates) maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s; (c) investments in certificates of deposit, banker’s acceptances, time deposits or overnight bank deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000, and having a debt rating of “A-1” or better from S&P or “P-1” or better from Moody’s; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000. “Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e- payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements. “CFC” means a Foreign Subsidiary (other than the Sunshine Entities) that is a “controlled foreign corporation” under Section 957 of the Code and any Subsidiary owned directly or indirectly by such Foreign Subsidiary. “CFC Holdco” means a Subsidiary substantially all the assets of which consist of Equity Interests in Foreign Subsidiaries that each constitute a CFC and/or Indebtedness or accounts receivable owed by Foreign Subsidiaries that each constitute a CFC or are treated as owed by any such Foreign Subsidiaries for U.S. federal income tax purposes. “Change in Law” means the occurrence after the date of this Agreement of: (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, (c) any new, or adjustment to, requirements prescribed by the Board of Governors for “Eurocurrency Liabilities” (as defined in Regulation D of the Board of Governors), requirements imposed by the Federal Deposit Insurance Corporation, or similar requirements imposed by any domestic or foreign governmental authority or resulting from compliance by Administrative Agent or any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority and related in any manner to Adjusted Daily Simple SOFR or SOFR, or (d) the making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or not having the force of law; provided, that notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued
- 13 - 7446933.5 in connection therewith, and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued. “Change of Control” means that: (a) at any time, Parent shall fail to own or control, directly or indirectly, one hundred percent (100%) of the Equity Interests of Thryv entitled to vote in the election of members of the board of directors (or equivalent governing body) of Thryv; (b) at any time, Thryv shall fail to own or control, directly or indirectly, one hundred percent (100%) of the Equity Interests of each other Loan Party (other than (i) Parent and (ii) in connection with any transaction involving any such Loan Party expressly permitted under Section 6.3 or Section 6.4 of this Agreement that would result in such Loan Party no longer existing or the Equity Interests of such Loan Party no longer being, directly or indirectly, owned or controlled 100% by Thryv) entitled to vote in the election of members of the board of directors (or equivalent governing body) of each such Loan Party; (c) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Holders becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Equity Interests that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of the Equity Interests entitled to vote for members of the board of directors (or equivalent governing body) of Parent on a fully diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right) representing more than 40% of the total voting power of all of the outstanding Equity Interests of Parent; or (d) the occurrence of a change in control, or other similar provision, as defined in the Term Loan Credit Agreement or any agreement or instrument evidencing any other Indebtedness or Equity Interests in excess of $25,000,000 obligating Parent or any of its Subsidiaries to repurchase, redeem or repay all or any part of the Indebtedness or Equity Interests provided for therein. “Chapter 11 Cases” means the bankruptcy cases commenced by Parent and its Subsidiaries in the United States Bankruptcy Court for the District of Delaware on May 17, 2016 by filing voluntary petitions under chapter 11 of the Bankruptcy Code. “Closing Date” means the date of the making of the initial Revolving Loan (or other extension of credit) under the Agreement. “Co-Collateral Agents” has the meaning set forth in the preamble to the Agreement. “Code” means the New York Uniform Commercial Code, as in effect from time to time. “Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Borrower or its Subsidiaries in or upon which a Lien is granted by such Person in favor of Administrative Agent, the Australian Security Trustee or any other Secured Party under any of the Loan Documents.
- 14 - 7446933.5 “Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Borrower’s or its Subsidiaries’ books and records, in each case, in form and substance reasonably satisfactory to Co-Collateral Agents. “Collateral and Guarantee Requirement” means the requirement that: (a) Administrative Agent shall have received (i) from each US Loan Party either (A) a counterpart of the Guaranty and Security Agreement and the Intercreditor Agreement duly executed and delivered on behalf of such Loan Party or (B) in the case of any of its Subsidiaries that becomes a US Loan Party after the Closing Date, a supplement to the Guaranty and Security Agreement and Intercreditor Agreement, in the form specified therein, duly executed and delivered on behalf of such Subsidiary, (ii) from each Australian Loan Party, either (A) the documentation set forth in Section 5.16 and/or (B) in the case of any Australian Subsidiary that becomes an Australian Loan Party after the Fifth Amendment Effective Date, such supplements thereto as the Administrative Agent may reasonably require and (iii) in the case of any Subsidiary that has been designated as a Discretionary Guarantor in accordance with the definition thereof, (A) in the case of an Australian Subsidiary, the documents described in clause (ii) above or (B) in the case of any other Foreign Subsidiary (other than an Australian Subsidiary), such documentation as Administrative Agent may reasonably require; (b) all outstanding Equity Interests of each Subsidiary of Parent shall have been pledged pursuant to the Guaranty and Security Agreement (except that Parent and each other Loan Party shall not be required to pledge more than 65% of the outstanding voting Equity Interests of any first-tier Foreign Subsidiary or any Equity Interests of a Foreign Subsidiary that is not directly owned by a Loan Party) and Administrative Agent shall have received all certificates or other instruments representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; provided, that, notwithstanding the foregoing, no later than the earlier of (i) 90 days after the Fifth Amendment Effective Date and (ii) the date that such items are pledged to the Term Loan Agent pursuant to the Term Loan Documents (or such later date as the Administrative Agent may agree), all outstanding Equity Interests of Thryv Ausco and the Australian Sunshine Entities shall have been pledged pursuant to the Australian Specific Security Deed and the Australian General Security Deed and the Administrative Agent shall have received all certificates or other instruments representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; (c) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by Co-Collateral Agents or Required Lenders to be filed, registered or recorded to create the Liens intended to be created by the Loan Documents and perfect such Liens to the extent required by, and with the priority required by, the Guaranty and Security Agreement, shall have been filed, registered or recorded or delivered to Administrative Agent, for filing, registration or recording; and (d) each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Loan Documents (or supplements thereto) to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder. “Commitment” means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Lender became a Lender under the Agreement, as such amounts
- 15 - 7446933.5 may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 of the Agreement. “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute. “Competitor” means any Person engaged (whether directly or indirectly through the control of any other person) other than through Parent and its Subsidiaries in the business of providing yellow page services or other similar targeted advertising in North America; provided, that no potential assignee shall be deemed to be a Competitor on account of owning less than 10% (or, in the case of any Person that was a Term Loan Lender (as defined in the Reorganization Plan) as of the petition date, 20%) of the outstanding shares of equity securities of a Competitor so long as such potential assignee does not have the right to appoint, and no director, officer or employee of such potential assignee is, a director of such Competitor or any of its Subsidiaries. “Compliance Certificate” means a certificate substantially in the form of Exhibit C to the Agreement delivered by the chief financial officer or principal accounting officer of Administrative Borrower to Administrative Agent. “Confidential Information” has the meaning specified therefor in Section 17.9(a) of the Agreement. “Confirmation Order” means that certain order approving the Disclosure Statement and confirming the Reorganization Plan pursuant to the Bankruptcy Code entered by the bankruptcy court on July 15, 2016. “Consolidated EBITDA” means, for any period, Consolidated Net Income for such period plus (a) without duplication and (except in the case of clauses (a)(x) and (a)(v)(B) below) to the extent deducted in determining such Consolidated Net Income, the sum of: (i) Consolidated Interest Expense for such period, (ii) Taxes paid or provisions for Taxes, in each case, measured by net income, profits or capital (or any similar measures), including federal and state and local income Taxes, foreign income Taxes and franchise Taxes for such period, (iii) (A) depreciation and amortization for such period (including, without limitation, amortization of goodwill, software and other intangible assets) and (B) other non-cash charges or expenses (including impairment charges, write-offs, write-downs and non-cash compensation charges arising from the granting of stock options, stock appreciation rights, profits interests and/or similar arrangements), (iv) any non-recurring extraordinary charges or losses for such period (excluding losses from discontinued operations, but including any losses in connection with any actual or prospective legal settlement, fine, judgment or order); provided that in any applicable Reference Period the sum of (A) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to this clause (a)(iv) in such Reference Period plus (B) the aggregate amount added back to Consolidated EBITDA pursuant to clauses (a)(v)(A) and
- 16 - 7446933.5 (a)(v)(B) below in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such Reference Period, (v) (A) other cash expenses or charges (including restructuring charges, attributable to the undertaking and/or implementation of new initiatives, business optimization activities, cost savings initiatives, cost rationalization programs, operating expense reductions and/or synergies and/or similar initiatives and/or similar programs, including expenses incurred in connection with inventory optimization programs, office or facility closure, relocation, headcount savings, product margin and integration savings, office or facility consolidations and openings, retention, severance, systems establishment costs, contract termination costs and reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses; provided that for any applicable Reference Period, the sum of (1) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to clause (a)(iv) above in such Reference Period, plus (2) the aggregate amount added back to Consolidated EBITDA pursuant to this clause (a)(v)(A) and clause (a)(v)(B) below in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such Reference Period; and (B) the amount of any “run rate” synergies, operating expense reductions and other net cost savings and integration costs, in each case, projected by Parent in connection with Permitted Acquisitions, Dispositions (including the termination or discontinuance of activities constituting such business) and/or other operating improvement, restructuring, cost savings initiative or other similar initiative taken after the Fifth Amendment Effective Date that have been consummated during the applicable Reference Period (calculated on a pro forma basis as though such synergies, expense reductions and cost savings had been realized on the first day of the period for which Consolidated EBITDA is being determined), net of the amount of actual benefits realized during such period from such actions; provided, that (x) such synergies, expense reductions and cost savings are reasonably identifiable, factually supportable, expected to have a continuing impact on the operations of Parent and its Subsidiaries and have been determined by Parent in good faith to be reasonably anticipated to be realizable within 12 months following any such action as set forth in reasonable detail on a certificate of a Financial Officer of Parent delivered to the Administrative Agent, (y) no such amounts shall be added pursuant to this clause to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment, the definition of pro forma basis or otherwise and (z) for any applicable Reference Period, the sum of (1) the aggregate amount added pursuant to this clause (v)(B) for such Reference Period plus (2) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to clause (a)(iv) above in such Reference Period, plus (3) the aggregate amount added back to Consolidated EBITDA pursuant to clause (a)(v)(A) above in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such period, (vi) payments of customary investment and commercial banking fees and expenses in connection with transactions permitted by this Agreement, (vii) cash premiums, penalties or other payments payable in connection with the early extinguishment or repurchase of Indebtedness, (viii) (A) Specified Charges for such period and/or (B) any earn-out and contingent consideration obligations (including to the extent accounted for as bonuses, compensation or otherwise) incurred in connection with the Fifth Amendment Transactions and/or any other acquisition and/or other Investment which is paid or accrued during such period and, in each case, adjustments thereof,
- 17 - 7446933.5 (ix) the amount of any charge or expense that is actually reimbursed or reimbursable by one or more third parties pursuant to indemnification or reimbursement provisions or similar agreements or insurance; provided that in respect of any such charge or expense that is added back in reliance on this clause (a)(ix), the relevant Person in good faith expects to receive reimbursement for such charge or expense within the next four fiscal quarters (it being understood that to the extent any such reimbursement amount is not actually received within such four fiscal quarter period, such reimbursement amount shall be deducted in calculating Consolidated EBITDA for the last fiscal quarter of such period and each subsequent period which includes such quarter), (x) the amount of any proceeds of any business interruption insurance policy in an amount representing the earnings for the applicable period that such proceeds are intended to replace (whether or not then received so long as the relevant Person in good faith expects to receive such proceeds within the next four fiscal quarters (it being understood that to the extent such proceeds are not actually received within such four fiscal quarter period, such proceeds shall be deducted in calculating for the last fiscal quarter of such period and each subsequent period which includes such quarter)), and/or (xi) any charge, expense or deduction that is associated with any Subsidiary and attributable to any non-controlling interest and/or minority interest of any third party, minus (b) without duplication and to the extent included in determining such Consolidated Net Income, (i) consolidated interest income for such period, (ii) Federal, state, local and foreign income Tax credits of Parent and its Subsidiaries for such period (to the extent not netted from income Tax expense); (iii) all extraordinary, unusual or non-recurring gains (including any gains in connection with any actual or prospective legal settlement, fine, judgment or order); (iv) non-cash gains or non-cash items (v) any cash expense made during such period which represents the reversal of any non-cash expense that was added in a prior period pursuant to clause (b)(iii) above subsequent to the fiscal quarter in which the relevant non-cash expenses, charges or losses were incurred; and (vi) cash rental and other cash payments made for such period pursuant to the Tucker Lease. For purposes of this Agreement, Consolidated EBITDA shall exclude any non-cash impact attributable to the reduction in deferred revenue or reduction in deferred costs to balance sheet accounts as a result of the fair value exercise undertaken as required by purchase method of accounting for the transactions contemplated by any acquisition, in accordance with GAAP. “Consolidated Interest Expense” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for Parent and its Subsidiaries in accordance with GAAP, interest expense (including (i) any amortization of any debt issuance cost and/or deferred financing
- 18 - 7446933.5 fees, (ii) any interest expense attributable to Capital Leases and (iii) all net payment obligations pursuant to Hedge Agreements) for such period. “Consolidated Net Income” means, for any period, the net income (or loss) of Parent and its Subsidiaries for such period, determined on a consolidated basis, without duplication, in accordance with GAAP and adjusted to eliminate any non-cash impact attributable to the reduction in deferred revenue or reduction in deferred costs to balance sheet accounts as a result of the fair value exercise undertaken as required by purchase method of accounting for the transactions contemplated by any Acquisition, in accordance with GAAP; provided, that, in calculating Consolidated Net Income of Parent and its Subsidiaries for any period, there shall be excluded: (a) the income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below) in which Parent or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid in cash to Parent or any of its Subsidiaries by dividend or other distribution during such period, (b) the income (or loss) any Person accrued prior to the date it becomes a Subsidiary of Parent or any of its Subsidiaries or is merged into or consolidated with Parent or any of its Subsidiaries or that Person’s assets are acquired by Parent or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a), (c) the net income (if positive), of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to Parent or any of its Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any Taxes payable on such dividends or distributions, but in each case only to the extent of such prohibition or Taxes, (d) the net income (or loss) of any Non-Wholly-Owned Subsidiary to the extent such net income (or loss) is attributable to the minority interest in such Subsidiary, (e) any gain or loss from Dispositions of Property during such period, (f) any gain or loss attributable to the early extinguishment of Indebtedness (and the termination of any associated Hedge Agreement) and any cancellation of indebtedness income resulting from any purchase of any Term Loans by the Borrower under the Term Loan Credit Agreement, (g) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights (including equity compensation to employees (including pursuant to pension plans)) and non-cash charges associated with the roll-over, acceleration or payout of Equity Interests by management of Administrative Borrower, Parent or any direct or indirect parent thereof in connection with the Fifth Amendment Transactions or other Permitted Acquisitions, (h) (i) any realized or unrealized gain and/or loss in respect of (A) any obligation under any Hedge Agreement as determined in accordance with GAAP and/or (B) any other derivative instrument pursuant to, in the case of this clause (B), Financial Accounting Standards Board’s Accounting Standards Codification No. 815-Derivatives and Hedging and/or (ii) any realized or unrealized foreign currency exchange gain or loss (including any currency re-measurement of Indebtedness, any net gain or loss resulting from Hedge Agreements for currency exchange risk resulting from any intercompany Indebtedness, any foreign currency translation or transaction or any other currency-related risk; provided,
- 19 - 7446933.5 that notwithstanding anything to the contrary herein, any realized gain or loss in respect of any Designated Operational FX Hedge shall be included in the calculation of Consolidated Net Income; (i) (i) the effects of adjustments resulting from the application of purchase accounting, recapitalization accounting and/or acquisition method accounting, as applicable, in relation to the Fifth Amendment Transactions or any consummated acquisition or other similar investment or the amortization or write-off of any amount thereof, net of Taxes and (ii) the cumulative effect of changes in accounting principles or policies made in such period in accordance with GAAP which affect Consolidated Net Income; and (j) the amount of any contingent payments related to any Acquisition or Investment permitted hereunder that are treated as compensation expense in accordance with GAAP. “Control Agreement” means (a) in the case of a US Loan Party, a control agreement, in form and substance reasonably satisfactory to Co-Collateral Agents, executed and delivered by a Borrower or one of its Subsidiaries, Administrative Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account) and (b) in the case of an Australian Loan Party, an agreement in form and substance reasonably satisfactory to the Australian Security Trustee, establishing “control” (for purpose of Part 9.5 of the Australian PPSA) of such account by the Australian Security Trustee or other equivalent control arrangement acceptable to Australian Security Trustee satisfying the requirements set forth in Section 5.17. “Controller” has the meaning given to it in section 9 of the Australian Corporations Act. “Copyright Security Agreement” has the meaning specified therefor in the Guaranty and Security Agreement. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Covered Party” has the meaning specified therefor in Section 17.18 of this Agreement. “Credit Card Accounts” means all present and future rights of a Borrower to payment from any Credit Card Issuer or Credit Card Processor, including all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise. “Credit Card Acknowledgments” means the agreements by parties to the Credit Card Agreements in favor of the Administrative Agent (or the Australian Security Trustee, as applicable) acknowledging the Administrative Agent’s first priority lien on and security interest in the monies due and
- 20 - 7446933.5 to become due to the Loan Parties under the Credit Card Agreements of such Loan Parties, and agreeing to transfer all such amounts to a Cash Management Account. “Credit Card Agreements” means all agreements (other than Credit Card Acknowledgments) now or hereafter entered into by a Borrower or for the benefit of a Borrower, in each case with any Credit Card Issuer or any Credit Card Processor with respect to sales transactions involving credit card or debit card purchases, including, but not limited to, the agreements set forth on Schedule 4.25 hereto. “Credit Card Issuer” means any person (other than a Loan Party) who issues or whose members issue credit cards and other non-bank credit or debit cards, including credit or debit cards. “Credit Card Processor” means any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to a Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer. “Daily Simple SOFR Loan” means each portion of the Revolving Loans that bears interest at a rate determined by reference to Adjusted Daily Simple SOFR. “Debtor Relief Law” means the Bankruptcy Code, the Australian Corporations Act and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief law of the United States, Australia or other applicable jurisdiction from time to time in effect. “Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default. “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “Defaulting Lender” means any Lender that (a) has failed to fund any amounts required to be funded by it under the Agreement within one (1) Business Day of the date that it is required to do so under the Agreement (including the failure to make available to Administrative Agent amounts required pursuant to a Settlement or to make a required payment in connection with a Letter of Credit Disbursement), (b) notified Borrowers, Administrative Agent, or any Lender in writing that it does not intend to comply with all or any portion of its funding obligations under the Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under the Agreement or under other agreements generally (as reasonably determined by Administrative Agent) under which it has committed to extend credit, (d) failed, within two (2) Business Day after written request by Administrative Agent or a Borrower, to confirm that it will comply with the terms of the Agreement relating to its obligations to fund any amounts required to be funded by it under the Agreement, (e) otherwise failed to pay over to Administrative Agent or any other Lender any other amount required to be paid by it under the Agreement within one (1) Business Day of the date that it is required to do so under the Agreement, or (f) (i) becomes or is insolvent or has a parent company that has become or is insolvent, (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian or appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (iii) becomes the subject of a Bail-in Action.
- 21 - 7446933.5 “Defaulting Lender Rate” means (a) for the first three days from and after the date the relevant payment is due, Adjusted Daily Simple SOFR, and (b) thereafter, the interest rate then applicable to Revolving Loans that are SOFR Loans (inclusive of the Applicable Margin applicable thereto). “Deposit Account” means any deposit account (as that term is defined in the Code) and any deposit account which has the meaning given to the term “ADI account” in the Australian PPSA. “Designated Account” means the Deposit Account of Administrative Borrower identified on Schedule D-1 to the Agreement (or such other Deposit Account of Administrative Borrower located at Designated Account Bank that has been designated as such, in writing, by Borrowers to Administrative Agent). “Designated Account Bank” has the meaning specified therefor in Schedule D-1 to the Agreement (or such other bank that is located within the United States that has been designated as such, in writing, by Borrowers to Administrative Agent). “Designated Non-Cash Consideration” means the fair market value (as determined by Administrative Borrower in good faith) of non-cash consideration received by the Parent or any Subsidiary in connection with any Disposition pursuant to clause (d) of the definition of “Permitted Disposition” that is designated as Designated Non-Cash Consideration pursuant to a certificate of an authorized officer of Administrative Borrower, setting forth the basis of such valuation (which amount will be reduced by the amount of cash or Cash Equivalents received in connection with a subsequent sale or conversion of such Designated Non-Cash Consideration to cash or Cash Equivalents). “Designated Operational FX Hedge” means any Hedge Agreement entered into for the purpose of hedging currency-related risks in respect of the revenues, cash flows or other balance sheet items of Administrative Borrower or any of its Subsidiaries and irrevocably designated at the time entered into (or on or prior to the Fifth Amendment Effective Date, with respect to any Hedge Agreement entered into on or prior to the Fifth Amendment Effective Date) as a Designated Operational FX Hedge by Administrative Borrower in a writing to the Administrative Agent promptly after such Hedge Agreement is entered into. “Dilution” means, as of any date of determination and with respect to any period selected by Administrative Agent, a percentage that is the result of dividing the Dollar amount of (a) bad debt write- downs, discounts, advertising allowances, credits, or other dilutive items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’ billings with respect to Accounts during such period. “Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by one (1) percentage point for each percentage point by which Dilution is in excess of five percent (5%). “Disclosure Statement” means the Disclosure Statement for the Reorganization Plan filed in the Chapter 11 Cases at Docket No. 19, the adequacy of which was approved by the bankruptcy court pursuant to the Confirmation Order. “Discretionary Guarantor” has the meaning assigned thereto in the definition of “Guarantor”. “Disposed EBITDA” means, with respect to any Person or business that is sold or disposed of in a Disposition during any period, the amount for such period of Consolidated EBITDA of any such
- 22 - 7446933.5 Person or business subject to such Disposition (determined using such definitions as if references to Parent and its Subsidiaries therein were to such Person or business), as calculated by the Borrower in good faith. “Disposition” means the sale, transfer, license, lease or other disposition of any property (including any sale and leaseback transaction or division), whether in a single transaction or a series of related transactions, by any Loan Party or any Subsidiary thereof, and any issuance of Equity Interests by any Subsidiary of Parent to any Person that is not a Loan Party or any Subsidiary thereof. For the avoidance of doubt, the write-off of any assets subject to the Tucker Lease shall not be deemed to constitute a Disposition. “Disqualified Equity Interests” shall mean any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 180 days after the Maturity Date. “Drawing Document” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Eligible Accounts” means Eligible Billed Accounts, Eligible Installment Accounts, Eligible Credit Card Accounts, Eligible Alpha Accounts and Eligible Telstra Accounts. “Eligible Alpha Accounts” means Accounts due from AT&T or any of its Affiliates (other than any Loan Party or its Subsidiaries) which (a) otherwise meet the criteria in subclauses (c), (h), (l) and (m) of the definition of Eligible Billed Accounts, (b) arise from the sale of such Eligible Billed Accounts by any Loan Party to AT&T or any of its Affiliates (other than any Loan Party or its Subsidiaries) pursuant to the terms of the Billing and Collection Agreement and (c) are net of any amounts owed by any Loan Party to AT&T or any of its Affiliates pursuant to the terms of the Billing and Collection Agreement. “Eligible Billed Accounts” means those Accounts (other than Credit Card Accounts, Alpha Accounts or Telstra Accounts) created by a Borrower in the ordinary course of its business, that arise out
- 23 - 7446933.5 of such Borrower’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible for failing to satisfy one or more of the criteria set forth below. In determining the amount to be included, Eligible Billed Accounts shall be calculated net of customer deposits, unapplied cash, taxes, discounts, credits, allowances, and rebates. In general, the Co-Collateral Agents on behalf of Lenders will not deem an Account to be an Eligible Billed Account unless it satisfies the following criteria: (a) delivery of the merchandise or the rendition of the services has been completed with respect to such Account; (b) no dispute has occurred with respect to such Account, the Account Debtor has not asserted any setoff, defense or counterclaim with respect to such Account, and there has not occurred any extension of the time for payment with respect to such Account without the consent of Co-Collateral Agents in their Permitted Discretion; provided that, (x) in the case of any dispute, setoff, defense or counterclaim with respect to an Account, the portion of such Account not subject to such dispute, setoff, defense or counterclaim will not be ineligible solely by reason of this clause (b) and (y) with respect to the extension of time, the consent of Co-Collateral Agents shall not be required to the extent such extension of time does not exceed the period permitted under clause (e) of this definition; (c) such Account is lawfully owned by a Loan Party free and clear of any Lien other than (i) Liens in favor of Administrative Agent (or the Australian Security Trustee, as applicable) for the benefit of the Secured Parties, (ii) Liens securing obligations under the Term Loan Documents and which are subject to the Intercreditor Agreement and (iii) Liens described in clause (c) of the definition of Permitted Liens and otherwise continues to be in conformity in all material respects with all representations and warranties made by a Loan Party to Administrative Agent and the Secured Parties with respect thereto in the Loan Documents; (d) such Account is unconditionally payable in US Dollars (or, solely in the case of Australian Bill Rate Loans, Australian Dollars) within 90 days from the invoice date (or, in the case of Accounts owing by Account Debtors who are designated as “national advertisers” placing ads in print directories, 105 days from the invoice date) and is not evidenced by a promissory note, chattel paper or any other instrument or other document; (e) no more than 90 days have elapsed from the invoice date (or, in the case of Accounts owing by Account Debtors who are designated as “national advertisers” placing ads in print directories, 105 days from the invoice date) and no more than 60 days have elapsed from the due date with respect to such Account; (f) such Account is not due from an Affiliate of a Loan Party; (g) such Account does not constitute an obligation of the United States, Australia or any other Governmental Authority (unless all steps required by Co-Collateral Agents in their Permitted Discretion in connection therewith, including notice to the United States Government under the Federal Assignment of Claims Act or any action under any state statute comparable to the Federal Assignment of Claims Act or issuing a notice of assignment in respect of the Account to the applicable Australian Governmental Authority, have been duly taken in a manner satisfactory to Co-Collateral Agents in their Permitted Discretion for such Accounts in the aggregate exceeding $5,000,000); (h) the Account Debtor (or the applicable office of the Account Debtor) with respect to such Account is (i) in the case of Accounts of US Borrowers, located in the United States, Puerto Rico or Canada, or (ii) in the case of Accounts of Australian Borrowers, located in Australia, unless, in each
- 24 - 7446933.5 case, such Account is supported by a letter of credit or other similar obligation satisfactory to Co-Collateral Agents in their Permitted Discretion; (i) the Account Debtor with respect to such Account is not also a supplier to or creditor of a Loan Party, unless such Account Debtor has executed a no-offset letter satisfactory to Co- Collateral Agents in their Permitted Discretion; (j) not more than 50% of the aggregate amount of all Accounts of the Account Debtor with respect to such Account have remained unpaid 90 days past the invoice date (or, in the case of Accounts owing by Account Debtors who are designated as “national advertisers” placing ads in print directories, 105 days from the invoice date); (k) the invoice amount of such Eligible Billed Account, together with the sum of all Eligible Billed Accounts and Eligible Installment Accounts outstanding from the same Account Debtor and its Affiliates do not exceed 10% of the sum of the invoice amount of all Eligible Billed Accounts plus the sum of all Eligible Installment Accounts; (l) the Account Debtor with respect to such Account (i) has not filed a petition for bankruptcy or any other relief under any Debtor Relief Law, (ii) has not failed, suspended business operations, become insolvent or called a meeting of its creditors for the purpose of obtaining any financial concession or accommodation, (iii) has not had or suffered to be appointed a receiver or a trustee for all or a significant portion of its assets or affairs or (iv) in the case of an Account Debtor who is an individual, is not an employee of a Loan Party or any of its Affiliates and has not died or been declared incompetent; (m) the Account Debtor with respect to such Account is not an entity subject to an OFAC Sanctions Program; (n) such Account does not represent a progress payment that is due prior to the completion of performance by the Loan Party under the subject contract for goods and services; (o) such Account is not due from an Account Debtor with respect to which a Loan Party has accelerated the due date of any billed or un-billed Accounts with respect to such Account Debtor and such acceleration is due to a credit issue with respect to such Account Debtor; (p) if such Accounts were acquired, or were owned by a Person acquired, in connection with a Permitted Acquisition (including, but not limited to, the Sunshine Acquisition), Co- Collateral Agents have completed an appraisal and field examination with respect to such Accounts, in each case, reasonably satisfactory to Co-Collateral Agents (which appraisal and field examination may be conducted prior to the closing of such Permitted Acquisition); and (q) such Account is not otherwise unacceptable to Co-Collateral Agents, in the exercise of their Permitted Discretion. “Eligible Credit Card Accounts” means those Credit Card Accounts of a Borrower that arise in the ordinary course of its business out of such Borrower’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible as a result of one or more of the criteria set forth below. In determining the amount to be included, Eligible Credit Card Accounts shall be calculated net of fees. In general, the Co-Collateral Agents on behalf of Lenders will not deem an Account to be an Eligible Credit Card Account if:
- 25 - 7446933.5 (a) it has been outstanding for more than five (5) Business Days from the date of sale or such longer period as may be approved by the Administrative Agent in its Permitted Discretion; (b) a Borrower does not have valid title thereto, free and clear of any Lien (other than (i) Liens in favor of the Administrative Agent (or the Australian Security Trustee, as applicable) for the benefit of Lenders, (ii) Liens securing obligations under the Term Loan Documents and which are subject to the Intercreditor Agreement, (iii) Liens described in clause (c) of the definition of Permitted Liens and otherwise continues to be in conformity in all material respects with all representations and warranties made by a Loan Party to Administrative Agent and the Secured Parties with respect thereto in the Loan Documents and (iv) the offset or chargeback rights of such Credit Card Processors (which shall be governed by clause (d) below)); (c) it is not subject to a first priority perfected security interest in favor of Administrative Agent (or the Australian Security Trustee, as applicable) on behalf of itself and the Lenders; (d) it is disputed or it is with recourse due to the creditworthiness of the cardholder, or with respect to which a claim, counterclaim, offset or chargeback has been asserted by the related Credit Card Processor (but such Credit Card Account is only ineligible to the extent of such dispute, counterclaim, offset or chargeback); (e) except as otherwise approved by the Co-Collateral Agents in writing, it is due from a major Credit Card Processor as to which the Administrative Agent has not received an acceptable (determined in its Permitted Discretion) Credit Card Acknowledgment; (f) the Credit Card Processor with respect to such Credit Card Account (A) has filed a petition for bankruptcy or any other relief under any Debtor Relief Law, (B) has failed, suspended business operations, become insolvent or called a meeting of its creditors for the purpose of obtaining any financial concession or accommodation, or (C) has had or suffered to be appointed a receiver or a trustee for all or a significant portion of its assets or affairs; (g) it is due from a Credit Card Processor which is not located in the United States of America or Australia, as applicable; (h) it is not denominated in US Dollars (or, solely in the case of the Australian Borrowers, Australian dollars); (i) it does not constitute an “account” or a “payment intangible” (as such terms are defined in the UCC); (j) it is owed by, or arose from a transaction with, a Person subject to an OFAC Sanctions Program; or (k) such Credit Card Account is otherwise unacceptable to Co-Collateral Agents, in the exercise of their Permitted Discretion. “Eligible Installment Accounts” means Accounts (other than Billed Accounts, Alpha Accounts, Telstra Accounts or Credit Card Accounts) which otherwise meet the criteria set forth in the definition of Eligible Billed Accounts (other than as set forth in clauses (e) and (j)), but for the fact that an invoice has not been rendered to the Account Debtor; provided that no Eligible Installment Account may remain unbilled longer than thirteen (13) months; provided further that if (i) at any time 25% or more of the aggregate billed Accounts owing by an Account Debtor do not meet any of the criteria set forth in the
- 26 - 7446933.5 definition of Eligible Billed Accounts, or (ii) at any time 25% or more of the aggregate Eligible Billed Accounts owing by an Account Debtor are more than thirty (30) days past due then, in either case, none of such Account Debtor’s unbilled Accounts will be deemed Eligible Installment Accounts hereunder. “Eligible Telstra Accounts” means Telstra Accounts which (a) otherwise meet the criteria in subclauses (c), (h), (l) and (m) of the definition of Eligible Billed Accounts, (b) arise from the sale of such Eligible Billed Accounts by any Australian Borrower to Telstra or any of its Affiliates (other than any Loan Party or its Subsidiaries) and (c) are net of any amounts owed by any Loan Party to Telstra or any of its Affiliates. “Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any Affiliate of any Lender and any Related Fund of any Lender; and (b) (i) a commercial bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (A) (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country, and (B) such bank has total assets in excess of $1,000,000,000; and (c) during the continuation of an Event of Default, any other Person approved by Administrative Agent. “Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is sponsored, maintained or contributed to by any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA Affiliate has any liability, contingent or otherwise. “Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of any Borrower, any of its Subsidiaries of any Borrower, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Borrower, any of its Subsidiaries of any Borrower, or any of their predecessors in interest. “Environmental Law” means any applicable federal, state or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Loan Party or its Subsidiaries, relating to the environment, the effect of the environment on employee health or exposure to Hazardous Materials. “Environmental Liabilities” means all liabilities, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines and penalties incurred as a result of any claim or demand, or remedial action required, by any Governmental Authority. “Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities. “Equipment” means equipment (as that term is defined in the Code).
- 27 - 7446933.5 “Equity Interest” means, with respect to a Person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto. “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) of the Code. “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Sections 412 and 430 of the Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure by any Loan Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan; (d) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Plan; (e) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA; (f) the receipt by any Loan Party or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (g) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (h) the receipt by any Loan Party or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA. “Erroneous Payment” has the meaning specified therefor in Section 17.19 of this Agreement. “Erroneous Payment Deficiency Assignment” has the meaning specified therefor in Section 17.19 of this Agreement. “Erroneous Payment Impacted Loans” has the meaning specified therefor in Section 17.19 of this Agreement. “Erroneous Payment Return Deficiency” has the meaning specified therefor in Section 17.19 of this Agreement. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time. “Event of Default” has the meaning specified therefor in Section 8 of the Agreement.
- 28 - 7446933.5 “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time. “Exchange Rate” means on any date, as determined by Administrative Agent, the spot selling rate posted by Reuters on its website for the sale of the applicable currency for US Dollars at approximately 11:00 a.m. on such date; provided, that, if, for any reason, no such spot rate is being quoted, the spot selling rate shall be determined by reference to such publicly available service for displaying exchange rates as may be reasonably selected by Administrative Agent, or, in the event no such service is available, such spot selling rate shall instead be the rate reasonably determined by Administrative Agent as the spot rate of exchange in the market where its foreign currency exchange operations in respect of the applicable currency are then being conducted, at or about 11:00 a.m. on the applicable date for the purchase of the relevant currency for delivery two (2) Business Days later. “Excluded Subsidiary” means (a) each CFC, (b) each Subsidiary that is a direct or indirect Subsidiary of a CFC, (c) each CFC Holdco, (d) any Subsidiary that (i) is prohibited by applicable law or by any contractual obligation existing on the Fifth Amendment Effective Date or existing at the time of acquisition of such Subsidiary after the Fifth Amendment Effective Date or such Person becoming a Subsidiary (and not incurred in contemplation of such acquisition or such Person becoming a Subsidiary), in each case, from guaranteeing the Obligations, but only so long as such prohibition exists or (ii) is subject to a requirement to obtain governmental (including regulatory) or third party (other than an Affiliate) consent, approval, license or authorization (including any regulatory consent, approval, license or authorization) to provide a Guarantee of the Obligations (in each case, to the extent such requirement exists on the Fifth Amendment Effective Date or exists at the time of acquisition of such Subsidiary after the Fifth Amendment Effective Date or such Person becoming a Subsidiary (and not incurred in contemplation of such acquisition or such Person becoming a Subsidiary) that has not been obtained or received, but only for so long as such requirement or any replacement or renewal thereof is in effect and such consent, approval, license or authorization has not been obtained or received (it being understood and agreed that none of Parent, any Borrower and/or any of their respective Subsidiaries shall have any obligation to obtain (or seek to obtain) any such consent, approval, license or authorization), (e) any Foreign Subsidiary (other than any Australian Subsidiary), (f) any not-for-profit Subsidiary, (g) any captive insurance Subsidiary, (h) each Immaterial Subsidiary, (i) any special purpose entity engaging in receivables financing transactions permitted under this Agreement, (j) any bona fide joint ventures with non-affiliated third parties, (k) any Subsidiary with respect to which Administrative Agent and Administrative Borrower mutually agree that the provision of a Guarantee of the Obligations would reasonably be likely to result in material and adverse tax consequences to Parent or any of its Subsidiaries and (l) any other Subsidiary with respect to which Administrative Agent and Administrative Borrower mutually agree that the cost of providing a Guarantee of the Obligations would be excessive in relation to the benefit to be afforded thereby. Notwithstanding the foregoing, in no event shall any Subsidiary that is an obligor or guarantor of (i) the Term Loan or any other Material Indebtedness, in any such case be an Excluded Subsidiary (other than a CFC that is a borrower thereunder to the extent (A) the Guarantee of the Obligations would result in material adverse tax consequences to Parent and its Subsidiaries or (B) clause (l) above applies). “Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the obligation of such Loan Party in respect of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Loan Party becomes effective with respect to such related Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.
- 29 - 7446933.5 “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, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes and Australian withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by Borrowers under Section 14.2) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 16.1, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 16.2, (d) any U.S. federal withholding Taxes imposed under FATCA and (e) any amounts paid or deducted from a payment to a Recipient in compliance with a notice or direction under section 260-5 Schedule 1 to the Taxation Administration Act 1953 (Cth) of Australia, section 255 of the Australian Tax Act or any analogous provisions. “Existing Letters of Credit” means those letters of credit described on Schedule E-1 to the Agreement. “Extraordinary Advances” has the meaning specified therefor in Section 2.3(d)(iii) of the Agreement. “FATCA” means Sections 1471 through 1474 of the IRC, as of the date of the Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the IRC, and any applicable intergovernmental agreement with respect thereto and applicable official implementing guidance thereunder. “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero). “Fee Letter” means that certain fee letter, dated as of the Closing Date, even date with the Agreement, among the US Borrowers and Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent. “Fifth Amendment” means the Fifth Amendment to Amended and Restated Credit Agreement, First Amendment to Guaranty and Security Agreement and Joinder, dated as of the Fifth Amendment Effective Date, by and among the Borrowers, Parent, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent. “Fifth Amendment Effective Date” means March 1, 2021. “Fifth Amendment Transactions” means, collectively, (a) the repayment in full of all Indebtedness outstanding under the Existing Credit Agreement (under and as defined in the Term Loan
- 30 - 7446933.5 Credit Agreement), (b) the entry into the Term Loan Credit Agreement and the making of the Term Loan on the Term Loan Closing Date, (c) the closing of the Sunshine Acquisition, (d) the closing of the Fifth Amendment, (e) the repayment on the Fifth Amendment Effective Date of certain Indebtedness hereunder and (f) the payment of the Specified Charges incurred in connection with the foregoing. “Financial Officer” means the chief financial officer, principal accounting officer, vice president of finance, treasurer or controller of Parent. “Fixed Charge Coverage Ratio” means, with respect to any fiscal period and with respect to Parent determined on a consolidated basis in accordance with GAAP, the ratio of (a) Consolidated EBITDA for such period minus Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, to (b) Fixed Charges for such period. “Fixed Charges” means, with respect to any fiscal period and with respect to Parent determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) consolidated interest expense accrued (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (b) scheduled principal payments in respect of Indebtedness paid during such period, and (c) all federal, state, and local income taxes accrued during such period, (d) all management, consulting, monitoring, and advisory fees paid to Jason Mudrick or his Affiliates during such period, and (e) all Restricted Payments paid (whether in cash or other property, other than common Equity Interest) during such period. “Flood Laws” means the National Flood Insurance Act of 1968, Flood Disaster Protection Act of 1973, and related laws, rules and regulations, including any amendments or successor provisions. “Foreign Lender” means any Lender or Participant that is not a United States person within the meaning of IRC section 7701(a)(30). “Foreign Subsidiary” means any Subsidiary that is not a US Subsidiary. “Funding Date” means the date on which a Borrowing occurs. “Funding Losses” has the meaning specified therefor in Section 2.12(a) of this Agreement. “GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied. “Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person. “Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supra-national bodies such as the European Union or the European Central Bank). “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
- 31 - 7446933.5 funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “Guarantors” means, collectively, (a) US Guarantors, (b) Australian Guarantors, (c) each US Subsidiary or Australian Subsidiary of each Borrower that becomes a guarantor pursuant to Section 5.11 and (d) upon (i) Administrative Borrower’s request, (ii) at its sole discretion, the prior written consent of Administrative Agent, (iii) the receipt by the Lenders, the Issuing Bank and the Administrative Agent (or Australian Security Trustee, as applicable) of such documentation and other information requested by the Lenders, the Issuing Bank or the Administrative Agent (or Australian Security Trustee, as applicable) for purposes of complying with all necessary “know your customer” or other similar checks under applicable law, which documentation and information is satisfactory to the Lenders, the Issuing Bank and the Administrative Agent (or Australian Security Trustee, as applicable) and (iv) the satisfaction of the applicable conditions set forth in Section 5.11 and the Collateral and Guarantee Requirement, any Foreign Subsidiary (other than any Australian Subsidiary) that is not otherwise required to be a Guarantor to provide a Guarantee of the Obligations that becomes a guarantor pursuant to Section 5.11 (a “Discretionary Guarantor”); provided, that upon such an election pursuant to this clause (d) (and for so long as such election remains in effect) such Subsidiary shall no longer be deemed to be an Excluded Subsidiary. “Guaranty and Security Agreement” means a guaranty and security agreement, dated as of the Closing Date and amended on the Fifth Amendment Effective Date, executed and delivered by each US Loan Party and each of the US Guarantors to Administrative Agent. “Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources and (c) any flammable substances or explosives or any radioactive materials “Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code. “Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of each Borrower and their Subsidiaries arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the Hedge Providers. “Hedge Provider” means any Lender or any of its Affiliates; provided, that no such Person (other than Wells Fargo or its Affiliates) shall constitute a Hedge Provider unless and until Administrative Agent receives a Bank Product Provider Agreement from such Person and with respect to the applicable Hedge Agreement within 10 days after the execution and delivery of such Hedge Agreement with a Borrower or its Subsidiaries; provided further, that if, at any time, a Lender ceases to be a Lender under the Agreement, then, from and after the date on which it ceases to be a Lender thereunder, neither it nor any of
- 32 - 7446933.5 its Affiliates shall constitute Hedge Providers and the obligations with respect to Hedge Agreements entered into with such former Lender or any of its Affiliates shall no longer constitute Hedge Obligations. “Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary. “Indebtedness” as to any Person means (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial products, (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices and, for the avoidance of doubt, other than royalty payments payable in the ordinary course of business in respect of non-exclusive licenses), (f) all monetary obligations of such Person owing under Hedge Agreements (which amount shall be calculated based on the amount that would be payable by such Person if the Hedge Agreement were terminated on the date of determination), (g) any Disqualified Equity Interests of such Person, and (h) any Guarantee of such Person of Indebtedness of others. For purposes of this definition, (i) the amount of any Indebtedness represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an identified asset shall be valued at the lesser of (A) if applicable, the limited amount of such obligations, and (B) if applicable, the fair market value of such assets securing such obligation. Notwithstanding anything to the contrary, in no event shall the obligations (including rental payments) under the Tucker Lease be deemed to be Indebtedness. “Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of the Agreement. “Indemnified Person” has the meaning specified therefor in Section 10.3 of the Agreement. “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 Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes. “Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other Debtor Relief Law. “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, Marks, Mark licenses, technology, know-how and processes, 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. “Intercompany Subordination Agreement” means an intercompany subordination agreement, dated as of the Closing Date, executed and delivered by each Loan Party and each of their Subsidiaries, and Administrative Agent, the form and substance of which is reasonably satisfactory to Administrative Agent. “Intercreditor Agreement” means the Intercreditor Agreement, dated as of the Fifth Amendment Effective Date (as amended, restated, amended and restated, supplemented or otherwise
- 33 - 7446933.5 modified from time to time) between the Administrative Agent and the Term Loan Agent, and acknowledged by Borrowers and Guarantors. “Inventory” means inventory (as that term is defined in the Code). “Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide accounts receivable arising in the ordinary course of business), or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. For purposes of determining the amount of any Investment outstanding for purposes of Section 6.9, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired (without adjustment for subsequent increases or decreases in the value of such Investment), but after giving effect to any repayments in cash of principal and/or payments in cash of interest in the case of any Investment in the form of a loan and any amount realized in respect of such Investment in the form of an equity Investment upon the sale, collection or return of capital (whether as a distribution, dividend, redemption or sale, but not to exceed the original amount invested). “IRC” means the Internal Revenue Code of 1986, as in effect from time to time. “ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto. “ISP” means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any subsequent revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issued. “Issuer Document” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit. “Issuing Bank” means Wells Fargo, PNC Bank, National Association with respect to the Existing Letters of Credit, or any other Lender that, at the request of Borrowers and with the consent of Administrative Agent, agrees, in such Lender’s sole discretion, to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section 2.11 of the Agreement, and Issuing Bank shall be a Lender. “Joint Book Runners” has the meaning set forth in the preamble to the Agreement. “Joint Lead Arrangers” has the meaning set forth in the preamble to the Agreement. “Junior Indebtedness” means, with respect to Parent, the Borrower and its Subsidiaries, any (a) Subordinated Indebtedness and (b) Indebtedness secured by Liens that are junior to the Liens securing the Obligations. “Landlord Reserve” means, as to each location at which a Borrower has books and records located and as to which a Collateral Access Agreement has not been received by Administrative Agent, a reserve in an amount equal to the greater of (a) the number of months’ rent for which the landlord will have,
- 34 - 7446933.5 under applicable law, a Lien on any Collateral to secure the payment of rent or other amounts under the lease relative to such location, or (b) 3 months’ rent under the lease relative to such location. “Lender” has the meaning set forth in the preamble to the Agreement, shall include Issuing Bank and the Swing Lender, and shall also include any other Person made a party to the Agreement pursuant to the provisions of Section 13.1 of the Agreement and “Lenders” means each of the Lenders or any one or more of them. “Lender Group” means each of the Lenders (including Issuing Bank and the Swing Lender), Australian Security Trustee, Administrative Agent and the Co-Collateral Agents, or any one or more of them. “Lender Group Expenses” means all (a) costs or expenses (including taxes and insurance premiums) required to be paid by any Loan Party or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by any Secured Party, (b) documented out-of-pocket fees or charges paid or incurred by Administrative Agent, Australian Security Trustee and Co-Collateral Agents in connection with the Lender Group’s transactions with each Loan Party and its Subsidiaries under any of the Loan Documents, including, photocopying, notarization, couriers and messengers, telecommunication, public record searches, filing fees, recording fees, publication, real estate surveys, real estate title policies and endorsements, and environmental audits, (c) Administrative Agent’s and Co-Collateral Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Loan Party or its Subsidiaries, (d) Administrative Agent's customary fees and charges (as adjusted from time to time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise), together with any out-of-pocket costs and expenses incurred in connection therewith, (e) customary charges imposed or incurred by Administrative Agent resulting from the dishonor of checks payable by or to any other Loan Party, (f) reasonable documented out-of-pocket costs and expenses paid or incurred by the Secured Parties to correct any default or enforce any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (g) field examination, appraisal, and valuation fees and expenses of Administrative Agent and Co-Collateral Agents related to any field examinations, appraisals, or valuation to the extent of the fees and charges (and up to the amount of any limitation) provided in Section 2.10 of the Agreement, (h) reasonable costs and expenses (including reasonable documented attorneys’ fees and expenses) of Administrative Agent, Australian Security Trustee and Co-Collateral Agents relative to third party claims or any other lawsuit or adverse proceeding paid or incurred, whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions contemplated by the Loan Documents, Agent’s Liens (or the Liens of Australian Security Trustee) in and to the Collateral, or the Secured Parties’ relationship with any Loan Party or any of their Subsidiaries, (i) reasonable documented costs and expenses (including reasonable documented attorneys’ fees and due diligence expenses) incurred by Administrative Agent and Co- Collateral Agents in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging), syndicating (including, CUSIP, DXSyndicate™, SyndTrak or other communication costs incurred in connection with a syndication of the loan facilities), or amending, waiving, or modifying the Loan Documents, and (j) Administrative Agent’s, Co-Collateral Agents’ and each Lender’s reasonable documented costs and expenses (including reasonable documented attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Loan Party or any of their Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether a lawsuit or other adverse proceeding is brought, or in taking any enforcement action or any remedial action with respect to the Collateral (provided that the fees and expenses of counsel that shall
- 35 - 7446933.5 constitute Lender Group Expenses shall in any event be limited to one primary counsel, one local counsel in each reasonably necessary jurisdiction (including, without limitation, Australian counsel), one specialty counsel in each reasonably necessary specialty area, and one or more additional counsel if one or more conflicts of interest arise). “Lender Group Representatives” has the meaning specified therefor in Section 17.9 of the Agreement. “Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents. “Letter of Credit” means a letter of credit (as that term is defined in the Code) issued by Issuing Bank. “Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Administrative Agent, including provisions that specify that the Letter of Credit Fees and all commissions, fees, charges and expenses provided for in Section 2.11(k) of the Agreement (including any fronting fees) will continue to accrue while the Letters of Credit are outstanding) to be held by Administrative Agent for the benefit of the Revolving Lenders in an amount equal to 105% of the then existing Letter of Credit Usage, (b) delivering to Administrative Agent documentation executed by all beneficiaries under the Letters of Credit, in form and substance reasonably satisfactory to Administrative Agent and Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of Credit, or (c) providing Administrative Agent with a standby letter of credit, in form and substance reasonably satisfactory to Administrative Agent, from a commercial bank acceptable to Administrative Agent (in its sole discretion) in an amount equal to 105% of the then existing Letter of Credit Usage (it being understood that the Letter of Credit Fee and all fronting fees set forth in the Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit). “Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a Letter of Credit. “Letter of Credit Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Letter of Credit Usage on such date. “Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of the Agreement. “Letter of Credit Indemnified Costs” has the meaning specified therefor in Section 2.11(f) of the Agreement. “Letter of Credit Related Person” has the meaning specified therefor in Section 2.11(f) of the Agreement. “Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit. “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest (including, without limitation, any “security interest” as defined in sections 12(1) and 12(2) of the Australian PPSA), or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature
- 36 - 7446933.5 whatsoever, including any interest of a vendor or lessor under any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing. “Liquidity” means the sum of (a) the amount of unrestricted cash and Cash Equivalents of Borrowers that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and, solely with respect to any Deposit Account or Securities Account of a US Loan Party, which Deposit Account or Securities Account is the subject of a Control Agreement and is maintained by a branch office of a bank or securities intermediary located within the United States, plus (b) Total Availability. “Loan” shall mean any Revolving Loan, Swing Loan or Extraordinary Advance made (or to be made) hereunder. “Loan Accounts” means the US Loan Account and the Australian Loan Account, individually or collectively, as the context requires. “Loan Documents” means the Agreement, the Control Agreements, the Copyright Security Agreement, any Borrowing Base Certificate, the Fee Letter, the Guaranty and Security Agreement, the Intercompany Subordination Agreement, any Issuer Documents, the Letters of Credit, the Patent Security Agreement, the Trademark Security Agreement, any Credit Card Acknowledgment, any Australian Security Documents, the Australian Security Trust Deed, any note or notes executed by Borrowers in connection with the Agreement and payable to any member of the Lender Group, and any other instrument or agreement entered into, now or in the future, by Parent, any Borrower or any of its Subsidiaries and any Secured Party in connection with the Agreement that is designated (other than with respect to any amendment to any Loan Document or any security agreement, which requires no such specific designation) as a “Loan Document”. “Loan Party” means any Borrower or any Guarantor. “Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time. “Marks” means all current and future (i) trademarks, service marks, trade styles, and logos (including all registrations and recordings thereof and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise) and (ii) trademark rights in any trade names, corporate names, company names, business names, fictitious business names, other source or business identifiers Internet domain names, subdomain names and social media account or page addresses (but excluding all other rights in the foregoing items in this subsection (ii), including any rights in any registrations or recordings for the foregoing items), and in each case of subsections (i) and (ii), all goodwill associated therewith and all common-law rights related thereto. “Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, material agreements, liabilities, financial condition or results of operations of Parent and its Subsidiaries, taken as a whole, or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights and remedies of Administrative Agent or the other Secured Parties under any of the Loan Documents. “Material Indebtedness” means Indebtedness (other than the Loans but including, for the avoidance of doubt, Guarantees) of any one or more of Parent and its Subsidiaries, in an aggregate principal amount exceeding $25,000,000. For purposes of determining Material Indebtedness, the “principal amount”
- 37 - 7446933.5 of the obligations of Parent or any of its Subsidiaries in respect of any Hedge Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Parent or such Subsidiary would be required to pay if such Hedge Agreement were terminated at such time. “Material Subsidiary” means (a) each Borrower and (b) a Subsidiary that, together with its Subsidiaries on a consolidated basis, as of the date of the financial statements most recently delivered pursuant to Section 5.1 (i) generates annual revenue in excess of 2.5% of the Consolidated annual revenue of Parent and its Subsidiaries or (ii) owns assets the book value of which exceeds 2.5% of the Consolidated book value of the total assets of Parent and its Subsidiaries; provided, that no Subsidiary shall be excluded as a Material Subsidiary until, and for so long as, Administrative Borrower shall have designated such Subsidiary’s status as an Immaterial Subsidiary in writing to the Administrative Agent; provided, further, that no Subsidiary shall be excluded as a Material Subsidiary if the consolidated total assets or consolidated revenue of such Subsidiary, taken together with the consolidated total assets and consolidated revenue of all other Subsidiaries then excluded as Material Subsidiaries, exceeds 5.0% of the consolidated total assets or consolidated revenue, as the case may be, of Administrative Borrower and its Subsidiaries. “Maturity Date” means the earlier of (a) March 1, 2026 or (b) ninety-one (91) days prior to the stated maturity date of the Term Loan. “Maximum Australian Loan Amount” means US$40,000,000. “Maximum Revolver Amount” means $175,000,000, unless decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.4(c). “Maximum US Loan Amount” means, at any time, (a) the Maximum Revolver Amount, minus (b) the Australian Revolver Usage. “Moody’s” means Moody’s Investors Service, Inc. “Mudrick” means Mudrick Capital Management L.P. “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. “Net Extraordinary Charges and Losses” means, for any applicable Reference Period, an amount (which shall not be less than zero) equal to (a) the amount of non-recurring extraordinary charges and losses for such Reference Period minus (b) the amount of any extraordinary gains deducted from Consolidated EBITDA for such period pursuant to clause (a)(iii) of the definition thereof. “Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement. “Non-Defaulting Lender” means each Lender other than a Defaulting Lender. “Non-Wholly-Owned Subsidiary” means any Subsidiary of Parent that is not Wholly- Owned. “Obligations” means (a) all loans (including the Revolving Loans (inclusive of Extraordinary Advances and Swing Loans)), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations
- 38 - 7446933.5 with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to any Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any other Loan Party arising out of, under, pursuant to, in connection with, or evidenced by the Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product Obligations. Without limiting the generality of the foregoing, the Obligations of Borrowers under the Loan Documents include the obligation to pay (i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving Loans, (iii) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees payable under the Agreement or any of the other Loan Documents, and (vii) indemnities and other amounts payable by any other Loan Party under any Loan Document. Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding. “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury. “OFAC Sanctions Programs” means the laws, regulations and Executive Orders administered by OFAC, including but not limited to, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as it has been or shall thereafter be renewed, extended, amended, or replaced, and the list of Specially Designated Nationals and Blocked Persons administered by OFAC, as such list may be amended from time to time. “Originating Lender” has the meaning specified therefor in Section 13.1(e) of the Agreement. “Other Connection Taxes” means, with respect to a Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction or taxing authority imposing the Tax (other than any such connection arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document). “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.13(b) or Section 14.2). “Overadvance” means, as of any date of determination, that the Total Revolver Usage is greater than any of the limitations set forth in Section 2.1 or Section 2.11. “Parent” has the meaning specified therefor in the preamble to the Agreement.
- 39 - 7446933.5 “Participant” has the meaning specified therefor in Section 13.1(e) of the Agreement. “Participant Register” has the meaning set forth in Section 13.1(f) of the Agreement. “Patent Security Agreement” has the meaning specified therefor in the Guaranty and Security Agreement. “Patriot Act” has the meaning specified therefor in Section 4.13 of the Agreement. “Payment Conditions” means, with respect to any transaction or payment, the following: (a) as of the date of any such transaction or payment, and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (b) as of the date of any such transaction or payment, on a pro forma basis after giving effect thereto, Total Excess Availability shall be greater than or equal to fifteen percent (15%) of the Maximum Revolver Amount, (c) for the thirty (30) day period immediately preceding such transaction or payment, average Total Excess Availability shall be greater than or equal to fifteen percent (15%) of the Maximum Revolver Amount, (d) as of the date of any such transaction or payment and after giving effect thereto, Parent’s Fixed Charge Coverage Ratio, calculated for the preceding trailing twelve month period ending closest to the date on which the transaction or payment shall have been consummated, determined on a pro forma basis as if such transaction or payment had been consummated during or at the end of such period, shall not be less than 1.00 to 1.00. (e) as of the date of any such transaction or payment and after giving effect thereto, Parent and its Subsidiaries on a consolidated basis shall be Solvent and Administrative Agent shall have received a customary officer’s certificate with respect thereto, and (f) Administrative Agent shall have received a certificate of a Financial Officer, certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) the calculations required thereby. “Payment Recipient” has the meaning specified therefor in Section 17.19 of this Agreement. “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. “Permitted Acquisitions” means any Acquisition by Parent or any other Loan Party, so long as: (a) both before and immediately after giving effect thereto, each of the Payment Conditions is satisfied, (b) a substantial portion of the business of such acquired Person or business consists of one or more Permitted Businesses,
- 40 - 7446933.5 (c) each US Subsidiary and/or Australian Subsidiary resulting from such Acquisition (and which survives such Acquisition), other than any Excluded Subsidiary, shall become a Loan Party and 100% of the Equity Interests of each such Subsidiary shall be owned directly by Parent and/or Loan Parties and shall have been pledged pursuant to the applicable Loan Documents (subject to the limitations of the pledge of Equity Interests of Foreign Subsidiaries set forth in the definition of “Collateral and Guarantee Requirement”), in each case, in accordance with and within the time periods provided for in Section 5.11 of this Agreement and the applicable Loan Documents, (d) the Collateral and Guarantee Requirement shall have been satisfied with respect to each such US Subsidiary and/or Australian Subsidiary (other than any Excluded Subsidiary) in accordance with and within the time periods provided for in Section 5.11 of this Agreement and the applicable Loan Documents, (e) such Acquisition shall be consensual and shall been approved by the board of directors (or comparable body) of the Person to be acquired and such Person has not announced that it will oppose such Acquisition or shall not have commenced an action which alleges that such Acquisition will violate applicable law, (f) no Indebtedness will be incurred, assumed, or would exist with respect to any Loan Party or their Subsidiaries as a result of such Acquisition, other than Indebtedness permitted under clause (f) of the definition of Permitted Indebtedness and no Liens will be incurred, assumed, or would exist with respect to the assets of any Loan Party or their Subsidiaries as a result of such Acquisition other than Permitted Liens, (g) Borrowers have provided Administrative Agent with written confirmation, supported by reasonably detailed calculations, that on a pro forma basis (including pro forma adjustments arising out of events which are directly attributable to such proposed Acquisition, are factually supportable, and are expected to have a continuing impact, in each case, determined as if the combination had been accomplished at the beginning of the relevant period; such eliminations and inclusions to be calculated by adding the historical combined financial statements of Parent (including the combined financial statements of any other Person or assets that were the subject of a prior Permitted Acquisition during the relevant period) to the historical consolidated financial statements of the Person to be acquired (or the historical financial statements related to the assets to be acquired) pursuant to the proposed Acquisition, Parent and its Subsidiaries (i) would have been in compliance with the financial covenants in Section 7 of the Agreement for the fiscal quarter ended immediately prior to the proposed date of consummation of such proposed Acquisition, and (ii) are projected to be in compliance with the financial covenants in Section 7 of the Agreement for each of the 4 fiscal quarters in the period ended one year after the proposed date of consummation of such proposed Acquisition, (h) Borrowers have provided Administrative Agent with its due diligence package relative to the proposed Acquisition, including forecasted balance sheets, profit and loss statements, and cash flow statements of the Person or assets to be acquired, all prepared on a basis consistent with such Person’s (or assets’) historical financial statements, together with appropriate supporting details and a statement of underlying assumptions for the one (1) year period following the date of the proposed Acquisition, on a quarter by quarter basis), but excluding for purposes of this clause (h) any Protected Information, (i) Borrowers have provided Administrative Agent with written confirmation, supported by reasonably detailed calculations, that after giving pro forma effect to such Acquisition, the assets being acquired or the Person whose Equity Interests are being acquired will not have a negative effect on Consolidated EBITDA of Parent and its Subsidiaries,
- 41 - 7446933.5 (j) Borrowers have provided Administrative Agent with written notice of the proposed Acquisition at least fifteen (15) Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than five (5) Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, but excluding for purposes of this clause (j) any Protected Information, and (k) the assets being acquired (other than a de minimis amount of assets in relation to the assets being acquired) are located within the United States, Canada, Australia or the jurisdiction of organization of any Discretionary Guarantor, or the Person whose Equity Interests are being acquired is organized in a jurisdiction located within the United States, Canada, Australian or the jurisdiction of organization of any Discretionary Guarantor; provided, that, (i) an Acquisition by Parent of the assets of, or Equity Interests in, Camilyo (a software company based in Tel Aviv, Israel), which otherwise satisfies clauses (a) through (j) of this definition, shall not be excluded as a Permitted Acquisition by reason of this clause (k) and (ii) for purposes of clauses (c) and (d) of this definition, Acquisitions, to the extent that any Person or Property acquired in such Acquisition does not become a Guarantor or a part of a Guarantor, shall not be excluded as a Permitted Acquisition by reason of such clauses (c) and (d) as to Acquisitions during the term of this Agreement (for the period commencing after the Fifth Amendment Effective Date) that involve consideration not to exceed the aggregate amount of $25,000,000, except, that, the foregoing dollar cap set forth in clause (ii) above shall not apply to any Acquisition to the extent the Person so acquired (or the Person owning the assets so acquired) becomes a Guarantor even though such Person owns Equity Interests in Persons that are not otherwise required to become Guarantors hereunder, if not less than 80% of the Consolidated EBITDA of the Person(s) acquired in such Acquisition (for this purpose and for the component definitions used therein, determined on a consolidated basis for such Persons and their respective Subsidiaries) is generated by Person(s) that will become Guarantors (i.e., disregarding any Consolidated EBITDA generated by Subsidiaries of such Guarantors that are not (or will not become) Guarantors). “Permitted Business” means the telephone and internet, targeted print, marketing, digital and directory services businesses (including CRM applications) and businesses reasonably related, incidental or ancillary thereto or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. “Permitted Discretion” means a determination made in good faith and the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment. “Permitted Dispositions” means: (a) Dispositions of (i) inventory in the ordinary course of business and/or (ii) used, surplus, obsolete or worn-out assets no longer used or useful in the business of Parent or any of its Subsidiaries; (b) Dispositions to Parent or a Subsidiary; provided, that any such Dispositions made to any Subsidiary that is not a Loan Party shall be made in compliance with Section 6.10; (c) sale and leaseback transactions permitted by Section 6.4(b); (d) sales, transfers and other dispositions of assets (other than ABL Priority Collateral and Equity Interests in a Subsidiary) to bona fide third parties that are not Affiliates of Parent and that are not permitted by any other clause of this Section; provided, that, (i) the aggregate cumulative fair market value of all assets sold, transferred or otherwise disposed of after the Term Loan Closing Date in reliance
- 42 - 7446933.5 upon this clause (d) shall not exceed $20,000,000 and (ii) at least 75% of the consideration for such disposition shall consist of cash or Permitted Investments; (e) licensing or sublicensing (other than exclusive licenses or sublicenses) of Intellectual Property in the ordinary course of business in a manner that does not, and could not reasonably be expected to, materially interfere with the business of Parent and its Subsidiaries, taken as a whole; (f) the expiration of Intellectual Property in accordance with its statutory term or the abandonment or lapse of intellectual property in the ordinary course of business, in each case in a manner that does not, and could not reasonably be expected to, materially interfere with the business of Parent and its Subsidiaries, taken as a whole; (g) abandonment or lapse of Intellectual Property in the ordinary course of business in a manner that does not, and could not reasonably be expected to, materially interfere with the business of the Borrowers, taken as a whole; (h) Dispositions of cash or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; (i) the write-off, discount, sale or other Disposition, in each case without recourse, of accounts receivable and similar obligations arising in the ordinary course of business, but only in connection with the compromise or collection thereof; (j) the sale of Dispositions of accounts receivable in connection with, and as contemplated by, the Billing and Collection Agreement; (k) any involuntary loss, damage or destruction of property; (l) any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property; (m) leases, subleases, licenses or sublicenses of real or personal property granted by Parent or any of its Subsidiaries to others in the ordinary course of business not detracting from the value of such real or personal property or interfering in any material respect with the business of Parent or any of its Subsidiaries, taken as a whole; (n) the Specified Disposition; provided that at the time of such Specified Disposition and after giving effect thereto, no Default or Event of Default shall have occurred and continuing or would result therefrom; (o) the Disposition, termination or unwinding of any Hedge Agreement; (p) the making of any Permitted Investment; and (q) Dispositions pursuant to any other transaction permitted in accordance with Section 6.3; provided, that (x) all Dispositions permitted pursuant to clauses (c), (d), (h), (j) and (n) shall be made for at least 75% cash consideration (and any Designated Non-Cash Consideration received in respect of all such Dispositions having an aggregate fair market value not in excess of $5,000,000 shall
- 43 - 7446933.5 be deemed to be cash), and (y) all sales, transfers, leases and other dispositions permitted by clauses (a)(i), (c), (d) and (n) above shall be made for fair value as determined in good faith by Administrative Borrower. “Permitted Encumbrances” means: (a) Liens imposed by law for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) that (i) (A) are not yet delinquent and payable or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or (B) the underlying taxes are the subject of Permitted Protests and (ii) do not have priority over Administrative Agent’s Lien; (b) carriers’, warehousemen’s, mechanics’, materialmen’s, landlord’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are the subject of Permitted Protests; (c) pledges and deposits made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds, bank guarantees and other obligations of a like nature incurred in the ordinary course of business or in connection with the Sunshine Acquisition; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment Liens in respect of judgments or attachments that do not constitute a Default or an Event of Default under Section 8.3; (f) easements, zoning restrictions, rights-of-way, encroachments, other survey defects, rights or restrictions on Real Property that would be shown by a current, accurate survey or physical inspection, and similar encumbrances or irregularities in title or on record of Real Property, which in the aggregate are not substantial in amount and do not, or could not reasonably be expected to, materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Parent or any of its Subsidiaries; (g) (i) Liens of a collecting bank arising in the ordinary course of business under Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction, (ii) Liens of any depositary bank in connection with statutory, common law and contractual rights of setoff and recoupment with respect to any deposit account of the Borrowers or any Subsidiary thereof, (iii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of any assets or property in the ordinary course of business and permitted pursuant to Section 6.4 and (iv) Liens or rights of setoff against credit balances of Parent or any of its Subsidiaries with credit card issuers or credit card processors, or amounts owing by such credit card issuers or credit card processors to Parent or any of its Subsidiaries in the ordinary course of business, but not Liens on or rights of setoff against any other property or assets of Parent or any of its Subsidiaries, pursuant to applicable credit card agreements to secure the obligations of Parent or any of its Subsidiaries to such credit card issuers or credit card processors as a result of fees and chargebacks; (h) (i) leases, subleases, non-exclusive licenses or sublicenses granted to others in the ordinary course of business which do not (A) interfere in any material respect with the business of Parent
- 44 - 7446933.5 or its Subsidiaries or (B) secure any Indebtedness and (ii) any interest or title of a lessor, sub-lessor, non- exclusive licensor or sub-licensor under leases, subleases, non-exclusive licenses or sublicenses entered into by any of Parent and its Subsidiaries as non-exclusive licensee, sub-licensee, lessee or sub-lessee in the ordinary course of business (and covering only the assets so leased or licensed) or any customary restriction or encumbrance with respect to the Property subject to any such lease, sublease, non-exclusive license or sublicense which do not (A) interfere in any material respect with the business of Parent or its Subsidiaries or (B) secure any Indebtedness; (i) the licensing or sublicensing (other than exclusive licenses or sublicenses) of Intellectual Property in the ordinary course of business in a manner that does not, or could not reasonably be expected to, materially interfere with the business of Parent and its Subsidiaries; (j) any provision for the retention of title to any property by the vendor or transferor of such property, which property is acquired by Parent or a Subsidiary of Parent in a transaction entered into in the ordinary course of business of Parent or such Subsidiary of Parent and for which kind of transaction it is normal market practice for such retention of title provision to be included; and (k) (i) Liens on Equity Interests of joint ventures securing capital contributions thereto and (ii) customary rights of first refusal and tag, drag and similar rights in joint venture agreements and agreements, in each case, with respect to Non-Wholly-Owned Subsidiaries which are not Loan Parties; provided, that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness. “Permitted Holder” means, collectively, (a) Mudrick and its Affiliates and (b) any fund or investment vehicle that (i) is organized by Mudrick for the purpose of making equity or debt investments in one or more companies and (ii) is advised, managed or controlled by, or under common control or management with, Mudrick, but in each case, excluding any portfolio companies of Mudrick or any portfolio companies of its co-investors. For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person, whether by contract or otherwise. “Permitted Indebtedness” means: (a) Indebtedness evidenced by the Loan Documents and any Bank Product Agreements; (b) Indebtedness set forth on Schedule 4.14 to the Agreement and any Refinancing Indebtedness in respect of such Indebtedness; (c) Permitted Intercompany Advances; (d) (i) Guarantees by Parent of Indebtedness of any other Loan Party and by any of its Subsidiaries of Indebtedness of Parent or any other Loan Party and (ii) Guarantees by any Loan Party of Indebtedness of any Subsidiary that is not a Loan Party (to the extent constituting a Permitted Investment (other than under clause (e) of such definition); (e) Indebtedness and Attributable Debt of Parent or any of its Subsidiaries incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capitalized Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than by an amount not greater than fees and expenses, including premium and defeasance costs,
- 45 - 7446933.5 associated therewith) or result in a decreased average weighted life thereof; provided, that (1) such Indebtedness or Attributable Debt is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (2) the aggregate principal amount of Indebtedness and Attributable Debt permitted by this clause (v), shall not exceed $30,000,000 at any time outstanding; (f) Indebtedness of any Person that becomes a Subsidiary of any Loan Party after the Closing Date and Refinancing Indebtedness in respect thereof; provided, that (A) such Indebtedness (other than Refinancing Indebtedness) exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary (except to the extent such Indebtedness refinanced other Indebtedness to facilitate such entity becoming a Subsidiary) and (B) the aggregate principal amount of Indebtedness permitted by this clause (vi) shall not exceed $50,000,000 at any time outstanding; (g) the incurrence by any Loan Party of Indebtedness under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, exchange rate, commodity price, or foreign currency risks associated with such Loan Party’s operations and not for speculative purposes, (h) Indebtedness under the Term Loan Credit Agreement in an aggregate principal amount not to exceed the Term Debt Cap (as such term is defined in the Intercreditor Agreement, as in effect on the date hereof) and any refinancings, renewals, substitutions or extensions of all of such Indebtedness; provided, however, that (i) the interest rate applicable thereto shall be a market interest rate, (ii) the scheduled maturity date for such Indebtedness is on or after the Maturity Date, (iii) such Indebtedness has an equal or longer weighted average life to maturity than the Term Loan as of the Fifth Amendment Effective Date, (iv) after giving effect to any such refinancing, renewal, substitution or extension, the amount of such Indebtedness is not greater than the amount of Term Loan Cap, (v) such Indebtedness does not have terms and conditions that would result in a material increase with respect to mandatory prepayments from the terms and conditions of the Term Loan Credit Agreement as of the Fifth Amendment Effective Date and (vi) the Liens on the ABL Priority Collateral securing any such obligations shall remain subordinate to the Liens on the ABL Priority Collateral securing the Obligations subject to the Intercreditor Agreement or intercreditor arrangements on substantially the same terms and conditions as in effect immediately prior to such refinancing, renewal, substitution or extension; (i) Indebtedness in an amount not to exceed $15,000,000 at any time outstanding of the Borrowers or any Subsidiary required in connection with cash management services and arrangements (other than pursuant to the Loan Documents); (j) (i) endorsement of instruments or other payment items for deposit in the ordinary course of business and/or (ii) unsecured Indebtedness incurred in respect of netting services, overdraft protection, and other like services, in each case, incurred in the ordinary course of business; (k) Indebtedness owed to any Person providing property, casualty, liability, or other insurance to any Borrower or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year; (l) contingent liabilities in respect of any indemnification obligation, adjustment of purchase price, non-compete, earn-out or similar obligation of any Loan Party or its Subsidiaries that are subordinated to the Obligations on terms satisfactory to the Administrative Agent incurred in connection with the consummation of one or more Permitted Acquisitions (including the Sunshine Acquisition);
- 46 - 7446933.5 (m) Indebtedness composing Permitted Investments; (n) any other Indebtedness incurred by any Loan Party or any of their Subsidiaries in an aggregate outstanding amount not to exceed $25,000,000 at any one time; (o) Permitted Unsecured Indebtedness and/or Subordinated Indebtedness in an aggregate principal amount not to exceed $500,000,000 at any time outstanding; (p) Indebtedness under performance bonds, surety bonds, release, appeal and similar bonds, statutory obligations or with respect to workers’ compensation claims, in each case incurred in the ordinary course of business or in connection with the Sunshine Acquisition, and reimbursement obligations in respect of any of the foregoing; (q) Indebtedness arising under (i) the letters of credit of the Australian Sunshine Entities assumed by any Loan Party or any of its Subsidiaries pursuant to the Sunshine Acquisition Agreement and (ii) any bank guarantees issued in connection with such assumed letters of credit referred to in clause (i) in an aggregate amount not to exceed AUS$3,325,021.39; (r) Indebtedness consisting of promissory notes issued to current or former officers, directors and employees (or their respective family members, estates or trusts or other entities for the benefit of any of the foregoing) of Parent or its Subsidiaries to purchase or redeem Equity Interests or options of Parent permitted pursuant to clause (i) of the definition of “Permitted Investments”; provided, that the aggregate principal amount of all such Indebtedness shall not exceed $5,000,000 at any time outstanding; and (s) the intercompany note issued on the Fifth Amendment Effective Date by Thryv Parabolica Limited, an entity organized under the laws of Malta, as issuer, in favor of Thryv Ausco in connection with the Sunshine Acquisition. “Permitted Intercompany Advances” means loans made by (a) a Loan Party to another Loan Party, (b) a Subsidiary of Parent that is not a Loan Party to another Subsidiary of Parent that is not a Loan Party, (c) a Subsidiary of Parent that is not a Loan Party to a Loan Party, so long as the parties thereto are party to the Intercompany Subordination Agreement, or (d) a Loan Party to a Subsidiary that is not a Loan Party in amount not to exceed $25,000,000 at any time outstanding, provided, that, as of the date of the making of any such loan in connection with this clause (d), and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing. “Permitted Investments” means: (a) Investments in cash and Cash Equivalents, (b) Investments existing on the date hereof and set forth on Schedule P-1, and any modification, replacement, renewal or extension thereof so long as such modification, renewal or extension thereof does not increase the amount of such original Investment except as otherwise permitted by Section 6.9; (c) to the extent not otherwise constituting a Permitted Intercompany Advance, other Investments (i) by Parent or its Subsidiaries in Subsidiaries that are Loan Parties immediately prior to the time of such Investments, except, that, (A) no Borrower shall make Investments of any ABL Priority Collateral to any Guarantor, (B) no US Borrower shall make Investments of any ABL Priority Collateral to any Australian Borrower and (C) no Australian Borrower shall make Investments of any ABL Priority
- 47 - 7446933.5 Collateral to any US Borrower, and (ii) by any Subsidiary that is not a Loan Party in the Parent or any other Subsidiary; (d) Investments by Parent or any of its Subsidiaries consisting of capital expenditures permitted by this Agreement; (e) guarantees constituting Indebtedness permitted by Section 6.1; (f) Investments (including debt obligations and equity securities) received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (g) extensions of trade credit in the ordinary course of business; (h) Investments consisting of non-cash consideration received in respect of Dispositions to the extent permitted by Section 6.4; (i) Investments in the form of loans and advances by Parent and any of its Subsidiaries to their officers, directors and employees in the ordinary course of business in an aggregate amount at any time outstanding not in excess of $5,000,000; (j) other Investments in cash, so long as, as of the date of making any such Investment, and after giving effect thereto, each of the Payment Conditions shall have been satisfied; (k) Permitted Acquisitions; (l) Hedge Agreements entered into in compliance with this Agreement; (m) Permitted Intercompany Advances; (n) deposits of cash made in the ordinary course of business to secure performance of operating leases; (o) Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition; (p) Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business; (q) advances made in connection with purchases of goods or services in the ordinary course of business; (r) Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries; (s) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;
- 48 - 7446933.5 (t) the Sunshine Acquisition and any Investments made in connection therewith on the date of the consummation thereof; (u) without duplication, Investments in the form of Restricted Payments permitted pursuant to Section 6.7; and (v) the ownership by Thryv of Equity Interests of ChinaBig existing as of the Fifth Amendment Effective Date. “Permitted Liens” means (a) Liens created under the Loan Documents; (b) Liens on the Collateral securing Indebtedness and other obligations under the Term Loan Documents; provided, that such Liens are subject at all times to the Intercreditor Agreement; (c) Permitted Encumbrances; (d) any Lien existing on the Closing Date and set forth in Schedule P-2 on any property or asset of Parent or any of its Subsidiaries; provided, that (A) such Lien shall not apply to any other property or asset of Parent or any of its Subsidiaries (other than proceeds) and (B) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals, refinancings and replacements thereof that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; (e) any Lien existing on any property or asset prior to the acquisition thereof by Parent or any of its Subsidiaries or existing on any property or asset of any Person that becomes a Subsidiary after the Closing Date prior to the time such Person becomes a Subsidiary; provided, that (A) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (B) such Lien shall not apply to any other property or assets of Parent or any of its Subsidiaries (other than proceeds) and (C) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals, refinancings and replacements thereof that do not increase the outstanding principal amount thereof (other than by an amount not in excess of fees and expenses, including premium and defeasance costs, associated therewith) or result in a decreased average weighted life thereof; (f) Liens securing Indebtedness permitted under clause (e) of the definition of “Permitted Indebtedness”; provided, that (A) such Liens shall be created substantially simultaneously with the acquisition, repair, construction, improvement or lease, as applicable, of the related property, (B) such Liens do not at any time encumber any property other than the property financed or improved by such Indebtedness, (C) the amount of Indebtedness secured thereby is not increased and (D) the principal amount of Indebtedness secured by any such Lien shall at no time exceed one hundred percent (100%) of the original price for the purchase, repair, construction, improvement or lease amount (as applicable) of such property at the time of purchase, repair, construction, improvement or lease (as applicable); (g) Liens on cash collateral and deposit accounts maintained by the lienholder as depository bank to secure (i) Indebtedness incurred pursuant to clause (i) of the definition of Permitted Indebtedness and/or (ii) Indebtedness incurred pursuant to clause (q) of the definition of Permitted Indebtedness; provided, that, in the case of clause (ii), the amount of such cash collateral shall not exceed the aggregate amount of such Indebtedness permitted pursuant to such clause (q);
- 49 - 7446933.5 (h) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness; (i) Liens solely on any cash earnest money deposits made by a Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; (j) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not have priority over Administrative Agent’s Liens and the underlying taxes, assessments, or charges or levies are the subject of Permitted Protests; (k) Liens arising from the filing of precautionary UCC-1 financing statement that are filed by lessors with respect to operating leases entered into by the Loan Parties in the ordinary course of business; (l) Liens or rights of setoff against credit balances of Borrowers with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrowers in the ordinary course of business, but not Liens on or rights of setoff against any other property or assets of Borrowers, pursuant to the Credit Card Agreements to secure the obligations of Borrowers to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks; (m) Liens on cash collateral (and any deposit account which exclusively holds such cash collateral) maintained by such depository bank to secure Indebtedness incurred pursuant to clause (q) of “Permitted Indebtedness”; provided that the amount of such cash collateral shall not exceed the aggregate amount of the Indebtedness permitted pursuant to clause (q) of “Permitted Indebtedness”; (n) (i) Liens not otherwise permitted by clauses (a) through (l) of this definition securing obligations other than Indebtedness and (ii) involuntary Liens not otherwise permitted hereunder securing Indebtedness, which in the case of clauses (i) and (ii) hereof, are in not excess of an aggregate amount at any time outstanding of (1) if encumbering Collateral other than ABL Priority Collateral, $25,000,000 and (2) if encumbering ABL Priority Collateral, $1,000,000; and (o) in respect of each Australian Loan Party, a Lien that is a deemed security interest under section 12(3) of the Australian PPSA which does not secure payment or performance of an obligation. “Permitted Protest” means the right of any Loan Party or any of their Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), or rental payment; provided that (a) a reserve with respect to such obligation is established on such Loan Party’s or such Subsidiary’s books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Loan Party or its Subsidiary, as applicable, in good faith, and (c) Administrative Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of Agent’s Liens. “Permitted Unsecured Indebtedness” means unsecured Indebtedness that (i) provides solely for interest to be payable in-kind and not in cash, (ii) has a maturity date that is 180 days or more after the scheduled maturity date of the Term Loan, (iii) has covenants and other terms which, taken as a whole, are no more restrictive to Parent and its Subsidiaries in any material respect than the terms of this Agreement, taken as a whole, except for terms with respect to such Subordinated Indebtedness that are applicable only to the period after the date that is 180 days after the Latest Maturity Date (as defined in the Term Loan Credit Agreement) in effect at the time of incurrence of such Permitted Unsecured Indebtedness;
- 50 - 7446933.5 provided, that such Indebtedness may have covenants and terms that are more restrictive in respect of the incurrence of additional unsecured Indebtedness; provided, further, that a certificate of an authorized officer of Administrative Borrower delivered to the Administrative Agent prior to the incurrence or assumption of such Permitted Unsecured Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Permitted Unsecured Indebtedness and substantially final drafts of the documentation related thereto, stating that Administrative Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement of clause (iii), and (iv) does not require any payments of principal thereof until the Obligations and the Term Loans have been paid in full. “Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof. “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 of ERISA be deemed to be) an employer” as defined in Section 3(5) of ERISA. “Platform” has the meaning specified therefor in Section 17.9(c) of the Agreement. “Pro Rata Share” means, as of any date of determination: (a) with respect to a Lender’s obligation to make all or a portion of the Revolving Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and with respect to all other computations and other matters related to the Revolver Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders, (b) with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving Loans have been repaid in full and all Revolver Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined as if the Revolver Commitments had not been terminated and based upon the Revolver Commitments as they existed immediately prior to their termination, and (c) with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of the Agreement), the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1; provided, that if all of the Loans have been repaid in full, all Letters of Credit have been made the subject of Letter of Credit Collateralization, and all Commitments have been terminated, Pro Rata Share under this clause shall be determined as if the Revolving Loan Exposures had not been repaid, collateralized, or terminated and shall be based upon the Revolving Loan Exposures as they existed immediately prior to their repayment, collateralization, or termination.
- 51 - 7446933.5 “Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions. “Protected Information” information (a) in respect of which, and to the extent that, disclosure to Administrative Agent or any Lender (or any of their respective representatives) is prohibited by applicable law, (b) to the extent that such information is subject to any confidentiality agreement (unless mutually agreeable arrangements can be made to preserve such information as confidential in the good faith determination of Administrative Borrower), (c) to the extent that such information is classified or otherwise constitutes non-financial trade secrets or non-financial proprietary information of any Person or (d) to the extent that such information is subject to any attorney-client privilege or similar privilege or constitutes attorney work product; provided, that Administrative Borrower shall notify Administrative Agent if any such information is being withheld as a result of any of clauses (a) through (d) above and shall use its commercially reasonable efforts to describe, to the extent both feasible and permitted under applicable law or applicable confidentiality obligation, or without waiving such attorney-client privilege, as applicable, the applicable information (including via redaction) and seek to obtain necessary waivers to the disclosure of such information; provided, further, that any such confidentiality obligation was not entered into in contemplation of the requirements of this definition. “Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of the Agreement. “Public Lender” has the meaning specified therefor in Section 17.9(c) of the Agreement. “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. §5390(c)(8)(D). “QFC Credit Support” has the meaning specified therefor in Section 17.18 of this Agreement. “Qualified Equity Interest” means and refers to any Equity Interests issued by Parent (and not by one or more of its Subsidiaries) that is not a Disqualified Equity Interest. “Real Property” means any freehold estates or interests in real property now owned or hereafter acquired by any Loan Party or one of its Subsidiaries and the improvements thereto. “Receivable Reserves” means, as of any date of determination, those reserves that Co- Collateral Agents deem necessary or appropriate, in their Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including Dilution Reserves and reserves for rebates, discounts, warranty claims, and returns) with respect to Eligible Accounts, the Maximum Revolver Amount, the Maximum US Loan Amount or the Maximum Australian Loan Amount. “Recipient” means the Administrative Agent, any Lender or any Issuing Bank. “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. “Reference Period” means, as of any date of determination, the period of four (4) consecutive fiscal quarters ended on or immediately prior to such date for which financial statements of Parent and its Subsidiaries have been delivered to the Administrative Agent hereunder.
- 52 - 7446933.5 “Refinanced Debt” has the meaning assigned to such term in the definition of Refinancing Indebtedness. “Refinancing Indebtedness” means Indebtedness issued or incurred (including by means of the extension or renewal of existing Indebtedness) to extend, renew or refinance existing Indebtedness (“Refinanced Debt”); provided, that (a) such extending, renewing or refinancing Indebtedness is in an original aggregate principal amount not greater than the aggregate principal amount of, and unpaid interest on, the Refinanced Debt plus the amount of any premiums paid thereon and fees and expenses associated therewith, (b) such Indebtedness has a later maturity and a longer weighted average life than the Refinanced Debt, (c) such Indebtedness bears a market interest rate (as reasonably determined in good faith by the board of directors of Parent) as of the time of its issuance or incurrence, (d) if the Refinanced Debt or any guarantees thereof are subordinated to the Obligations, such Indebtedness and guarantees thereof are subordinated to the Obligations on terms no less favorable to the holders of the Obligations than the subordination terms of such Refinanced Debt or guarantees thereof (and no Loan Party that has not guaranteed such Refinanced Debt guarantees such Indebtedness), (e) such Indebtedness contains covenants and events of default and is benefited by guarantees (if any) which, taken as a whole, are reasonably determined in good faith by the board of directors of Parent not to be materially less favorable to the Lenders than the covenants and events of default of or guarantees (if any) in respect of such Refinanced Debt, (f) if such Refinanced Debt or any guarantees thereof are secured, such Indebtedness and any guarantees thereof are either unsecured or secured only by such assets as secured the Refinanced Debt and guarantees thereof, (g) if such Refinanced Debt and any guarantees thereof are unsecured, such Indebtedness and guarantees thereof are also unsecured, (h) such Indebtedness is issued only by the issuer of such Refinanced Debt and (i) the proceeds of such Indebtedness are applied promptly (and in any event within forty-five (45) days) after receipt thereof to the repayment, repurchase or other retirement of such Refinanced Debt. Notwithstanding anything herein to the contrary, any refinancing, renewal, substitution or extension of the Term Loans permitted pursuant to clause (h) of the definition of “Permitted Indebtedness” shall be deemed to constitute “Refinancing Indebtedness” for all purposes of this Agreement and the other Loan Documents. “Register” has the meaning set forth in Section 13.1(e) of the Agreement. “Related Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender. “Relevant Governmental Body” means (a) with respect to a Benchmark Replacement in respect of SOFR Loans denominated in US Dollars, the Board of Governors or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors or the Federal Reserve Bank of New York, or any successor thereto and (b) with respect to a Benchmark Replacement in respect of Revolving Loans denominated in any Agreed Currency (other than US Dollars), (i) the central bank for the currency in which such Benchmark Replacement is denominated or any central bank or other supervisor which is responsible for supervising either (A) such Benchmark Replacement or (B) the administrator of such Benchmark Replacement or (ii) any working group or committee officially endorsed or convened by (A) the central bank for the currency in which such Benchmark Replacement is denominated, (B) any central bank or other supervisor that is responsible for supervising either (1) such Benchmark Replacement or (2) the administrator of such Benchmark Replacement, (3) a group of those central banks or other supervisors or (C) the Financial Stability Board or any part thereof. “Relevant Rate” means (i) with respect to any SOFR Loan denominated in US Dollars, the applicable Adjusted Daily Simple SOFR or (ii) with respect to any Australian Bill Rate Loan denominated in Australian Dollars, the Australian Bill Rate Screen Rate.
- 53 - 7446933.5 “Reorganization Plan” means the Debtors’ Joint Prepackaged Chapter 11 Plan for Parent and its debtor Subsidiaries, including any exhibits, supplements, appendices and schedules thereto, dated May 16, 2016 and filed with the bankruptcy court on the petition date, as amended, supplemented or otherwise modified from time to time in accordance with the terms and as confirmed by the bankruptcy court pursuant to the Confirmation Order. “Replacement Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement. “Report” has the meaning specified therefor in Section 15.16 of the Agreement. “Reporting Trigger Period” means the period (a) commencing on the day that (i) an Event of Default occurs and is continuing or (ii) Total Excess Availability is less than fifteen percent (15%) of the Maximum Revolver Amount at such time, and (b) continuing until the date that during the previous ninety (90) consecutive days, (i) no Event of Default has existed and (ii) Total Excess Availability has been greater than fifteen percent (15%) of the Maximum Revolver Amount at such time; provided, however, that Reporting Trigger Period may not be cured as contemplated by clause (b) more than two (2) times in any fiscal year. “Required Lenders” means, at any time, Lenders having or holding more than 50% of the sum of the aggregate Revolving Loan Exposure of all Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders and (ii) at any time there are three (3) or fewer Lenders (with any Lender and its Affiliates being counted as one Lender for purposes of this definition), Required Lenders shall mean all Lenders. “Reserves” means, without duplication, as of any date of determination, those reserves (other than Receivable Reserves and Bank Product Reserves) that Co-Collateral Agents deem necessary or appropriate, in their Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves with respect to (a) sums that any Borrower or its Subsidiaries are required to pay under any Section of the Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, (b) amounts owing by any Loan Party or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Co- Collateral Agents likely would have a priority superior to Administrative Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral, and (c) fluctuations in the Exchange Rate of Available Currencies and other currencies into US Dollars) with respect to the Total Borrowing Base, the Maximum Revolver Amount, the Maximum US Loan Amount or the Maximum Australian Loan Amount. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “Restricted Payment” means to (a) declare or pay any dividend or make any other payment or distribution, directly or indirectly, on account of Equity Interests issued by Parent (including any payment in connection with any merger or consolidation involving Parent) or to the direct or indirect holders of Equity Interests issued by Parent in their capacity as such (other than dividends or distributions payable in Qualified Equity Interests issued by Parent, or (b) purchase, redeem, make any sinking fund or similar payment, or otherwise acquire or retire for value (including in connection with any merger or consolidation involving Parent) any Equity Interests issued by Parent, and (c) make any payment to retire, or to obtain the surrender of, any outstanding warrants, options, or other rights to acquire Equity Interests of Parent now
- 54 - 7446933.5 or hereafter outstanding, and (d) make, or cause or suffer to permit Parent or any of its Subsidiaries to make, any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness. “Revolver Commitment” means, with respect to each Revolving Lender, its Revolver Commitment, and, with respect to all Revolving Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Revolving Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Revolving Lender became a Revolving Lender under the Agreement, as such amounts may be reduced from time to time pursuant to Section 2.4(c) or assignments made in accordance with the provisions of Section 13.1 of the Agreement. “Revolving Lender” means a Lender that has a Revolver Commitment or that has an outstanding Revolving Loan. “Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any date of determination (a) prior to the termination of the Revolver Commitments, the amount of such Lender’s Revolver Commitment, and (b) after the termination of the Revolver Commitments, the aggregate outstanding principal amount of the Revolving Loans of such Lender. “Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the Agreement. “S&P” means Standard & Poor’s Rating Group. “Sanctioned Country” means a country or territory or a government of a country or territory that is a target of comprehensive, country-wide or territory-wide Sanctions, including a target of any such Sanctions administered and enforced by OFAC. For greater certainty, such countries and territories currently consist of Cuba, Iran, North Korea, Syria, and the Crimea Region of Ukraine. “Sanctioned Person” means, at any time (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is otherwise a target of Sanctions, (c) any Person operating, organized under the law of or resident in a Sanctioned Country, or (d) any Person directly or indirectly majority owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above. “Sanctions” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, trade embargoes, anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (e) any other Governmental Authority with jurisdiction over any member of Lender Group or any Loan Party or any of their respective Subsidiaries or Affiliates. “SEC” means the United States Securities and Exchange Commission and any successor thereto.
- 55 - 7446933.5 “Secured Parties” means (a) Administrative Agent (including in its capacity as Australian Security Trustee), (b) Co-Collateral Agents, (c) the Australian Security Trustee, (d) each member of the Lender Group, (e) each Bank Product Provider, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and assigns of each of the foregoing. “Securities Account” means a securities account (as that term is defined in the Code). “Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute. “Sensis Holdings” means Sensis Holding Limited, a private limited company incorporated under the laws of England and Wales. “Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement. “Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement. “Simple SOFR Adjustment” a percentage equal to 0.10% per annum. “Simple SOFR Determination Day” has the meaning specified therefor in the definition of Adjusted Daily Simple SOFR. “Simple SOFR Rate Day” has the meaning specified therefor in the definition of Adjusted Daily Simple SOFR. “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “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 Loan” means any Daily Simple SOFR Loan. “Solvent” means, with respect to any Person as of any date of determination, that (a) at fair valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of such Person’s assets, (b) such Person is not engaged or about to engage in a business or transaction for which the remaining assets of such Person are unreasonably small in relation to the business or transaction or for which the property remaining with such Person is an unreasonably small capital, (c) such Person has not incurred and does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise) and (d) such Person is “solvent” or not “insolvent”, as applicable within the meaning given those terms and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).
- 56 - 7446933.5 “Specified Charges” means all expenses, fees, charges and other amounts (other than depreciation or amortization expense) related to (a) the Fifth Amendment Transactions, (b) any Permitted Acquisitions and (c) any offerings of Equity Interests, Investments, dispositions, Restricted Payments, recapitalizations or incurrence of Indebtedness or any other transaction not prohibited under this Agreement, in each case, whether or not consummated, (including, without limitation, any financing fees, merger and acquisition fees, legal fees and expenses, financial advisory fees, due diligence fees or any other fees and expenses in connection therewith), in each case, to the extent paid within nine (9) months of the Fifth Amendment Effective Date or the closing or termination of such other transaction, as applicable, including (i) such fees, expenses, or charges related to the incurrence of the Loans hereunder and all fees, costs, or expenses incurred or paid by Parent, the Borrowers, or any of their respective Subsidiaries in connection Fifth Amendment Transactions, this Agreement, and the other Loan Documents, and the transactions contemplated hereby and thereby, (ii) such fees, expenses, or charges related to the offering of the Loan Documents and any other credit facilities or debt issuances, and (iii) any amendment or other modification of the Loans hereunder or other Indebtedness, and, in each case, deducted (and not added back) in computing Consolidated Net Income. “Specified Disposition” means the sale or other disposition of the real property of Parent or its Subsidiaries located in Moraine, Ohio. “Specified Transaction” means (a) any Disposition having gross sales proceeds in excess of $25,000,000, (b) any Permitted Acquisition or other similar Investment, (c) the Fifth Amendment Transactions, (d) any capital contribution in respect of Qualified Equity Interests or any issuance of Qualified Equity Interests (other than any Specified Equity Contribution (as defined in the Term Loan Credit Agreement)), and (e) any other event that by the terms of the Loan Documents requires pro forma compliance with a test or covenant hereunder or requires such test or covenant to be calculated on a pro forma basis. “Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit. “Subordinated Indebtedness” means any unsecured Indebtedness of any Loan Party or any of their Subsidiaries incurred from time to time that is subordinated in right of payment to the Obligations and (a) that is only guaranteed by the Guarantors, (b) that is not subject to scheduled amortization, redemption, sinking fund or similar payment and does not have a final maturity, in each case, on or before the date that is six months after the Maturity Date, (c) that does not include any financial covenants or any covenant or agreement that is more restrictive on any other Loan Party in any material respect than any comparable covenant in the Agreement (except for terms with respect to such Subordinated Indebtedness that are applicable only to the period after the date that is 180 days after the Latest Maturity Date (as defined in the Term Loan Credit Agreement) in effect at the time of incurrence of such Subordinated Indebtedness) and is otherwise on terms and conditions reasonably acceptable to Administrative Agent, provided, that a certificate of an authorized officer of Administrative Borrower delivered to the Administrative Agent prior to the incurrence or assumption of such Subordinated Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Subordinated Indebtedness and substantially final drafts of the documentation related thereto, stating that Administrative Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement of clause (c); and (d) shall be limited to cross-
- 57 - 7446933.5 payment default and cross-acceleration to designated “senior debt” (including the Obligations”), and (e) the terms and conditions of the subordination are reasonably acceptable to Administrative Agent. “Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent. Where it relates to any Australian Loan Party, “Subsidiary” means a subsidiary within the meaning given in Part 1.2 Division 6 of the Australian Corporations Act. Unless context otherwise requires, references herein to a “Subsidiary” mean a Subsidiary of the Parent. “Sunshine Acquisition” means the acquisition of all the Equity Interests of the Sunshine Entities by Thryv Ausco pursuant to the Sunshine Acquisition Agreement. “Sunshine Acquisition Agreement” means that certain Share Purchase Agreement, dated as of the Sunshine Acquisition Effective Date and relating to the Sunshine Acquisition, together with all exhibits and schedules thereto and all agreements expressly contemplated thereby. “Sunshine Acquisition Effective Date” means the “Sunshine Acquisition Effective Date” (as such term is defined in the Term Loan Agreement, as in effect on the date hereof). “Sunshine Entities” means, collectively, (i) Sensis Holding Limited (UK), a private limited company incorporated under the laws of England and Wales and (ii) the Australian Sunshine Entities. “Supermajority Lenders” means, at any time, Lenders having or holding more than 66 2/3% of the aggregate Revolving Loan Exposure of all Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders and (ii) at any time there are fewer than three (3) Lenders (with any Lender and its Affiliates being counted as one Lender for purposes of this definition), Supermajority Lenders shall mean all Lenders. “Supported QFC” has the meaning specified therefor in Section 17.18 of the Agreement. “Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act. “Swing Lender” means Wells Fargo or any other Lender that, at the request of Borrowers and with the consent of Administrative Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under Section 2.3(b) of the Agreement. “Swing Loan” has the meaning specified therefor in Section 2.3(b) of the Agreement. “Swing Loan Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Swing Loans on such date. “Tax Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.
- 58 - 7446933.5 “Taxes” means any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or similar liabilities with respect thereto. “Telstra” means Telstra Corporation Limited, an Australian public limited liability company. “Telstra Accounts” means Accounts due from Telstra or any of its Affiliates (other than any Loan Party or its Subsidiaries) from the sale of Accounts by any Australian Borrower to Telstra or any of its Affiliates (other than any Loan Party or its Subsidiaries) pursuant to the terms of the White Pages Agreement, dated as of February 28, 2014, as amended, restated, amended and restated, supplemented or otherwise modified from time to time. “Term Loan” means the “Term Loans” as defined in the Term Loan Credit Agreement. “Term Loan Agent” means Wells Fargo Bank, National Association, in its capacity as administrative agent under the Term Loan Credit Agreement, in its capacity as collateral agent under the “Security Documents” (as defined in the Term Loan Credit Agreement) and, where the context requires, in its capacity as Australian Security Trustee, and each of its successors and assigns in such capacity. “Term Loan Cap” has the meaning specified therefor in clause (h) of the definition of “Permitted Indebtedness”. “Term Loan Closing Date” means March 1, 2021. “Term Loan Credit Agreement” means the Term Loan Credit Agreement, dated as of the Term Loan Closing Date, by and among Parent, Thryv, the Term Loan Agent and Term Loan Lenders, as the same may hereafter be further amended, restated, amended and restated, modified, supplemented, extended, renewed, restated, refinanced or otherwise replaced in accordance with the terms of the Intercreditor Agreement. “Term Loan Debt Buyback” shall mean any assignment or repurchase of the Term Loans made pursuant to Section 10.9(g) of the Term Loan Credit Agreement. “Term Loan Documents” means the “Loan Documents” as defined in the Term Loan Credit Agreement. “Term Loan Lenders” means the lenders from time to time party to the Term Loan Credit Agreement, and each of their successors and assigns in such capacity. “Term Loan Payment Conditions” means, with respect to any optional prepayment of the Term Loan pursuant to Section 2.4(a) of the Term Loan Credit Agreement or any Term Loan Debt Buyback, the following: (a) as of the date of any such prepayment or repurchase, and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (b) as of the date of any such prepayment or repurchase, on a pro forma basis after giving effect thereto, Liquidity shall be greater than or equal to $30,000,000,
- 59 - 7446933.5 (c) for the thirty (30) day period immediately preceding such prepayment or repurchase, average Liquidity shall be greater than or equal to $30,000,000, and (d) as of the date of any such prepayment or repurchase (other than pursuant to Section 2.4(b)(iv) of the Term Loan Credit Agreement) and after giving effect thereto, Parent’s Fixed Charge Coverage Ratio, calculated for the preceding trailing twelve month period ending closest to the date on which the transaction or payment shall have been consummated, shall not be less than 1.00 to 1.00. “Thryv” has the meaning set forth in the preamble to the Agreement. “Thryv Ausco” means Thryv Australia Holdings Pty Ltd ACN 638 633 342 (formerly known as Thryv Australia Pty Ltd), an Australian proprietary limited company. “TIH” has the meaning set forth in the preamble to the Agreement. “Total Availability” means, as of any date of determination, the amount equal to the sum of the following, as of such date: (a) US Availability, plus (b) Australian Availability. “Total Borrowing Base” means, as of any date of determination, the amount equal to the sum of (a) the US Borrowing Base, plus (b) the Australian Borrowing Base. “Total Excess Availability” means, as of any date of determination, the amount equal to the sum of the following, as of such date: (a) US Excess Availability, plus (b) Australian Excess Availability. “Total Revolver Usage” means, as of any date of determination, the amount equal to the sum of the following, as of such date: (a) US Revolver Usage, plus (b) Australian Revolver Usage. “Trailing 90 Day Collections” means the aggregate amount of funds actually collected with respect to Accounts during the three (3) consecutive calendar months prior to the date of determination. “Trailing 90 Day Collections Report” means a report of the funds collected with respect to Accounts during the prior three (3) calendar months. “Trademark Security Agreement” has the meaning specified therefor in the Guaranty and Security Agreement. “Tucker Lease” means, collectively, (a) that certain Sublease Agreement, dated as of January 1, 2013, between AT&T Services Inc., a Delaware corporation, as tenant, and YP Texas Region Yellow Pages LLC, a Delaware limited liability company, as subtenant, in respect of the Real Property located at 2245 Northlake Parkway, Tucker, Georgia and (b) that certain Sublease Agreement, dated as of January 1, 2013, between AT&T Services Inc., a Delaware corporation, as tenant, and YP Texas Region Yellow Pages LLC, a Delaware limited liability company, as subtenant, in respect of the Real Property located at 2247 Northlake Parkway, Tucker, Georgia. “UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any subsequent revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issued.
- 60 - 7446933.5 “UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “US Availability” means, as of any date of determination, the amount that US Borrowers are entitled to borrow as US Revolving Loans under Section 2.1 of the Agreement (after giving effect to the then outstanding US Revolver Usage). “US Borrower” and “US Borrowers” have the respective meanings specified therefor in the preamble to the Agreement. “US Borrowing Base” means, as of any date of determination, as to US Borrowers, the result of: (a) the sum of (i) 85% of the amount of Eligible Billed Accounts of such US Borrowers, plus (ii) 65% of the amount of Eligible Installment Accounts of such US Borrowers, plus (iii) 85% of the amount of Eligible Credit Card Accounts of such US Borrowers, plus (iv) 85% of the amount of Eligible Alpha Accounts of such US Borrowers, minus (b) without duplication of clause (b) of the definition of “Australian Borrowing Base”, the aggregate amount of reserves, if any, established by Administrative Agent under Section 2.1(c) of the Agreement. Notwithstanding the foregoing, in no event shall the sum of clause (a)(ii) above plus clause (a)(ii) of the definition of Australian Borrowing Base exceed seventy-five percent (75%) of the Maximum Revolver Amount. “US Dollar Equivalent” means at any time (a) as to any amount denominated in US Dollars, the amount thereof at such time, and (b) as to any amount denominated in any currency other than US Dollars, the equivalent amount in US Dollars calculated by Administrative Agent at such time using the Exchange Rate in effect on the Business Day of determination. “US Dollars” or “$” means United States dollars. “US Excess Availability” means, as of any date of determination, the amount equal to US Availability minus the aggregate amount, if any, of all trade payables of US Borrowers and their Subsidiaries aged in excess of 60 days past their due date.
- 61 - 7446933.5 “US Guarantors” means, collectively, (a) Parent, (b) TIH, and (c) each other Person organized under the laws of the United States that becomes a US Guarantor after the Closing Date pursuant to Section 5.11 of the Agreement. “US Loan Account” has the meaning specified therefor in Section 2.9 of the Agreement. “US Loan Party” means any US Borrower or US Guarantor. “US Person” means a United States person within the meaning of Section 7701(a)(30) of the IRC. “US Revolver Usage” means, as of any date of determination, the sum of (a) the amount of outstanding US Revolving Loans (inclusive of Swing Loans and Extraordinary Advances), plus (b) the amount of the Letter of Credit Usage. “US Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the Agreement. “US Subsidiary” means any Subsidiary organized under the laws of the United States, any state thereof or the District of Columbia. “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; provided, that for purposes of notice requirements in Sections 2.3(a), such day is also a Business Day. “U.S. Special Resolution Regimes” has the meaning specified therefor in Section 17.18 of this Agreement. “United States”, “U.S.” or “US” means the United States of America. “Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the Agreement. “Voidable Transfer” has the meaning specified therefor in Section 17.8 of the Agreement. “Wells Fargo” means Wells Fargo Bank, National Association, a national banking association. “Wholly-Owned” means, with respect to a Subsidiary, that all of the Equity Interests of such Subsidiary are, directly or indirectly, owned or controlled by Parent and/or one or more of its Wholly- Owned Subsidiaries (except for directors’ qualifying shares or other shares required by applicable law to be owned by a Person other than Parent and/or one or more of its Wholly-Owned Subsidiaries). “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA. “Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify
- 62 - 7446933.5 or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
EX-10.25
5
exhibit1025-202310xk.htm
EX-10.25
exhibit1025-202310xk
EXHIBIT 10.25 EXECUTION VERSION 1 174539396_2 FIRST AMENDMENT TO TERM LOAN CREDIT AGREEMENT THIS FIRST AMENDMENT TO TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of June 21, 2023, is entered into by WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) under that certain Credit Agreement referred to below and in consultation with THRYV, INC., a Delaware corporation (the “Borrower”). Statement of Purpose WHEREAS, THRYV HOLDINGS, INC., a Delaware corporation, the Borrower, certain lenders party thereto (collectively, the “Lenders” and, each individually, a “Lender”) and the Administrative Agent are party to that certain Term Loan Credit Agreement dated as March 1, 2021 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”; and the Existing Credit Agreement, as amended by this Amendment, the “Credit Agreement). WHEREAS, on March 5, 2021, ICE Benchmark Administration (the “IBA”), the administrator of the London interbank offered rate, and the Financial Conduct Authority, the regulatory supervisor of the IBA, announced in public statements that the final publication or representativeness date for the London interbank offered rate for Dollars for overnight, 1 month, 3 month, 6 month and 12 month tenor settings will be June 30, 2023, which such date is the Benchmark Replacement Date for the London interbank offered rate (such announcements, collectively, the “LIBOR Cessation Announcement”); WHEREAS, as a result of such LIBOR Cessation Announcement, a Benchmark Transition Event has occurred; WHEREAS, pursuant to Section 3.8(c) of the Existing Credit Agreement, upon the occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date with respect to any Benchmark, if the applicable Benchmark Replacement is a Benchmark Replacement determined under clause (a)(1) of the definition of “Benchmark Replacement” (as defined in the Existing Credit Agreement) for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes under the Existing Credit Agreement and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any a further action or consent of any other party to, the Existing Credit Agreement or any other Loan Document; WHEREAS, the applicable Benchmark Replacement contemplated by this Amendment is a Benchmark Replacement determined under clause (a)(1) of the definition of “Benchmark Replacement” (as defined in the Existing Credit Agreement); WHEREAS, pursuant to Sections 3.8(c)(ii) and 10.2 of the Existing Credit Agreement, the Administrative Agent may, in connection with the implementation of any Benchmark Replacement, make Benchmark Replacement Conforming Changes and enter into amendments or modifications to the Existing Credit Agreement or any of the other Loan Documents or enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of Section 3.8(c) of the Existing Credit Agreement in accordance therewith; WHEREAS, the Administrative Agent is, in consultation with the Borrower, entering into this Amendment to reflect Benchmark Replacement Conforming Changes related to the Benchmark Replacement described herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
2 174539396_2 1. Capitalized Terms. All capitalized undefined terms used in this Amendment (including, without limitation, in the Statement of Purpose hereto) shall have the meanings assigned thereto in the Existing Credit Agreement. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents. 2. Amendments. Effective as of the Amendment Effective Date (as defined below) and subject to the terms and conditions set forth herein: (a) the body of the Existing Credit Agreement is hereby amended (i) to delete the red or green stricken text (indicated textually in the same manner as the following examples: stricken text and stricken text) and (ii) 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) as set forth in the Credit Agreement attached hereto as Annex A; and (b) Exhibits B (Form of Notice of Borrowing), C (Form of Notice of Prepayment), and D (Form of Notice of Conversion/Continuation) of the Existing Credit Agreement are hereby amended and restated in their entireties as attached hereto as Annex B. 3. Effectiveness. This Amendment shall become effective on June 30, 2023 (such date, the “Amendment Effective Date”). 4. Limited Effect. Except as expressly provided herein, the Existing Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect. This Amendment shall not be deemed (a) to be a waiver of, or consent to, or a modification or amendment of, any term or condition of the Existing Credit Agreement or any other Loan Document, (b) to prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or modified from time to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with Holdings, the Borrower, any of their respective Subsidiaries or any other Person with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent, or any of them, under or with respect to any such documents or (d) a novation of any Credit Party’s covenants, representations, warranties and other obligations set forth in the Credit Agreement, the Term Loan Notes, the Security Documents, the Australian Security Trust Deed, the Guaranty Agreement and the other Loan Documents to which such Credit Party is a party remains in full force and effect. References in the Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, “hereof” or other words of like import) and in any Loan Document to the “Credit Agreement” shall be deemed to be references to the Existing Credit Agreement as modified hereby. . 5. Costs and Expenses. The Borrower agrees to pay in accordance with Section 10.3 of the Credit Agreement all reasonable and documented out-of-pocket expenses (including, without limitation, all costs of electronic or internet distribution of any information hereunder) of the Administrative Agent in connection with the preparation, execution, delivery, administration and enforcement of this Amendment and the other instruments and documents to be delivered hereunder. 6. Execution in Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment.
3 174539396_2 7. Governing Law. This Amendment and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York. 8. Jurisdiction and Venue; Waiver of Jury Trial. Sections 10.5 and 10.6 of the Credit Agreement are hereby incorporated by this reference as if fully stated herein mutatis mutandis. 9. Entire Agreement. This Amendment is the entire agreement, and supersedes any prior agreements and contemporaneous oral agreements, of the parties concerning its subject matter. 10. Successors and Assigns. This Amendment shall be binding on and insure to the benefit of the parties and their heirs, beneficiaries, successors and permitted assigns. 11. Existing Loans. All Term Loans to which the LIBOR Rate (as defined in the Existing Credit Agreement) applies and are outstanding under the Existing Credit Agreement on the Amendment Effective Date shall continue as Term Loans at such LIBOR Rate under the Existing Credit Agreement (and, notwithstanding anything in this Amendment including Annex A hereto to the contrary, subject to the terms and conditions and applicable interest rate terms (including breakage) with respect to Term Loans at the LIBOR Rate under the Existing Credit Agreement) solely for the remainder of the Interest Periods applicable thereto immediately prior to the effectiveness of this Amendment; it being understood that such Term Loans to which the LIBOR Rate applies and such Interest Periods are not being renewed or extended as a result of this Amendment and, upon the expiration or earlier termination of such Interest Periods, such Term Loans to which the LIBOR Rate applies shall be (i) repaid or (ii) converted to Base Rate Loans or Term SOFR Loans (in each case, as defined in the Credit Agreement) as the Borrower may elect (which election in the case of clause (ii) shall be made in accordance with the notice requirements set forth in the Credit Agreement as though the Borrower were requesting a borrowing to be made on the effective date of such conversion). [Signature Page Follows]
First Amendment to Term Loan Credit Agreement Thryv, Inc. Signature Page IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed under seal by their duly authorized officers, all as of the day and year first written above. ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent By: /s/ Gambo Audu Name: Gambo Audu Title: Vice President
First Amendment to Term Loan Credit Agreement Thryv, Inc. Signature Page Acknowledged and accepted by: THRYV, INC. By: /s/ KJ Christopher Name: KJ Christopher Title: Vice President-Accounting and Corporate Development, Tax
174539396_2 Annex A Amended Credit Agreement See attached.
174539396_2 Annex B Amended Exhibits B, C and D See attached.
ANNEX A to First Amendment to Term Loan Credit Agreement 174504702_2 Published CUSIP Number: 88602GAC5 Term Loan CUSIP Number: 88602GAD3 $700,000,000 TERM LOAN CREDIT AGREEMENT dated as of March 1, 2021 (as amended by that certain First Amendment to Term Loan Credit Agreement dated as of June 21, 2023), by and among THRYV HOLDINGS, INC., as Holdings, THRYV, INC., as Borrower, THE LENDERS FROM TIME TO TIME PARTY HERETO, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent WELLS FARGO SECURITIES, LLC, as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS Page -i- 174504702_2 ARTICLE I DEFINITIONS ........................................................................................................................ 1 SECTION 1.1 Definitions ...................................................................................................... 1 SECTION 1.2 Other Definitions and Provisions ................................................................. 52 SECTION 1.3 Accounting Terms. ....................................................................................... 52 SECTION 1.4 UCC Terms .................................................................................................. 53 SECTION 1.5 Rounding ...................................................................................................... 53 SECTION 1.6 References to Agreement and Laws ............................................................. 53 SECTION 1.7 Times of Day ................................................................................................ 53 SECTION 1.8 Guarantees/Earn-Outs .................................................................................. 53 SECTION 1.9 Covenant Compliance Generally.................................................................. 54 SECTION 1.10 Limited Condition Transactions ................................................................... 54 SECTION 1.11 Rates ............................................................................................................. 55 SECTION 1.12 Divisions....................................................................................................... 56 SECTION 1.13 Banking Code of Practice (Australia) .......................................................... 56 ARTICLE II TERM LOAN FACILITY .................................................................................................... 56 SECTION 2.1 Initial Term Loan ......................................................................................... 56 SECTION 2.2 Procedure for Advance of Term Loan. ......................................................... 56 SECTION 2.3 Repayment of Term Loans. .......................................................................... 56 SECTION 2.4 Prepayments of Term Loans. ....................................................................... 57 ARTICLE III GENERAL LOAN PROVISIONS...................................................................................... 62 SECTION 3.1 Interest. ......................................................................................................... 62 SECTION 3.2 Notice and Manner of Conversion or Continuation of Term Loans............. 63 SECTION 3.3 Fees .............................................................................................................. 64 SECTION 3.4 Manner of Payment ...................................................................................... 64 SECTION 3.5 Evidence of Indebtedness ............................................................................. 64 SECTION 3.6 Sharing of Payments by Lenders .................................................................. 65 SECTION 3.7 Administrative Agent’s Clawback. .............................................................. 65 SECTION 3.8 Changed Circumstances. .............................................................................. 66 SECTION 3.9 Indemnity ..................................................................................................... 68 SECTION 3.10 Increased Costs. ............................................................................................ 69 SECTION 3.11 Taxes. ........................................................................................................... 70 SECTION 3.12 Mitigation Obligations; Replacement of Lenders. ....................................... 73
TABLE OF CONTENTS (continued) Page -ii- 174504702_2 SECTION 3.13 Incremental Term Loans. ............................................................................. 75 SECTION 3.14 Amend and Extend Transactions. ................................................................. 76 SECTION 3.15 Refinancing Facilities. .................................................................................. 77 ARTICLE IV CONDITIONS OF CLOSING AND BORROWING ........................................................ 78 SECTION 4.1 Conditions to Closing and Initial Term Loan ............................................... 78 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES ..................... 82 SECTION 5.1 Organization; Power; Qualification .............................................................. 82 SECTION 5.2 Ownership .................................................................................................... 83 SECTION 5.3 Authorization; Enforceability ....................................................................... 83 SECTION 5.4 Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc ...................................................................................................... 83 SECTION 5.5 Compliance with Law; Governmental Approvals ........................................ 84 SECTION 5.6 Tax Returns and Payments ........................................................................... 84 SECTION 5.7 Intellectual Property Matters ........................................................................ 84 SECTION 5.8 Environmental Matters. ................................................................................ 84 SECTION 5.9 Employee Benefit Matters. ........................................................................... 85 SECTION 5.10 Margin Stock ................................................................................................ 86 SECTION 5.11 Government Regulation ............................................................................... 86 SECTION 5.12 Employee Relations ...................................................................................... 87 SECTION 5.13 Financial Statements .................................................................................... 87 SECTION 5.14 No Material Adverse Change ....................................................................... 87 SECTION 5.15 Solvency ....................................................................................................... 87 SECTION 5.16 Title to Properties ......................................................................................... 87 SECTION 5.17 Litigation ...................................................................................................... 87 SECTION 5.18 Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions. ....... 88 SECTION 5.19 Absence of Defaults ..................................................................................... 88 SECTION 5.20 Senior Indebtedness Status ........................................................................... 88 SECTION 5.21 Disclosure ..................................................................................................... 88 SECTION 5.22 Security Interest in Collateral ....................................................................... 89 SECTION 5.23 Tax Consolidation and Payment of Taxes .................................................... 89 ARTICLE VI AFFIRMATIVE COVENANTS ........................................................................................ 89 SECTION 6.1 Financial Statements .................................................................................... 89 SECTION 6.2 Certificates; Other Reports ........................................................................... 90
TABLE OF CONTENTS (continued) Page -iii- 174504702_2 SECTION 6.3 Notice of Litigation and Other Matters ........................................................ 92 SECTION 6.4 Preservation of Corporate Existence and Related Matters ........................... 93 SECTION 6.5 Maintenance of Property and Licenses. ....................................................... 93 SECTION 6.6 Insurance ...................................................................................................... 93 SECTION 6.7 Accounting Methods and Financial Records ................................................ 94 SECTION 6.8 Payment of Taxes and Other Obligations ..................................................... 94 SECTION 6.9 Compliance with Laws and Approvals ........................................................ 94 SECTION 6.10 Environmental Laws .................................................................................... 94 SECTION 6.11 Compliance with ERISA .............................................................................. 94 SECTION 6.12 Visits and Inspections; Lender Calls ............................................................ 95 SECTION 6.13 Additional Guarantors and Collateral. .......................................................... 95 SECTION 6.14 Use of Proceeds. ........................................................................................... 96 SECTION 6.15 Compliance with Anti-Corruption Laws; Beneficial Ownership Regulation, Anti-Money Laundering Laws and Sanctions .......................... 97 SECTION 6.16 Further Assurances ....................................................................................... 97 SECTION 6.17 Maintenance of Debt Ratings ....................................................................... 97 SECTION 6.18 Post-Closing Matters .................................................................................... 98 ARTICLE VII NEGATIVE COVENANTS .............................................................................................. 98 SECTION 7.1 Indebtedness ................................................................................................. 98 SECTION 7.2 Liens ........................................................................................................... 101 SECTION 7.3 Investments................................................................................................. 103 SECTION 7.4 Fundamental Changes ................................................................................ 106 SECTION 7.5 Asset Dispositions ...................................................................................... 107 SECTION 7.6 Restricted Payments ................................................................................... 108 SECTION 7.7 Transactions with Affiliates ....................................................................... 109 SECTION 7.8 Accounting Changes; Organizational Documents...................................... 110 SECTION 7.9 Payments and Modifications of Indebtedness. ........................................... 110 SECTION 7.10 No Further Negative Pledges; Restrictive Agreements. ............................. 111 SECTION 7.11 Nature of Business ..................................................................................... 112 SECTION 7.12 Amendments of Other Documents ............................................................. 112 SECTION 7.13 Sale Leasebacks .......................................................................................... 112 SECTION 7.14 Total Net Leverage Ratio ........................................................................... 113 SECTION 7.15 Limitations on Holdings ............................................................................. 113
TABLE OF CONTENTS (continued) Page -iv- 174504702_2 SECTION 7.16 Australian Tax Matters ............................................................................... 113 ARTICLE VIII DEFAULT AND REMEDIES ....................................................................................... 114 SECTION 8.1 Events of Default ........................................................................................ 114 SECTION 8.2 Remedies .................................................................................................... 116 SECTION 8.3 Rights and Remedies Cumulative; Non-Waiver; Etc. ................................ 116 SECTION 8.4 Crediting of Payments and Proceeds .......................................................... 117 SECTION 8.5 Administrative Agent May File Proofs of Claim ....................................... 118 SECTION 8.6 Credit Bidding. ........................................................................................... 118 SECTION 8.7 Borrower’s Right to Cure ........................................................................... 119 ARTICLE IX THE ADMINISTRATIVE AGENT ................................................................................. 120 SECTION 9.1 Appointment and Authority........................................................................ 120 SECTION 9.2 Rights as a Lender ...................................................................................... 120 SECTION 9.3 Exculpatory Provisions. ............................................................................. 120 SECTION 9.4 Reliance by the Administrative Agent ....................................................... 122 SECTION 9.5 Delegation of Duties ................................................................................... 122 SECTION 9.6 Resignation of Administrative Agent. ........................................................ 122 SECTION 9.7 Non-Reliance on Administrative Agent and Other Lenders ...................... 124 SECTION 9.8 No Other Duties, Etc .................................................................................. 124 SECTION 9.9 Collateral and Guaranty Matters. ............................................................... 124 SECTION 9.10 Secured Hedge Obligations and Secured Cash Management Obligations ................................................................................................. 125 SECTION 9.11 Certain ERISA Matters. ............................................................................. 126 SECTION 9.12 Australian Security Trust Deed. ................................................................. 127 ARTICLE X MISCELLANEOUS........................................................................................................... 128 SECTION 10.1 Notices. ....................................................................................................... 128 SECTION 10.2 Amendments, Waivers and Consents ......................................................... 131 SECTION 10.3 Expenses; Indemnity. ................................................................................. 134 SECTION 10.4 Right of Setoff ............................................................................................ 136 SECTION 10.5 Governing Law; Jurisdiction, Etc. .............................................................. 136 SECTION 10.6 Waiver of Jury Trial ................................................................................... 137 SECTION 10.7 Reversal of Payments ................................................................................. 137 SECTION 10.8 Injunctive Relief ......................................................................................... 138 SECTION 10.9 Successors and Assigns; Participations. ..................................................... 138
TABLE OF CONTENTS (continued) Page -v- 174504702_2 SECTION 10.10 Treatment of Certain Information; Confidentiality .................................... 145 SECTION 10.11 Performance of Duties ................................................................................ 146 SECTION 10.12 All Powers Coupled with Interest .............................................................. 146 SECTION 10.13 Survival. ..................................................................................................... 147 SECTION 10.14 Titles and Captions ..................................................................................... 147 SECTION 10.15 Severability of Provisions .......................................................................... 147 SECTION 10.16 Counterparts; Integration; Effectiveness; Electronic Execution. ............... 147 SECTION 10.17 Term of Agreement .................................................................................... 148 SECTION 10.18 USA PATRIOT Act; Anti-Money Laundering Laws ................................ 148 SECTION 10.19 Independent Effect of Covenants ............................................................... 148 SECTION 10.20 No Advisory or Fiduciary Responsibility. ................................................. 148 SECTION 10.21 Inconsistencies with Other Documents ...................................................... 149 SECTION 10.22 Intercreditor Agreements. ........................................................................... 150 SECTION 10.23 Acknowledgement and Consent to Bail-In of Affected Financial Institutions .................................................................................................. 150 SECTION 10.24 Acknowledgement Regarding Any Supported QFCs................................. 150 SECTION 10.25 Australian PPSA Provisions ....................................................................... 151
vi 174504702_2 EXHIBITS Exhibit A - Form of Term Loan Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Notice of Prepayment Exhibit D - Form of Notice of Conversion/Continuation Exhibit E - Form of Compliance Certificate Exhibit F - Form of Assignment and Assumption Exhibit G-1 - Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Lenders) Exhibit G-2 - Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Participants) Exhibit G-3 - Form of U.S. Tax Compliance Certificate (Foreign Participant Partnerships) Exhibit G-4 - Form of U.S. Tax Compliance Certificate (Foreign Lender Partnerships) Exhibit H - Form of Joinder Agreement Exhibit I - Form of Auction Procedures Exhibit J - Form of Affiliated Lender Assignment and Assumption SCHEDULES Schedule 1.1 - Designated Operational FX Hedge Schedule 5.1 - Jurisdictions of Organization and Qualification of Subsidiary Guarantors Schedule 5.2 - Subsidiaries and Capitalization Schedule 5.9 - ERISA Plans Schedule 5.12 - Labor and Collective Bargaining Agreements Schedule 5.16 - Real Property Schedule 5.17 - Litigation Schedule 6.18 - Post-Closing Matters Schedule 7.1 - Existing Indebtedness Schedule 7.2 - Existing Liens Schedule 7.3 - Existing Loans, Advances and Investments Schedule 7.7 - Transactions with Affiliates
1 174504702_2 TERM LOAN CREDIT AGREEMENT, dated as of March 1, 2021 (as amended by that certain First Amendment to Term Loan Credit Agreement dated as of June 21, 2023), by and among THRYV HOLDINGS, INC., a Delaware corporation, as Holdings, THRYV, INC., a Delaware corporation, as Borrower, the lenders who are party to this Agreement and the lenders who may become a party to this Agreement from time to time pursuant to the terms hereof, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent and Australian Security Trustee for the Lenders. STATEMENT OF PURPOSE WHEREAS, the Borrower has requested, and subject to the terms and conditions set forth in this Agreement, the Administrative Agent and the Lenders have agreed to extend, a certain term loan credit facility to the Borrower. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below: “ABL Administrative Agent” means, individually or collectively as the context may require, (a) Wells Fargo, in its capacity as administrative agent and ABL Australian Security Trustee under the ABL Credit Agreement and (b) each co-collateral agent under the ABL Documents and, in each case, their respective successors and assigns in such capacity. “ABL Australian Security Trustee” means the Australian security trustee appointed under the ABL Documents and its successors and assigns in such capacity. “ABL Credit Agreement” means the Amended and Restated Credit Agreement, dated as of June 30, 2017, by and among the Borrower and certain of its Subsidiaries, as borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto in their capacities as lenders thereunder, and the ABL Administrative Agent, as administrative agent thereunder, as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as of January 31, 2019, that certain Second Amendment to Amended and Restated Credit Agreement, dated as of March 21, 2019, that certain Third Amendment to Amended and Restated Credit Agreement, dated as of August 20, 2019, that certain Fourth Amendment to Amended and Restated Credit Agreement, dated as of January 28, 2020 and that certain Fifth Amendment to Amended and Restated Credit Agreement, dated as of the date hereof (the “Fifth ABL Amendment”), and as further amended, supplemented, modified, replaced, restated or amended and restated from time to time in accordance with the terms thereof, the terms of this Agreement and the terms of the Closing Date Intercreditor Agreement. “ABL Documents” means, collectively, the ABL Credit Agreement, all other “Loan Documents” as such term is defined in the ABL Credit Agreement, as amended, modified, supplemented, restated, or amended and restated from time to time in accordance with the terms thereof, this Agreement and the Closing Date Intercreditor Agreement.
2 174504702_2 “ABL Obligations” means “Obligations” as such term is defined in the ABL Credit Agreement; provided that the ABL Obligations shall at all times (a) be subject to, and the administrative agent thereunder party to, the Closing Date Intercreditor Agreement and (b) be an asset-based facility with advances thereunder based on a borrowing base. “ABL Priority Collateral” has the meaning assigned to “ABL Priority Collateral” in the Closing Date Intercreditor Agreement. “Acceptable Junior Lien Intercreditor Agreement” means, in connection with any Indebtedness that is, or is intended to be, secured by the Collateral on a junior basis, an intercreditor agreement that is reasonably satisfactory to the Borrower and the Administrative Agent, among the Administrative Agent, the ABL Administrative Agent (so long as the ABL Credit Agreement is in effect), one or more representatives for the holders of any Indebtedness that is, or is intended to be, secured by the Collateral on a pari passu basis (if applicable) and one or more representatives for the holders of any Indebtedness that is, or is intended to be, secured by the Collateral on a junior basis with the Secured Obligations, and acknowledged by the Credit Parties, as the same may be amended, restated, amended and restated, supplemented or otherwise modified in accordance with the terms hereof and thereof. “Acquired EBITDA” means, with respect to any Person or business acquired pursuant to an Acquisition for any period, the amount for such period of Consolidated EBITDA of any such Person or business so acquired (determined using such definitions as if references to Holdings and its Subsidiaries therein were to such Person or business), as calculated by the Borrower in good faith and which shall be factually supported by historical financial statements or a quality of earnings report prepared by an independent third party accounting firm that is reasonably acceptable to the Administrative Agent; provided that, notwithstanding the foregoing to the contrary, in determining Acquired EBITDA for any Person or business that does not have historical financial accounting periods which coincide with that of the financial accounting periods of Holdings and its Subsidiaries (a) references to Reference Period in any applicable definitions shall be deemed to mean the same relevant period as the applicable period of determination for Holdings and its Subsidiaries and (b) to the extent the commencement of any such Reference Period shall occur during a fiscal quarter of such acquired Person or business (such that only a portion of such fiscal quarter shall be included in such Reference Period), Acquired EBITDA for the portion of such fiscal quarter so included in such Reference Period shall be deemed to be an amount equal to (x) Acquired EBITDA otherwise attributable to the entire fiscal quarter (determined in a manner consistent with the terms set forth above) multiplied by (y) a fraction, the numerator of which shall be the number of months of such fiscal quarter included in the relevant Reference Period and the denominator of which shall be actual months in such fiscal quarter. “Acquired Entities” means, collectively, (a) Sensis Holdings, (b) Sunshine SPV and (c) the Sunshine Target and its domestic and Australian Subsidiaries (as defined in the Sunshine Acquisition Agreement). “Acquisition” means any acquisition, or any series of related acquisitions, consummated on or after the date of this Agreement, by which any Credit Party or any of its Subsidiaries (a) acquires any business or all or substantially all of the assets of any Person, or business unit, line of business or division thereof, whether through purchase of assets, exchange, issuance of stock or other equity or debt securities, merger, reorganization, amalgamation, division or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of members of the board of directors or the equivalent governing body (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.
3 174504702_2 “Adjusted Term SOFR” means, 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. “Administrative Agent” means Wells Fargo, in its capacity as Administrative Agent hereunder, and where the context requires, shall include Wells Fargo, in its capacity as Australian Security Trustee, and any successor thereto appointed pursuant to Section 9.6. “Administrative Agent’s Office” means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 10.1(c). “Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Affiliated Lender” means, collectively, any Affiliate of the Borrower or a Permitted Investor (other than Holdings, the Borrower and their respective Subsidiaries or any natural Person) and shall include all of the Designated Affiliated Lenders and the Non-Designated Affiliated Lenders. “Affiliated Lender Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.9) that is an Affiliated Lender, and accepted by the Administrative Agent, in substantially the form attached as Exhibit J or any other form reasonably satisfactory to the Administrative Agent. “Affiliated Lender Cap” has the meaning assigned thereto in Section 10.9(h)(iv). “Agent Parties” has the meaning assigned thereto in Section 10.1(e). “Agreement” means this Term Loan Credit Agreement. “All-In Yield” means, as to any Indebtedness, the effective all-in yield applicable thereto as determined in a manner consistent with generally accepted financial practices, taking into account: (a) interest rate margins, (b) original issue discount (“OID”) and upfront or similar fees (which shall be deemed to constitute like amounts of OID) payable by the Borrower or any of its Subsidiaries or Affiliates to the lenders under, or holders of, such Indebtedness in the initial primary syndication thereof (with OID and upfront fees being equated to interest based on assumed four-year life to maturity (or, if less, the stated weighted average life to maturity at the time of its incurrence of the applicable Indebtedness)), and (c) any interest rate floor, but excluding (i) any arrangement, commitment, structuring, agency or underwriting fees that are not paid to or shared with all relevant lenders generally in connection with the commitment or syndication of such Indebtedness, (ii) any ticking, unused line or similar fees or (iii) any other fee that is not paid directly by the Borrower generally to all relevant lenders ratably in the primary syndication of such Indebtedness; provided that (A) to the extent that any interest rate specified for such Indebtedness that is subject to a floor (in each case, without giving effect to any such floor on the date on which the All-In Yield is being calculated) is less than such floor, the amount of such difference will be deemed added to the
4 174504702_2 interest rate margin applicable to such Indebtedness for purposes of calculating the All-In Yield and (B) to the extent that any interest rate specified for such Indebtedness that is subject to a floor (in each case, without giving effect to any such floor on the date on which the All-In Yield is being calculated) is equal to or greater than such floor, the floor will be disregarded in calculating the All-In Yield. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction from time to time concerning or relating to bribery or corruption, including the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder. “Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules related to terrorism financing, money laundering, any predicate crime to money laundering or any financial record keeping, including any applicable provision of the PATRIOT Act, The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) of Australia and the Anti-Money Laundering and Counter-Terrorism Financing Rules of Australia. “Applicable ECF Percentage” means, with respect to any determination of Excess Cash Flow, (a) 100% for any fiscal quarter of the Borrower with respect to which the Total Net Leverage Ratio (as of the end of the applicable fiscal quarter for which Excess Cash Flow is being calculated) is greater than 1.50 to 1.00, (b) 75% for any fiscal quarter of the Borrower with respect to which the Total Net Leverage Ratio (as of the end of the applicable fiscal quarter for which Excess Cash Flow is being calculated) is greater than 1:00 to 1:00 but equal to or less than 1.50 to 1.00, (c) 50% for any fiscal quarter of the Borrower with respect to which the Total Net Leverage Ratio (as of the end of the applicable fiscal quarter for which Excess Cash Flow is being calculated) is greater than 0.50 to 1:00 but equal to or less than 1.00 to 1.00, and (d) 25% for any fiscal quarter of the Borrower with respect to which the Total Net Leverage Ratio (as of the end of the applicable fiscal quarter for which Excess Cash Flow is being calculated) is less than 0.50 to 1.00. “Applicable Law” means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of Governmental Authorities and all orders and decrees of all courts and arbitrators. “Applicable Margin” means a percentage per annum equal to (a) for SOFR Loans, 8.50%, and (b) for Base Rate Loans 7.50%. The Applicable Margin shall be increased as, and solely to the extent, required by the MFN Protection. “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. “Arranger” means Wells Fargo Securities, LLC, in its capacity as sole lead arranger and sole bookrunner. “ASIC” means the Australian Securities and Investments Commission. “Asset Disposition” means the sale, transfer, license, lease or other disposition of any Property (including any sale and leaseback transaction or division), whether in a single transaction or a series of related transactions, by any Credit Party or any Subsidiary thereof, and any issuance of Equity Interests by any Subsidiary of Holdings to any Person that is not a Credit Party or any Subsidiary thereof. For the
5 174504702_2 avoidance of doubt, the write-off of any assets subject to the Tucker Lease shall not be deemed to constitute an Asset Disposition. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.9) that is not an Affiliated Lender, and accepted by the Administrative Agent, in substantially the form attached as Exhibit F or any other form reasonably satisfactory to the Administrative Agent. “Attributable Indebtedness” means, on any date of determination, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease or operating lease, the capitalized amount or principal amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease Obligation. “Australia” means the Commonwealth of Australia. “Australian Corporations Act” means the Corporations Act 2001 (Cth) of Australia. “Australian Credit Party” means each Credit Party incorporated under the laws of Australia. “Australian Featherweight Security Deed” means the featherweight security deed to be entered into on the Australian Sunshine Targets Accession Date between Thryv Ausco, each Australian Sunshine Target and the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian General Security Deed” means the general security deed to be entered into on the Australian Sunshine Targets Accession Date between Thryv Ausco, each Australian Sunshine Target and the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian PPSA” means the Personal Property Securities Act 2009 (Cth) of Australia. “Australian Security Documents” means the collective reference to (a) the Australian General Security Deed, (b) the Australian Featherweight Security Deed, (c) the Australian Specific Security Deed, and (d) all other security documents governed by the laws of Australia hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the Secured Obligations. “Australian Security Trust Deed” means the security trust deed to be entered into on the Australian Sunshine Targets Accession Date between, among others, TIH, Thryv Ausco, each Australian Sunshine Target and the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian Security Trustee” means Wells Fargo in its capacity as Australian security trustee hereunder and any successor or assign acting in such capacity. “Australian Specific Security Deed” means the specific security deed (marketable securities) to be entered into on the Australian Sunshine Targets Accession Date between TIH and the Australian Security Trustee, in form and substance reasonably satisfactory to the Administrative Agent. “Australian Subsidiary” means any Subsidiary incorporated or organized under the laws of Australia.
6 174504702_2 “Australian Sunshine Targets” means each of (a) Sunshine SPV, (b) the Sunshine Target, (c) Project Sunshine II Pty Limited ACN 167 275 890, (d) Project Sunshine III Pty Limited ACN 167 276 066, (e) Project Sunshine IV Pty Limited ACN 167 276 226, (f) Sensis Pty Ltd ACN 007 423 912, (g) Sensis Holdings Pty Ltd ACN 090 894 769, (h) Citysearch Australia Pty. Ltd. ACN 076 673 857, (i) Australian Local Search Pty Limited ACN 109 826 351, and (j) Life Events Media Pty Limited ACN 118 014 298. “Australian Sunshine Targets Accession Date” means the date following the Australian Whitewash Completion Date (or such later date as may be determined by the Administrative Agent in its sole discretion) on which each Australian Sunshine Target, TIH and Thryv Ausco executes each of the documents to which it is a party under Section 6.18. “Australian Tax Act” means the Income Tax Assessment Act 1936 (Cth) of Australia. “Australian Tax Consolidated Group” means a “Consolidated Group” or an “MEC Group” as defined in the Australian Tax Act. “Australian TFA” means any tax funding agreement for Australian tax consolidation purposes. “Australian TSA” means an agreement between the members of an Australian Tax Consolidated Group which takes effect as a tax sharing agreement under section 721-25 of the applicable Australian Tax Act and complies with the applicable Australian Tax Act and any applicable law, official directive, request, guideline or policy (whether or not having the force of law) issued in connection with the applicable Australian Tax Act. “Australian Whitewash Completion Date” means the date (following the expiry of all required time periods under the Australian Corporations Act before the Australian Security Documents can be executed) of completion of the Australian Whitewash Transaction. “Australian Whitewash Documents” means all documents (including all resolutions, notices of meeting, explanatory statements and forms) that are required to be lodged with ASIC in connection with the Australian Whitewash Transaction. “Australian Whitewash Transaction” means the transaction by which Thryv Ausco and each Australian Sunshine Target, among others: (i) passes all resolutions that are required to be passed in accordance with section 260B of the Australian Corporations Act to approve the giving of financial assistance in connection with the entry into and performance of obligations under each Loan Document to which it is proposed to be a party within the required time periods; and (ii) lodges all its relevant Australian Whitewash Documents with ASIC in accordance with section 260B of the Australian Corporations Act. “Available Amount” means, at any time, an amount, at such time (which shall not be less than zero) equal to the sum, without duplication, of: (a) $25,000,000; plus (b) Retained Excess Cash Flow: plus (c) one hundred percent (100%) of the aggregate Net Cash Proceeds and the fair market value of Cash Equivalents or other property received by the Borrower since the Closing Date from (i) an Equity Issuance of Qualified Equity Interests (other than an Equity Issuance (A) of Disqualified Equity Interests, (B) from Holdings or a Subsidiary thereof to Holdings or a Subsidiary thereof or (C) in connection with a Specified Equity Contribution) and (ii) Indebtedness of the Borrower or a Subsidiary of the Borrower that
7 174504702_2 has been converted into or exchanged for Qualified Equity Interests of the Borrower or any direct or indirect parent company of the Borrower; plus (d) one hundred percent (100%) of the aggregate amount of cash and the fair market value of Cash Equivalents or other property contributed to the capital of the Borrower from a Person other than Holdings or its Subsidiaries following the Closing Date (other than Disqualified Equity Interests or any Specified Equity Contribution); plus (e) one hundred percent (100%) of (i) the aggregate amount received in cash and the fair market value of any Cash Equivalents or other Property received by means of (A) a sale or other disposition (other than to Holdings or its Subsidiaries) of Investments made by the Borrower or a Subsidiary pursuant to Section 7.3(n) and (B) repurchases and redemptions of such Investments from the Borrower or any of its Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Investments made by the Borrower or the Subsidiaries pursuant to Section 7.3(n), in each case, not in an amount in excess of the original amount of such Investment and (ii) returns, profits, distributions and similar amounts actually received by the Borrower and its Subsidiaries on Investments made pursuant to Section 7.3(n) and not in an amount in excess of the original amount of such Investment; plus (f) the aggregate amount of Declined Proceeds retained by the Borrower and its Subsidiaries pursuant to Section 2.4(b)(vi); minus (g) the aggregate amount of Investments made pursuant to Section 7.3(n) prior to such date of determination; minus (h) the aggregate amount of Restricted Payments made pursuant to Section 7.6(f) prior to such date of determination; minus (i) the aggregate amount of Restricted Junior Debt Payments made pursuant to Section 7.9(b)(iv) prior to such date of determination. “Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 3.8(c)(iv). “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
8 174504702_2 “Bankruptcy Code” means 11 U.S.C. §§ 101 et seq. “Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or unascertainable). Notwithstanding the foregoing, in no event shall the Base Rate be less than 2.00%. “Base Rate Loan” means any Term Loan bearing interest at a rate based upon the Base Rate as provided in Section 3.1(a). “Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the 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 3.8(c)(i). “Benchmark Replacement” means, for any Available Tenor, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (a) the sum of: (A) Daily Simple SOFR and (B) the related Benchmark Replacement Adjustment; or (b) the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) 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. If the Benchmark Replacement as determined pursuant to this definition would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this 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 applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement: (1) for purposes of clause (a) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent: (a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Available Tenor of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; and
9 174504702_2 (b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Available Tenor of such Benchmark for the applicable Corresponding Tenor; and (2) for purposes of clause (b) 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 the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Available Tenor of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Available Tenor of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities; provided that, (x) in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion and (y) if the then-current Benchmark is a term rate, more than one tenor of such Benchmark is available as of the applicable Benchmark Replacement Date and the applicable Unadjusted Benchmark Replacement that will replace such Benchmark in accordance with Section 3.8(c)(i) will not be a term rate, the Available Tenor of such Benchmark for purposes of this definition of “Benchmark Replacement Adjustment” shall be deemed to be, with respect to each Unadjusted Benchmark Replacement having a payment period for interest calculated with reference thereto, the Available Tenor that has approximately the same length (disregarding business day adjustments) as such payment period. “Benchmark Replacement Conforming Changes” means, with respect to Term SOFR or 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. Securities Business Day,” the definition of “Interest Period,” or any similar or analogous definition (or the addition of the 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, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent (in consultation with the Borrower) decides may be appropriate to reflect the adoption and implementation of such rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents). “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: (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 all Available Tenors of such Benchmark (or such component thereof); and
10 174504702_2 (b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication of information referenced in clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. For the avoidance of doubt, (i) 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 and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: (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 all Available Tenors of 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 any Available Tenor of such Benchmark (or such component thereof); (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 FRB, 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 all Available Tenors of 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 any Available Tenor of such Benchmark (or such component thereof); or (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 all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means the period (if any) (a) beginning at the time that a Benchmark Replacement Date 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 3.8(c) and (b) 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 3.8(c).
11 174504702_2 “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 CFR § 1010.230. “Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”. “Borrower” means Thryv, Inc., a Delaware corporation. “Borrower Materials” has the meaning assigned thereto in Section 6.2. “Business Day” means any day that (a) is not a Saturday, Sunday or other day on which the Federal Reserve Bank of New York is closed and (b) is not a day on which commercial banks in Charlotte, North Carolina are closed. “Capital Expenditures” means, with respect to Holdings and its Subsidiaries on a Consolidated basis, for any period, (a) the additions to property, plant and equipment and other capital expenditures that are (or would be) set forth in a Consolidated statement of cash flows of such Person for such period prepared in accordance with GAAP and (b) Capital Lease Obligations during such period. “Capital Lease Obligations” of any Person means, subject to Section 1.3(b), the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as finance leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Cash Equivalents” means, collectively, (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case, maturing or allowing for liquidation at the original par value at the option of the holder within one year from the date of acquisition thereof; (b) investments in commercial paper (other than commercial paper issued by the Borrower or any of its Affiliates) maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s; (c) investments in certificates of deposit, banker’s acceptances, time deposits or overnight bank deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000, and having a debt rating of “A-1” or better from S&P or “P-1” or better from Moody’s; (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and (e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000. “Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card (including non-card electronic payables and purchasing cards), electronic funds transfer and other cash management arrangements.
12 174504702_2 “CFC” means a Foreign Subsidiary (other than an Acquired Entity) that is a “controlled foreign corporation” under Section 957 of the Code and any Subsidiary owned directly or indirectly by such Foreign Subsidiary. “CFC Holdco” means a Subsidiary substantially all the assets of which consist of Equity Interests in Foreign Subsidiaries that each constitute a CFC and/or Indebtedness or accounts receivable owed by Foreign Subsidiaries that each constitute a CFC or are treated as owed by any such Foreign Subsidiaries for U.S. federal income tax purposes. “Change in Control” means an event or series of events by which: (a) at any time, Holdings shall fail to own one hundred percent (100%) of the Equity Interests of the Borrower entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Borrower; (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Investors becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Equity Interests that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of the Equity Interests entitled to vote for members of the board of directors (or equivalent governing body) of Holdings on a fully diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right) representing more than 40% of the total voting power of all of the outstanding Equity Interests of Holdings; or (c) the occurrence of a change in control, or other similar provision, as defined in the ABL Credit Agreement or any agreement or instrument evidencing any Refinancing Equivalent Indebtedness, any Incremental Equivalent Indebtedness, any other Indebtedness or Equity Interests in excess of the Threshold Amount obligating Holdings or any of its Subsidiaries to repurchase, redeem or repay all or any part of the Indebtedness or Equity Interests provided for therein. “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in implementation thereof and (ii) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, implemented or issued. “Class” means, when used in reference to any Term Loan, whether such Term Loan is the Initial Term Loan, an Incremental Term Loan, an Extended Term Loan or a Refinancing Term Loan. “Closing Date” means the date of this Agreement.
13 174504702_2 “Closing Date Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent and the ABL Administrative Agent and acknowledged by the Credit Parties. “Co-Investor” means, with respect to Mudrick, any fund or investment vehicle that (a) is organized by Mudrick for the purpose of making equity or debt investments in one or more companies and (b) is advised, managed or controlled by, or under common control or management with, Mudrick, but in each case, excluding any portfolio companies of Mudrick or any portfolio companies of the Co-Investors. For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person, whether by contract or otherwise. “Code” means the Internal Revenue Code of 1986, and the rules and regulations promulgated thereunder. “Collateral” means the collateral security for the Secured Obligations pledged or granted pursuant to the Security Documents. “Collateral Agreement” means the collateral agreement of even date herewith executed by the Credit Parties in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, which shall be in form and substance reasonably acceptable to the Borrower and the Administrative Agent. “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.). “Competitor” means any Person that is a competitor of the Sunshine Target, the Borrower or any of their respective Subsidiaries operating in the same industry or a substantially similar industry which offers a substantially similar product or service as the Sunshine Target, the Borrower or any of their respective Subsidiaries. “Compliance Certificate” means a certificate of the chief financial officer or the treasurer of Holdings substantially in the form attached as Exhibit E. “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. “Consolidated” means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP. “Consolidated EBITDA” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for Holdings and its Subsidiaries: (a) Consolidated Net Income for such period; plus (b) the sum of the following, without duplication, and (except in the case of clauses (b)(viii) and (b)(x)(B) below) to the extent deducted in determining Consolidated Net Income for such period: (i) Consolidated Interest Expense; (ii) Taxes paid or provisions for Taxes, in each case, measured by net income, profits or capital (or any similar measures), including federal and state and local income Taxes, foreign income Taxes and franchise Taxes;
14 174504702_2 (iii) (A) depreciation and amortization (including, without limitation, amortization of goodwill, software and other intangible assets) and (B) other non-cash charges or expenses (including impairment charges, write-offs, write-downs and non-cash compensation charges arising from the granting of stock options, stock appreciation rights, profits interests and/or similar arrangements); (iv) any non-recurring extraordinary charges or losses for such period (excluding losses from discontinued operations, but including any losses in connection with any actual or prospective legal settlement, fine, judgment or order); provided that in any applicable Reference Period the sum of (A) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to this clause (b)(iv) in such Reference Period plus (B) the aggregate amount added back to Consolidated EBITDA pursuant to clauses (b)(x)(A) and (b)(x)(B) below in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such Reference Period; (v) (A) Transaction Costs and/or (B) to the extent reducing Consolidated Net Income, any earn-out and contingent consideration obligations (including to the extent accounted for as bonuses, compensation or otherwise) incurred in connection with the Transactions and/or any other acquisition and/or other Investment which is paid or accrued during such period and, in each case, adjustments thereof; (vi) the amount of any charge or expense that is actually reimbursed or reimbursable by one or more third parties pursuant to indemnification or reimbursement provisions or similar agreements or insurance; provided that in respect of any such charge or expense that is added back in reliance on this clause (b)(vi), the relevant Person in good faith expects to receive reimbursement for such charge or expense within the next four fiscal quarters (it being understood that to the extent any such reimbursement amount is not actually received within such four fiscal quarter period, such reimbursement amount shall be deducted in calculating Consolidated EBITDA for the last fiscal quarter of such period and each subsequent period which includes such quarter); (vii) cash premiums, penalties or other payments payable in connection with the early extinguishment or repurchase of Indebtedness; (viii) the amount of any proceeds of any business interruption insurance policy in an amount representing the earnings for the applicable period that such proceeds are intended to replace (whether or not then received so long as the relevant Person in good faith expects to receive such proceeds within the next four fiscal quarters (it being understood that to the extent such proceeds are not actually received within such four fiscal quarter period, such proceeds shall be deducted in calculating for the last fiscal quarter of such period and each subsequent period which includes such quarter)); (ix) any charge, expense or deduction that is associated with any Subsidiary and attributable to any non-controlling interest and/or minority interest of any third party; and/or (x) (A) other cash expenses or charges, including restructuring charges, attributable to the undertaking and/or implementation of new initiatives, business optimization activities, cost savings initiatives, cost rationalization programs, operating expense reductions and/or synergies, and/or similar initiatives and/or similar programs, including expenses incurred in connection with inventory optimization programs, office or facility closure, relocation, headcount savings, product margin and integration savings, office or facility consolidations and openings, retention, severance, systems establishment costs, contract termination costs and reconstruction, decommissioning,
15 174504702_2 recommissioning or reconfiguration of fixed assets for alternative uses; provided that for any applicable Reference Period, the sum of (A) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to clause (b)(iv) above in such Reference Period, plus (B) the aggregate amount added back to Consolidated EBITDA pursuant to this clause (b)(x)(A) and clause (b)(x)(B) below in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such Reference Period; and (B) the amount of any “run rate” synergies, operating expense reductions and other net cost savings and integration costs, in each case projected by Holdings in connection with Permitted Acquisitions, Asset Dispositions (including the termination or discontinuance of activities constituting such business) and/or other operating improvement, restructuring, cost savings initiative or other similar initiative taken after the Closing Date that have been consummated during the applicable Reference Period (calculated on a Pro Forma Basis as though such synergies, expense reductions and cost savings had been realized on the first day of the period for which Consolidated EBITDA is being determined), net of the amount of actual benefits realized during such period from such actions; provided that (x) such synergies, expense reductions and cost savings are reasonably identifiable, factually supportable, expected to have a continuing impact on the operations of Holdings and its Subsidiaries and have been determined by Holdings in good faith to be reasonably anticipated to be realizable within 12 months following any such action as set forth in reasonable detail on a certificate of a Responsible Officer of Holdings delivered to the Administrative Agent, (y) no such amounts shall be added pursuant to this clause to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment, the definition of Pro Forma Basis or otherwise and (z) for any applicable Reference Period, the sum of (1) the aggregate amount added pursuant to this clause (x)(B) for such Reference Period plus (2) the aggregate amount of Net Extraordinary Charges and Losses added back to Consolidated EBITDA pursuant to clause (b)(iv) above in such Reference Period, plus (3) the aggregate amount added back to Consolidated EBITDA pursuant to clause (b)(x)(A) above in such Reference Period shall in no event exceed 15% of Consolidated EBITDA for such period; minus (c) the sum of the following, without duplication, to the extent included in determining Consolidated Net Income for such period: (i) interest income; (ii) Federal, state, local and foreign income Tax credits of Holdings and its Subsidiaries for such period (to the extent not netted from income Tax expense); (iii) any extraordinary, unusual or non-recurring gains (including any gains in connection with any actual or prospective legal settlement, fine, judgment or order); (iv) non-cash gains or non-cash items; (v) any cash expense made during such period which represents the reversal of any non-cash expense that was added in a prior period pursuant to clause (b)(iii) above subsequent to the fiscal quarter in which the relevant non-cash expenses, charges or losses were incurred; and (vi) cash rental and other cash payments made for such period pursuant to the Tucker Lease.
16 174504702_2 For purposes of this Agreement, Consolidated EBITDA shall (x) exclude any non-cash impact attributable to the reduction in deferred revenue or reduction in deferred costs to balance sheet accounts as a result of the fair value exercise undertaken as required by purchase method of accounting for the transactions contemplated by any acquisition, in accordance with GAAP and (y) except for purposes of calculating Excess Cash Flow, be calculated on a Pro Forma Basis. Notwithstanding anything to the contrary contained in this definition, for the purpose of determining Consolidated EBITDA under this Agreement for any period that includes the fiscal quarters ending December 31, 2019, March 31, 2020, June 30, 2020 and/or September 30, 2020, Consolidated EBITDA for such fiscal quarters shall be $147,805,000; $152,531,000; $159,899,000 and $72,713,000, respectively. “Consolidated First Lien Net Indebtedness” means, as of any date of determination, Consolidated Total Net Indebtedness as of such date that is secured by any Lien on any assets of Holdings and its Subsidiaries that is not expressly subordinated or junior in priority to the Liens on such assets securing the Secured Obligations. For the avoidance of doubt, the Secured Obligations and the ABL Obligations outstanding as of such date of determination shall each constitute Consolidated First Lien Net Indebtedness. “Consolidated Interest Expense” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for Holdings and its Subsidiaries in accordance with GAAP, interest expense (including (i) any amortization of any debt issuance cost and/or deferred financing fees, (ii) interest expense attributable to Capital Lease Obligations and (iii) all net payment obligations pursuant to Hedge Agreements) for such period. “Consolidated Net Income” means, for any period, the net income (or loss) of Holdings and its Subsidiaries for such period, determined on a Consolidated basis, without duplication, in accordance with GAAP and adjusted to eliminate any non-cash impact attributable to the reduction in deferred revenue or reduction in deferred costs to balance sheet accounts as a result of the fair value exercise undertaken as required by purchase method of accounting for the transactions contemplated by any acquisition, in accordance with GAAP; provided, that in calculating Consolidated Net Income of Holdings and its Subsidiaries for any period, there shall be excluded: (a) the net income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below), in which Holdings or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid in cash to Holdings or any of its Subsidiaries by dividend or other distribution during such period; (b) the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Holdings or any of its Subsidiaries or is merged into or consolidated with Holdings or any of its Subsidiaries or that Person’s assets are acquired by Holdings or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a); (c) the net income (if positive), of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to Holdings or any of its Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any taxes payable on such dividends or distributions, but in each case only to the extent of such prohibition or taxes; (d) the net income (or loss) of any Subsidiary that is not a Wholly-Owned Subsidiary to the extent such net income (or loss) is attributable to the minority interest in such Subsidiary;
17 174504702_2 (e) any gain or loss from Asset Dispositions during such period; (f) any gain or loss attributable to the early extinguishment of Indebtedness (and the termination of any associated Hedge Agreement) and any cancellation of indebtedness income resulting from any purchase of any Term Loans by the Borrower; (g) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights (including equity compensation to employees (including pursuant to pension plans)) and non-cash charges associated with the roll-over, acceleration or payout of Equity Interests by management of the Borrower, Holdings or any direct or indirect parent thereof in connection with the Transactions or other Acquisitions; (h) (i) any realized or unrealized gain and/or loss in respect of (A) any obligation under any Hedge Agreement as determined in accordance with GAAP and/or (B) any other derivative instrument pursuant to, in the case of this clause (B), Financial Accounting Standards Board’s Accounting Standards Codification No. 815-Derivatives and Hedging and/or (ii) any realized or unrealized foreign currency exchange gain or loss (including any currency re-measurement of Indebtedness, any net gain or loss resulting from Hedge Agreements for currency exchange risk resulting from any intercompany Indebtedness), any foreign currency translation or transaction or any other currency-related risk; provided, that notwithstanding anything to the contrary herein, any realized gain or loss in respect of any Designated Operational FX Hedge shall be included in the calculation of Consolidated Net Income; (i) (i) the effects of adjustments resulting from the application of purchase accounting, recapitalization accounting and/or acquisition method accounting, as applicable, in relation to the Transactions or any consummated acquisition or other similar investment or the amortization or write-off of any amount thereof, net of Taxes and (ii) the cumulative effect of changes in accounting principles or policies made in such period in accordance with GAAP which affect Consolidated Net Income; and (j) the amount of any contingent payments related to any Acquisition or Investment permitted hereunder that are treated as compensation expense in accordance with GAAP. “Consolidated Total Indebtedness” means, as of any date of determination with respect to Holdings and its Subsidiaries on a Consolidated basis, the sum of, without duplication, (a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person, (b) all purchase money Indebtedness, (c) all obligations to pay the deferred purchase price of property or services of any such Person (including all payment obligations under non-competition, earn-out or similar agreements, solely to the extent any such payment obligation under non-competition, earn-out or similar agreements becomes a liability on the balance sheet of such Person in accordance with GAAP), except trade payables arising in the ordinary course of business not more than ninety (90) days past due, or that are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of such Person, (d) the Attributable Indebtedness of such Person with respect to such Person’s Capital Lease Obligations and Synthetic Leases (regardless of whether accounted for as indebtedness under GAAP), (e) all drawn and unreimbursed obligations, contingent or otherwise, of any such Person relative to letters of credit, including any reimbursement obligation with respect thereto, and banker’s acceptances issued for the account of any such Person, (f) all obligations of any such Person in respect of Disqualified Equity Interests which shall be valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends that are past due, (g) all Guarantees of any such Person with respect to any Indebtedness of the types referred to in clauses (a) through (f) above and (h) all Indebtedness of the types referred to in clauses (a) through (g) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited
18 174504702_2 liability company) in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. For purposes of this Agreement and the other Loan Documents, the amount of Consolidated Total Indebtedness as of any date of determination may be adjusted to reflect the effect (as determined by the Borrower in good faith) of any Hedge Agreement entered into in respect of the currency exchange risk relating to any Consolidated Total Indebtedness. For purposes of this Agreement and the other Loan Documents, the amount of Consolidated Total Indebtedness as of any date of determination shall exclude the obligations (including rental payments) under the Tucker Lease. “Consolidated Total Net Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness as of such date minus the lesser of (a) Unrestricted cash and Cash Equivalents of Holdings and its Subsidiaries (excluding the proceeds of any Incremental Term Loans, Incremental Equivalent Indebtedness or any other Indebtedness incurred or made substantially concurrent with the determination of the amount of such Unrestricted cash and Cash Equivalents) and (b) $20,000,000. “Contract Consideration” has the meaning assigned thereto in the definition of “Excess Cash Flow”. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. “Controller” has the meaning given to it in section 9 of the Australian Corporations Act. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Credit Agreement Refinancing Indebtedness” means Indebtedness of the Credit Parties in the form of (a) one or more additional tranches or Classes of term loans under this Agreement incurred pursuant to a Refinancing Amendment (“Refinancing Term Loans”) which refinance, renew, replace, defease or refund (collectively, “Refinance”), in whole or in part, one or more Classes of outstanding Term Loans or (b) other Pari Passu Indebtedness, Indebtedness secured by a junior Lien on the Collateral or unsecured Indebtedness (such Indebtedness under this clause (b), collectively, “Refinancing Equivalent Indebtedness”) which, in each case, shall Refinance, in whole or in part, one or more Classes of outstanding Term Loans or outstanding Refinancing Equivalent Indebtedness; provided that (a) such Indebtedness shall satisfy each of the requirements set forth in the definition of “Permitted Refinancing Indebtedness” with references therein to “Refinancing Indebtedness” (it being acknowledged and agreed that clause (h) thereof shall not be required to be satisfied in the case of a refinancing in full of all of the Initial Term Loans) being deemed to refer to such Indebtedness and references therein to “Refinanced Indebtedness” being deemed to refer to the Class or Classes (or the portions thereof) of Term Loans or existing Credit Agreement Refinancing Indebtedness being exchanged, extended, renewed, replaced, repurchased, retired or refinanced thereby, (b) the Net Cash Proceeds of any such Credit Agreement Refinancing Indebtedness shall be applied, concurrently or substantially concurrently with the incurrence thereof, solely to the repayment of the outstanding amount of one or more Classes (or the portions thereof) of Term Loans or existing Credit Agreement Refinancing Indebtedness, as applicable, and (c) any portion of such Refinancing Term Loans provided by an Affiliated Lender shall comply with Section 10.9(h). “Credit Facility” means the term loan facility established pursuant to Article II, including each new term loan facility established pursuant to Section 3.13, each facility providing for the borrowing of Extended Term Loans and each facility providing for the borrowing of Refinancing Term Loans. “Credit Parties” means, collectively, the Borrower and the Guarantors.
19 174504702_2 “Cure Expiration Date” has the meaning assigned thereto in Section 8.7. “Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion. “Debt Issuance” means the issuance of any Indebtedness for borrowed money by any Credit Party or any of its Subsidiaries. “Debt Rating” means, as applicable, (a) the public corporate family rating of the Borrower as determined by Moody’s from time to time, (b) the public corporate rating of the Borrower as determined by S&P from time to time and (c) the public ratings of the Credit Facility as determined by Moody’s and/or S&P from time to time. “Debtor Relief Laws” means the Bankruptcy Code of the United States of America, the Australian Corporations Act, 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, Australia or other applicable jurisdictions from time to time in effect. “Declined Proceeds” has the meaning assigned thereto in Section 2.4(b)(vi). “Default” means any of the events specified in Section 8.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default. “Defaulting Lender” means, any Lender that has, or has a direct or indirect parent company that has, (a) become the subject of a proceeding under any Debtor Relief Law, (b) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state or federal regulatory authority acting in such a capacity or (c) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. “Designated Affiliated Lender” means an Affiliated Lender that (a) is primarily engaged in, including through advising of funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of business, (b) in each case, has one or more bona fide investors to whom its managers owe fiduciary duties independent of their fiduciary duties to any Permitted Investor and (c) is identified in a writing on a list delivered to the Arranger at least two (2) Business Days prior to the Closing Date or a written notice delivered pursuant to Section 10.9(h)(vi). “Designated Non-Cash Consideration” means the fair market value (as determined by the Borrower in good faith) of non-cash consideration received by the Borrower or any Subsidiary in connection with any Asset Disposition pursuant to Section 7.5(n) and/or Sale Leaseback pursuant to Section 7.13 that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the
20 174504702_2 Borrower delivered to the Administrative Agent prior to the closing of such Asset Disposition, setting forth the basis of such valuation (which amount will be reduced by the amount of cash or Cash Equivalents received in connection with a subsequent sale or conversion of such Designated Non-Cash Consideration to cash or Cash Equivalents). “Designated Operational FX Hedge” means any Hedge Agreement entered into for the purpose of hedging currency-related risks in respect of the revenues, cash flows or other balance sheet items of the Borrower or any of its Subsidiaries and irrevocably designated at the time entered into (or on or prior to the Closing Date, with respect to any Hedge Agreement entered into on or prior to the Closing Date) as a Designated Operational FX Hedge by the Borrower in a writing to the Administrative Agent and which is further set forth on Schedule 1.1 or a supplement to Schedule 1.1 delivered in accordance with Section 6.2 with the Compliance Certificate provided promptly after such Hedge Agreement is entered into. “Discretionary Guarantor” has the meaning assigned thereto in the definition of “Guarantor”. “Disinterested Member” means a member of Holdings’ board of directors (or equivalent governing body) who does not have a financial interest in a relevant transaction or arrangement (or series of related transactions or arrangements), excluding, in all cases, a financial interest in such transaction or arrangement (or series of transactions or arrangements) solely as an equity holder or member of the board of directors (or equivalent governing body) of Holdings and/or its Subsidiaries. “Disposed EBITDA” means, with respect to any Person or business that is sold or disposed of in an Asset Disposition during any period, the amount for such period of Consolidated EBITDA of any such Person or business subject to such Asset Disposition (determined using such definitions as if references to Holdings and its Subsidiaries therein were to such Person or business), as calculated by the Borrower in good faith. “Disqualified Equity Interests” means, with respect to any Person, any Equity Interests of such Person that, by their terms (or by the terms of any security or other Equity Interest into which they are convertible or for which they are exchangeable) or upon the happening of any event or condition, (a) mature or are mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full in cash of the Term Loans and all other Obligations ((other than contingent indemnification obligations not then due) and the termination of the Term Loan Commitments), (b) are redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full in cash of the Term Loans and all other Obligations ((other than contingent indemnification obligations not then due) and the termination of the Term Loan Commitments), in whole or in part, (c) provide for the scheduled payment of dividends in cash or (d) are or become convertible into, or exchangeable for, Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case of clauses (a) through (d), prior to the date that is 91 days after the latest scheduled maturity date of the Term Loans and Term Loan Commitments; provided that if such Equity Interests are issued pursuant to a plan for the benefit of Holdings or its Subsidiaries or by any such plan to such officers or employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by Holdings or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations. “Disqualified Institution” means (a)(i) any Person that was identified in writing to the Arranger on or prior to December 18, 2020, (ii) any Affiliate of any Person described in clause (a)(i) above that is reasonably identifiable as an Affiliate of such Person solely on the basis of such Affiliate’s name and (iii)
21 174504702_2 any other Affiliate of any Person described in clause (a)(i) above that is identified in a written notice by the Borrower to the Administrative Agent after the Closing Date (which such notice shall be specifically labeled as a supplement to the DQ List and delivered to each address of the Administrative Agent set forth in Section 10.1(a)); and/or (b)(i) any Person that is a Competitor or an Affiliate of a Competitor, in each case that was identified in writing by the Borrower to the Arranger on or prior to December 18, 2020, and (ii) any other Competitor or Affiliate of a Competitor that is identified in a written notice by the Borrower to the Administrative Agent after the Closing Date (which such notice shall be specifically labeled as a supplement to the DQ List and delivered to each address of the Administrative Agent set forth in Section 10.1(a)); provided that, supplements to the list of Disqualified Institutions shall become effective three (3) Business Days after delivery thereof to the Administrative Agent and shall not apply retroactively to disqualify any person that has previously acquired an assignment, participation or other interest in the Credit Facility; provided further that any bona fide debt fund or investment vehicle that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business which is managed, sponsored or advised by any Person Controlling, Controlled by or under common Control with any Person described in clause (b) above or its Controlling owner and for which no personnel involved with the competitive activities of such person or Controlling owner (i) makes any investment decisions for such debt fund or (ii) has access to any confidential information (other than publicly available information) relating to the Sunshine Target, the Borrower and or their respective Subsidiaries shall be deemed not to be included in clause (b) above. “Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency of the United States. “DQ List” has the meaning assigned thereto in Section 10.9(i)(iv). “Dutch Auction” has the meaning assigned thereto in Section 10.9(g). “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any credit institution or investment firm established in any EEA Member Country. “Electronic Record” has the meaning assigned to that term in, and shall be interpreted in accordance with, 15 U.S.C. 7006. “Electronic Signature” has the meaning assigned to that term in, and shall be interpreted in accordance with, 15 U.S.C. 7006. “Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.9(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.9(b)(iii)). For the avoidance of doubt, and subject to Section 10.9(i), “Eligible Assignee” shall not include any Disqualified Institution.
22 174504702_2 “Employee Benefit Plan” means (a) any employee benefit plan within the meaning of Section 3(3) of ERISA that is maintained for employees of any Credit Party or any ERISA Affiliate or (b) any Pension Plan or Multiemployer Plan that has at any time within the preceding five (5) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliate. “Engagement Letter” means the separate engagement letter, dated December 18, 2020, between the Borrower and the Arranger. “Environmental Claims” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of the Borrower, any of its Subsidiaries, or any of their respective predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by the Borrower, any of its Subsidiaries, or any of their respective predecessors in interest. “Environmental Laws” means any applicable federal, state or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Credit Party or its Subsidiaries, relating to the environment, the effect of the environment on employee health or exposure to Hazardous Materials. “Equity Interests” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests, (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person and (f) any and all warrants, rights or options to purchase any of the foregoing. “Equity Issuance” means (a) any issuance by Holdings of shares of its Equity Interests to any Person that is not a Credit Party (including in connection with the exercise of options or warrants or the conversion of any debt securities to equity) and (b) any capital contribution from any Person that is not a Credit Party into any Credit Party or any Subsidiary thereof. The term “Equity Issuance” shall not include (A) any Asset Disposition or (B) any Debt Issuance. “ERISA” means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder. “ERISA Affiliate” means any Person who together with any Credit Party or any of its Subsidiaries is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time. “Event of Default” means any of the events specified in Section 8.1; provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. “Excess Cash Flow” means, for Holdings and its Subsidiaries on a Consolidated basis, for any fiscal quarter, an amount (if positive) equal to excess of:
23 174504702_2 (a) the sum, without duplication, of: (i) Consolidated Net Income for such fiscal quarter; plus (ii) an amount equal to (A) the amount of all non-cash charges to the extent deducted in determining Consolidated Net Income for such fiscal quarter (including amounts expensed in such fiscal quarter with respect to cash expenditures made in a prior fiscal quarter) and (B) cash receipts to the extent not otherwise included in determining Consolidated Net Income for such fiscal quarter; plus (iii) an amount equal to the aggregate net non-cash loss on Asset Dispositions or Insurance and Condemnation Events (other than Asset Dispositions in the ordinary course of business) that were deducted in determining Consolidated Net Income for such fiscal quarter (up to the amount of such deduction); plus (iv) increases in current and non-current deferred revenue (to the extent deducted or otherwise not included in determining Consolidated Net Income for such fiscal quarter); plus (v) extraordinary, non-recurring or unusual cash gains; plus (vi) decreases in Working Capital for such fiscal quarter; minus (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in determining Consolidated Net Income for such fiscal quarter and all cash charges to the extent excluded in determining Consolidated Net Income for such fiscal quarter; plus (ii) the aggregate amount of Capital Expenditures or Permitted Acquisitions made in cash during such fiscal quarter, except to the extent financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries, other than intercompany loans permitted hereunder and revolving Indebtedness, (B) the Retained Excess Cash Flow portion of the Available Amount or (C) Net Cash Proceeds reinvested pursuant to Section 2.4(b); plus (iii) the aggregate amount of all principal payments of Indebtedness (other than voluntary prepayments or scheduled repayments of the Term Loans) of Holdings and its Subsidiaries (including, without limitation, (1) the principal component of payments in respect of Capital Lease Obligations, (2) the amount of a mandatory prepayment of Term Loans pursuant to Section 2.4(b) to the extent required due to an Asset Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase (but excluding all other mandatory prepayments of Term Loans made during such fiscal quarter) and (3) the amount of principal prepayments of the ABL Obligations made in accordance with the requirements of the ABL Documents, including as a result of the aggregate principal of the ABL Obligations exceeding the borrowing base thereunder or as otherwise necessary to avoid the commencement of a Cash Dominion Trigger Period (as defined in the ABL Credit Agreement), in each case, except to the extent such principal payments are financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted
24 174504702_2 hereunder and revolving Indebtedness, (B) the Retained Excess Cash Flow portion of the Available Amount or (C) Net Cash Proceeds reinvested pursuant to Section 2.4(b); plus (iv) an amount equal to the aggregate net non-cash gain on Asset Dispositions or Insurance and Condemnation Events (other than Asset Dispositions in the ordinary course of business) that resulted in an increase in determining Consolidated Net Income for such fiscal quarter (up to the amount of such increase); plus (v) payments in cash by Holdings and its Subsidiaries during such period in respect of any purchase price holdbacks, earn-out obligations, and long-term liabilities of Holdings and its Subsidiaries (other than Indebtedness), to the extent not expensed during such fiscal quarter or already deducted in determining Consolidated Net Income for such fiscal quarter, in each case to the extent not financed by proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted hereunder and revolving Indebtedness; plus (vi) the aggregate amount of cash consideration paid by Holdings and its Subsidiaries (on a Consolidated basis) in connection with Investments (including Acquisitions, but excluding Investments in cash or Cash Equivalents, Investments in Holdings or its Subsidiaries and the amount of any Investments deducted pursuant to clause (b)(ii) or (b)(v) above or clause (b)(x) below) made during such fiscal quarter pursuant to Section 7.3 to the extent that such Investments were not financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted hereunder and revolving Indebtedness, (B) the issuance of Equity Interests, (C) the Retained Excess Cash Flow portion of the Available Amount or (D) Net Cash Proceeds reinvested pursuant to Section 2.4(b); plus (vii) the aggregate amount of Restricted Payments paid or made in cash during such fiscal quarter (on a Consolidated basis) by Holdings and its Subsidiaries, to the extent such Restricted Payments were not financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted hereunder and revolving Indebtedness or (B) the Retained Excess Cash Flow portion of the Available Amount; plus (viii) the aggregate amount of expenditures actually made by Holdings and its Subsidiaries in cash during such fiscal quarter (including expenditures for the payment of financing fees and cash restructuring charges) to the extent that such expenditures are not expensed during such fiscal quarter and are not deducted in determining Consolidated Net Income for such fiscal quarter; plus (ix) the aggregate amount of any premium, make-whole, or penalty payments actually paid in cash by Holdings and its Subsidiaries during such fiscal quarter that are made in connection with any prepayment, early extinguishment or conversion of Indebtedness to the extent that such payments are not deducted in determining Consolidated Net Income for such fiscal quarter; plus (x) without duplication of amounts deducted from Excess Cash Flow in other periods, (1) the aggregate consideration required to be paid in cash by Holdings and its Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (such amount, the “Contract Consideration”) entered into prior to or during such fiscal quarter and (2) any planned cash expenditures by Holdings and its Subsidiaries (such amount, the “Planned Expenditures”), in the case of each of clauses (1) and (2), relating to Permitted Acquisitions or other permitted Investments to be consummated or made during the period of 180 days following the end of such fiscal quarter and identified in writing to the Administrative Agent with reasonable supporting
25 174504702_2 calculations (except to the extent financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted hereunder and revolving Indebtedness, (B) the issuance of Equity Interests, (C) the Retained Excess Cash Flow portion of the Available Amount or (D) Net Cash Proceeds reinvested pursuant to Section 2.4(b)); provided that to the extent that the aggregate amount of cash actually utilized to finance such Permitted Acquisitions or other Investments during such following period of 180 days is less than such Contract Consideration and Planned Expenditures, the amount of such shortfall shall be added to the calculation of Excess Cash Flow, at the end of such period of 180 days; plus (xi) the amount of taxes (including penalties and interest) paid in cash or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such fiscal quarter; plus (xii) cash expenditures in respect of Hedge Agreements during such fiscal quarter to the extent not deducted in determining Consolidated Net Income for such fiscal quarter; plus (xiii) extraordinary, non-recurring and unusual cash losses; plus (xiv) increases to Working Capital for such fiscal quarter; plus (xv) Transaction Costs. “Exchange Act” means the Securities Exchange Act of 1934 (15 U.S.C. § 77 et seq.). “Excluded Subsidiary” means (a) each CFC, (b) each Subsidiary that is a direct or indirect Subsidiary of a CFC, (c) each CFC Holdco, (d) any Subsidiary that (i) is prohibited by Applicable Law or by any contractual obligation existing on the Closing Date or existing at the time of acquisition of such Subsidiary after the Closing Date or such Person becoming a Subsidiary (and not incurred in contemplation of such acquisition or such Person becoming a Subsidiary) in each case from Guaranteeing the Obligations, but only so long as such prohibition exists or (ii) is subject to a requirement to obtain governmental (including regulatory) or third party (other than an Affiliate) consent, approval, license or authorization (including any regulatory consent, approval, license or authorization) to provide a Guarantee of the Obligations (in each case, to the extent such requirement exists on the Closing Date or exists at the time of acquisition of such Subsidiary after the Closing Date or such Person becoming a Subsidiary (and not incurred in contemplation of such acquisition or such Person becoming a Subsidiary) that has not been obtained or received, but only for so long as such requirement or any replacement or renewal thereof is in effect and such consent, approval, license or authorization has not been obtained or received (it being understood and agreed that none of Holdings, the Borrower and/or any of their respective Subsidiaries shall have any obligation to obtain (or seek to obtain) any such consent, approval, license or authorization), (e) any Foreign Subsidiary (other than any Australian Subsidiary), (f) any not-for-profit Subsidiary, (g) any captive insurance Subsidiary, (h) each Immaterial Subsidiary, (i) any special purpose entity engaging in receivables financing transactions permitted under this Agreement, (j) any bona fide joint ventures with non-affiliated third parties, (k) any Subsidiary with respect to which the Administrative Agent and the Borrower mutually agree that the provision of a Guarantee of the Obligations would reasonably be likely to result in material and adverse tax consequences to Holdings or any of its Subsidiaries and (l) any other Subsidiary with respect to which the Administrative Agent and the Borrower mutually agree that the cost of providing a Guarantee of the Secured Obligations would be excessive in relation to the benefit to be afforded thereby. Notwithstanding the foregoing, in no event shall any Subsidiary that is an obligor or guarantor of (i) the ABL Obligations (other than a CFC that is a borrower thereunder to the extent (A) the Guarantee of the Secured Obligations would result in material adverse tax consequences to Holdings and its Subsidiaries or (B) clause (l) above applies), (ii) any Junior Indebtedness, (iii) any Incremental
26 174504702_2 Equivalent Indebtedness, (iv) any Refinancing Equivalent Indebtedness or (v) any other Indebtedness in excess of the Threshold Amount, in any such case be an Excluded Subsidiary (other than a CFC that is a borrower thereunder to the extent (A) the Guarantee of the Secured Obligations would result in material adverse tax consequences to Holdings and its Subsidiaries or (B) clause (l) above applies). “Excluded Swap Obligation” means, with respect to any Credit Party, any Swap Obligation if, and to the extent that, all or a portion of the liability of such Credit Party for or the guarantee of such Credit Party of, or the grant by such Credit Party of a security interest to secure, such Swap Obligation (or any liability or guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Credit Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the liability for or the guarantee of such Credit Party or the grant of such security interest becomes effective with respect to such Swap Obligation (such determination being made after giving effect to any applicable keepwell, support or other agreement for the benefit of the applicable Credit Party, including under the keepwell provisions in the Guaranty Agreement). If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal for the reasons identified in the immediately preceding sentence of this definition. “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, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Term Loan or Term Loan Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Term Loan or Term Loan Commitment (other than pursuant to an assignment request by the Borrower under Section 3.12(b)) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.11, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.11(g) and (d) any United States federal withholding Taxes imposed under FATCA. “Existing Credit Agreement” means that certain Amended and Restated Credit Agreement, dated as of December 31, 2018, among the Borrower, the lenders party thereto and Wilmington Trust, National Association, as administrative agent (as amended, restated, amended and restated, supplemented or otherwise modified through the Closing Date). “Extended Term Loans” means any Class of Term Loans the maturity of which shall have been extended pursuant to Section 3.14. “Extension” has the meaning assigned thereto in Section 3.14(a). “Extension Amendment” means an amendment to this Agreement (which may, at the option of the Administrative Agent and the Borrower, be in the form of an amendment and restatement of this Agreement) among the Credit Parties, the applicable extending Lenders and the Administrative Agent. “Extension Offer” has the meaning assigned thereto in Section 3.14(a).
27 174504702_2 “FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code. “FDIC” means the Federal Deposit Insurance Corporation. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent. Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. “Fifth ABL Amendment” has the meaning assigned thereto in the definition of “ABL Credit Agreement”. “First Lien Net Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated First Lien Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Reference Period. “First Tier Foreign Subsidiary” means any Foreign Subsidiary, the Equity Interests of which are owned directly by any Credit Party. “Fiscal Year” means the fiscal year of Holdings and its Subsidiaries ending on December 31. “Floor” means a rate of interest equal to 1.00%. “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. “Foreign Subsidiary” means any Subsidiary that is not a U.S. Subsidiary. “FRB” means the Board of Governors of the Federal Reserve System of the United States. “Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities. “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or
28 174504702_2 such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. “Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, and all registrations and filings with or issued by, any Governmental Authorities. “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra- national bodies such as the European Union or the European Central Bank). “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation or (e) for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (whether in whole or in part); provided that the term “Guarantee” shall not include endorsements for collection or deposit, in each case, in the ordinary course of business, or customary and reasonable indemnity obligations in connection with any disposition of assets permitted under this Agreement (other than any such obligations with respect to Indebtedness). “Guarantors” means, collectively, Holdings and each Subsidiary Guarantor. Notwithstanding the foregoing, the Borrower may elect to cause any (a) U.S. Subsidiary or Australian Subsidiary or (b) with the consent of the Administrative Agent (such consent not to be unreasonably withheld, delayed or conditioned), any Foreign Subsidiary (other than any Australian Subsidiary), in each case, that is not otherwise required to be a Guarantor to provide a Guarantee of the Secured Obligations by causing such Subsidiary (any such Person, a “Discretionary Guarantor”), to execute a Joinder Agreement and deliver the other documents and take the other actions required pursuant to Section 6.13, and upon the execution of such Joinder Agreement and delivery of such other documents and taking of such other actions, any such Subsidiary and/or parent company shall be a Credit Party and a Guarantor hereunder for all purposes; provided that upon such an election (and for so long as such election remains in effect) such Subsidiary shall no longer be deemed to be an Excluded Subsidiary. “Guaranty Agreement” means the unconditional guaranty agreement of even date herewith executed by Holdings, the Borrower and the Subsidiary Guarantors in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, which shall be in form and substance reasonably acceptable to the Borrower and the Administrative Agent. “Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any Applicable Laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
29 174504702_2 natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources and (c) any flammable substances or explosives or any radioactive materials. “Hedge Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement. “Hedge Termination Value” means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender). “Holdings” means Thryv Holdings, Inc., a Delaware corporation. “Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary. “Incremental Amendment” has the meaning assigned thereto in Section 3.13(f). “Incremental Effective Date” has the meaning assigned thereto in Section 3.13(c). “Incremental Equivalent Indebtedness” has the meaning assigned thereto in Section 7.1(t). “Incremental Facility Limit” means, with respect to any proposed Incremental Term Loan under Section 3.13 and any Incremental Equivalent Indebtedness, the amount of additional Indebtedness that would not as of the last day of the most recently completed Reference Period prior to the incurrence of such additional Indebtedness (or in the case of any additional Indebtedness, the proceeds of which will finance a Limited Condition Transaction, the date determined pursuant to Section 1.10), calculated on a Pro Forma Basis after giving effect to the incurrence of such additional Indebtedness, any permanent repayment of Indebtedness in connection therewith and any Limited Condition Transaction or other Acquisition or Investment to be consummated using the proceeds of such additional Indebtedness and assuming that any such proposed Incremental Term Loans or Incremental Equivalent Indebtedness are each fully drawn at such time, (x) if such additional Indebtedness is Pari Passu Indebtedness, cause the First Lien Net Leverage Ratio to exceed the greater of (A) 1.25 to 1.00 and (B) the First Lien Net Leverage Ratio immediately prior to the issuance, incurrence or assumption of such Incremental Term Loan or Incremental Equivalent Indebtedness or (y) if such additional Indebtedness is unsecured or Junior Indebtedness, cause the Total Net Leverage Ratio to exceed the greater of (A) 2.00 to 1.00 and (B) the Total Net Leverage Ratio immediately prior to the issuance, incurrence or assumption of such Incremental Term Loan or Incremental Equivalent Indebtedness.
30 174504702_2 “Incremental Lender” has the meaning assigned thereto in Section 3.13(b). “Incremental Term Loan” has the meaning assigned thereto in Section 3.13(a). “Indebtedness” means, with respect to any Person at any date and without duplication, the sum of the following: (a) all liabilities, obligations and indebtedness of such Person for borrowed money, including obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, of such Person; (b) all obligations of such Person to pay the deferred purchase price of property or services of such Person (including all payment obligations under non-competition, earn-out or similar agreements, solely to the extent any such payment obligation under non-competition, earn-out or similar agreements becomes a liability on the balance sheet of such Person in accordance with GAAP), except trade payables arising in the ordinary course of business not more than ninety (90) days past due, or that are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of such Person and, for the avoidance of doubt, except royalty payments payable in the ordinary course of business in respect of non-exclusive licenses; (c) subject to Section 1.3(b), the Attributable Indebtedness of such Person with respect to such Person’s Capital Lease Obligations and Synthetic Leases (regardless of whether accounted for as indebtedness under GAAP); (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (e) all Indebtedness of any other Person secured by a Lien on any asset owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements except trade payables arising in the ordinary course of business), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) all obligations, contingent or otherwise, of such Person relative to the face amount of letters of credit, whether or not drawn, including any reimbursement obligation with respect thereto and banker’s acceptances issued for the account of such Person; (g) all obligations of such Person in respect of Disqualified Equity Interests; (h) all net obligations of such Person under any Hedge Agreements; and (i) all Guarantees of such Person with respect to any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. In respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, if such Indebtedness shall not have been assumed by such Person or is limited in recourse to the assets securing such Lien, the amount of such Indebtedness as of any date of determination will be the lesser of (x) the fair market value of such assets as of such date (as determined in good faith by
31 174504702_2 Holdings) and (y) the amount of such Indebtedness as of such date. The amount of any net obligation under any Hedge Agreement on any date shall be deemed to be the Hedge Termination Value thereof as of such date. The amount of obligations in respect of any Disqualified Equity Interests shall be valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends that are past due. For purposes of this Agreement and the other Loan Documents, the amount of Indebtedness as of any date of determination shall exclude the obligations (including rental payments) under the Tucker Lease. “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 Credit Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes. “Indemnitee” has the meaning assigned thereto in Section 10.3(b). “Information” has the meaning assigned thereto in Section 10.10. “Initial Term Loan” means the term loan made to the Borrower by the Lenders on the Closing Date pursuant to Section 2.1. “Insurance and Condemnation Event” means the receipt by any Credit Party or any of its Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective Property. “Interest Period” means, as to each SOFR Loan, the period commencing on the date such SOFR Loan is disbursed or converted to or continued as a SOFR Loan and ending on the date one (1), three (3), or six (6) months thereafter, in each case as selected by the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation and subject to availability; provided that: (a) the Interest Period shall commence on the date of advance of or conversion to any SOFR Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires; (b) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day; (c) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (d) no Interest Period shall extend beyond (A), in the case of the Initial Term Loan, the Term Loan Maturity Date and (B) in the case of any other Class of Term Loans, the maturity date applicable to such Class; (e) Interest Periods with respect to any Class of Term Loans shall be selected by the Borrower so as to permit the Borrower to make the scheduled principal installment payments of such Class without payment of any amounts pursuant to Section 3.9; (f) there shall be no more than eight (8) Interest Periods in effect at any time; and
32 174504702_2 (g) no tenor that has been removed from this definition pursuant to Section 3.8(c)(iv) shall be available for specification in any Notice of Borrowing or Notice of Conversion/Continuation. “Investment” means, with respect to any Person, that such Person (a) purchases, owns, invests in or otherwise acquires (in one transaction or a series of transactions), by division or otherwise, directly or indirectly, any Equity Interests, interests in any partnership or joint venture (including the creation or capitalization of any Subsidiary), evidence of Indebtedness or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, (b) makes any Acquisition or (c) makes or holds, directly or indirectly, any loans, advances or extensions of credit or capital contributions to, or any investment in cash or by delivery of Property in, any Person. “Investment Company Act” means the Investment Company Act of 1940 (15 U.S.C. § 80(a)(1), et seq.). “IRS” means the United States Internal Revenue Service. “ISDA CDS Definitions” has the meaning assigned thereto in Section 10.2. “ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto. “Joinder Agreement” means a joinder agreement substantially in the form of Exhibit H thereto or such other form as may be approved by the Administrative Agent and the Borrower. “Junior Indebtedness” means, with respect to Holdings, the Borrower and its Subsidiaries, any (a) Subordinated Indebtedness and (b) Indebtedness secured by Liens that are junior to the Liens securing the Secured Obligations. “Latest Maturity Date” means, at any date of determination, the latest maturity date or expiration date applicable to any Term Loan or Term Loan Commitment hereunder at such time, including the latest maturity date of any Incremental Term Loan or Extended Term Loan or any Refinancing Term Loan, in each case as extended in accordance with this Agreement from time to time. “LCT Test Date” has the meaning assigned thereto in Section 1.10(a). “Lender” means each Person executing this Agreement as a Lender on the Closing Date and any other Person that shall have become a party to this Agreement as a Lender pursuant to an Assignment and Assumption or an Affiliated Lender Assignment and Assumption or pursuant to Section 3.13, other than any Person that ceases to be a party hereto as a Lender pursuant to an Assignment and Assumption or an Affiliated Lender Assignment and Assumption. “Lending Office” means, with respect to any Lender, the office of such Lender maintaining such Lender’s Term Loans, which office may, to the extent the applicable Lender notifies the Administrative Agent in writing, include an office of any Affiliate of such Lender or any domestic or foreign branch of such Lender or Affiliate. “Lien” means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset, including a “security
33 174504702_2 interest” within the meaning of section 12(1) and section 12(2) of the Australian PPSA. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease Obligation or other title retention agreement relating to such asset. “Limited Condition Transaction” means any Acquisition or Investment that (a) is not prohibited hereunder and (b) is not conditioned on the availability of, or on obtaining, third-party financing. “Liquidity” means, as of any date of determination, the sum of (a) so long as no Default or Event of Default exists and is continuing and to the extent the Borrower and its Subsidiaries are then able to satisfy the conditions precedent for loans under the ABL Credit Agreement, the amount then available to be drawn under the ABL Credit Agreement at such time in accordance with the terms of the ABL Documents plus (b) the aggregate amount of Unrestricted cash and Cash Equivalents included in the Consolidated balance sheet of Holdings and its Subsidiaries as of such date. “Loan Documents” means, collectively, (a) this Agreement, each Term Loan Note, the Security Documents, the Australian Security Trust Deed, the Guaranty Agreement, the Engagement Letter (other than any provisions thereof that are superseded by the provisions of this Agreement), the Closing Date Intercreditor Agreement, each Acceptable Junior Lien Intercreditor Agreement, each Refinancing Amendment, each Incremental Amendment and each Extension Amendment and (b) each other document, instrument, certificate and agreement executed and delivered by the Credit Parties or any of their respective Subsidiaries in favor of or provided to the Administrative Agent or any Secured Party in connection with this Agreement or contemplated hereby that is specifically identified therein as a Loan Document or designated as such by the Borrower and the Administrative Agent (in each case, excluding any Secured Hedge Agreement and any Secured Cash Management Agreement). “Margin Stock” has the meaning assigned thereto in Regulation U of the FRB. “Material Adverse Effect” means, with respect to Holdings and its Subsidiaries, (a) a material adverse effect on the operations, business, assets, properties, liabilities (actual or contingent) or condition (financial or otherwise) of such Persons, taken as a whole, (b) a material impairment of the ability of any such Person to perform its Obligations under the Loan Documents to which it is a party, (c) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document or (d) an impairment of the legality, validity, binding effect or enforceability against any Credit Party of any Loan Document to which it is a party. “Material Subsidiary” means a Subsidiary that, together with its Subsidiaries on a consolidated basis, as of the date of the financial statements most recently delivered pursuant to Sections 6.1(a) or (b), (a) generates annual revenue in excess of 2.5% of the Consolidated annual revenue of Holdings and its Subsidiaries or (b) owns assets the book value of which exceeds 2.5% of the Consolidated book value of the total assets of Holdings and its Subsidiaries; provided that no Subsidiary shall be excluded as a Material Subsidiary until, and for so long as, the Borrower shall have designated such Subsidiary’s status as an Immaterial Subsidiary in writing to the Administrative Agent; provided further that no Subsidiary shall be excluded as a Material Subsidiary if the consolidated total assets or consolidated revenue of such Subsidiary, taken together with the consolidated total assets and consolidated revenue of all other Subsidiaries then excluded as Material Subsidiaries, exceeds 5.0% of the consolidated total assets or consolidated revenue, as the case may be, of the Borrower and its Subsidiaries. “MFN Protection” means, with respect to any Pari Passu Indebtedness (including any Incremental Term Loan that constitutes Pari Passu Indebtedness) incurred after the Closing Date, the requirement that if the All-In Yield in respect of such Indebtedness exceeds the All-In Yield for the Initial Term Loan (in
34 174504702_2 each case as determined by the Borrower and the Administrative Agent, in accordance with the parameters set forth in the definition of All-In Yield) by more than 0.50%, then the All-In Yield for the Initial Term Loan shall be increased (by increasing the Applicable Margin, increasing the interest rate floors, payment of fees or otherwise) so that the All-In Yield in respect of such Initial Term Loan is equal to the All-In Yield for such Indebtedness minus 0.50%. “Moody’s” means Moody’s Investors Service, Inc. “Mudrick” means Mudrick Capital Management, L.P. “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Credit Party or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding five (5) years, or to which any Credit Party or any ERISA Affiliate has any liability (contingent or otherwise). “Net Cash Proceeds” means, as applicable, (a) with respect to any Asset Disposition or Insurance and Condemnation Event, all cash and Cash Equivalents received by any Credit Party or any of its Subsidiaries therefrom (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, as and when received) less the sum of (i) all income taxes and other taxes assessed by, or reasonably estimated to be payable to, a Governmental Authority as a result of such transaction (provided that if such estimated taxes exceed the amount of actual taxes required to be paid in cash in respect of such Asset Disposition, the amount of such excess shall constitute Net Cash Proceeds), (ii) all reasonable and customary out-of-pocket fees and expenses incurred in connection with such transaction or event, (iii) the principal amount of, premium, if any, and interest on any Indebtedness (other than Indebtedness under the Loan Documents or the ABL Documents, any Incremental Equivalent Indebtedness, any Refinancing Equivalent Indebtedness) that is secured by a Lien on the asset (or a portion thereof) disposed of that is pari passu to or senior in ranking to the Liens on such asset created by the Loan Documents, which Indebtedness is required to be repaid in connection with such transaction or event, but only to the extent of such requirement and (iv) all amounts that are set aside as a reserve (A) for adjustments in respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to the extent such reserve is required by GAAP or as otherwise required pursuant to the documentation with respect to such Asset Disposition or Insurance and Condemnation Event, (C) for the payment of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition and (D) for the payment of indemnification obligations; provided that, to the extent and at the time any such amounts are released from such reserve and received by such Credit Party or any of its Subsidiaries, such amounts shall constitute Net Cash Proceeds, and (b) with respect to any Specified Equity Contribution or Debt Issuance, the gross cash proceeds received by any Credit Party or any of its Subsidiaries therefrom less all reasonable and customary out-of-pocket legal, underwriting and other fees and expenses incurred in connection therewith. “Net Extraordinary Charges and Losses” means, for any applicable Reference Period, an amount (which shall not be less than zero) equal to (a) the amount of non-recurring extraordinary charges and losses for such Reference Period minus (b) the amount of any extraordinary gains deducted from Consolidated EBITDA for such period pursuant to clause (b)(iii) of the definition thereof. “Net Short Lender” has the meaning assigned thereto in Section 10.2. “Non-Consenting Lender” means any Lender that does not approve any consent, waiver, amendment, modification or termination that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.2 and (b) has been approved by the Required Lenders.
35 174504702_2 “Non-Designated Affiliated Lender” means an Affiliated Lender that is not a Designated Affiliated Lender. “Non-Guarantor Subsidiary” means any Subsidiary of Holdings (other than the Borrower) that is not a Subsidiary Guarantor. “Non-Wholly-Owned Subsidiary” means any Subsidiary of the Borrower that is not Wholly- Owned. “Notice of Borrowing” has the meaning assigned thereto in Section 2.2(a). “Notice of Conversion/Continuation” has the meaning assigned thereto in Section 3.2. “Notice of Prepayment” has the meaning assigned thereto in Section 2.4(a). “Notice of Prepayment Rejection” has the meaning assigned thereto in Section 2.4(b)(vi). “Obligations” means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Term Loans and (b) all other fees and commissions (including attorneys’ fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Credit Parties to the Lenders or the Administrative Agent, in each case under any Loan Document of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note and including interest and fees that accrue after the commencement by or against any Credit Party of any proceeding under any Debtor Relief Laws, naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control. “OID” has the meaning assigned thereto in the definition of “All-In Yield”. “Organizational Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents); and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity. “Other Applicable Pari Passu Indebtedness” means with respect to any prepayment of the Initial Term Loans under Section 2.4(b)(i) (other than a prepayment from the proceeds of Credit Agreement Refinancing Indebtedness), Section 2.4(b)(ii) or Section 2.4(b)(iv), as applicable, any Pari Passu Indebtedness in the form of Incremental Term Loan, Incremental Equivalent Indebtedness or Refinancing Equivalent Indebtedness which, at the time of such prepayment, requires the Borrower or any of its Subsidiaries to prepay, or make an offer to repurchase to the holders of, such Pari Passu Indebtedness as a result of the event giving rise to such prepayment.
36 174504702_2 “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Term Loan or Loan Document). “Other Taxes” means all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.12). “Pari Passu Indebtedness” means Indebtedness that is secured by Liens only on assets constituting Collateral and having the same lien priority as the Secured Obligations (without regard to control of remedies). “Participant” has the meaning assigned thereto in Section 10.9(d). “Participant Register” has the meaning assigned thereto in Section 10.9(d). “PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)). “PBGC” means the Pension Benefit Guaranty Corporation or any successor agency. “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained, funded or administered for the employees of any Credit Party or any ERISA Affiliate, (b) has at any time within the preceding five (5) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliates or (c) any Credit Party or any ERISA Affiliate has any liability (contingent or otherwise). “Permitted Acquisition” means (i) the Sunshine Acquisition and (ii) any Acquisition that meets all of the following requirements, which in the case of a Limited Condition Transaction shall be subject to Section 1.10: (a) no less than fifteen (15) Business Days prior to the proposed closing date of such Acquisition (or such shorter period as may be agreed to by the Administrative Agent), the Borrower shall have delivered written notice of such Acquisition to the Administrative Agent, which notice shall include the proposed closing date of such Acquisition; (b) the board of directors or other similar governing body of the Person to be acquired shall have approved such Acquisition (and, if requested, the Administrative Agent shall have received evidence, in form and substance reasonably satisfactory to the Administrative Agent, of such approval); (c) the Person or business to be acquired shall be in a line of business permitted pursuant to Section 7.11 or, in the case of an Acquisition of assets, the assets acquired are useful in the business of the Borrower and its Subsidiaries as conducted immediately prior to such Acquisition or permitted pursuant to Section 7.11;
37 174504702_2 (d) if such Acquisition is a merger or consolidation, the Borrower or a Subsidiary of the Borrower shall be the surviving Person, and such surviving Person shall become, if required, a Subsidiary Guarantor in accordance with Section 6.13; and no Change in Control shall have been effected thereby; (e) after giving effect to such Acquisition and any Indebtedness and any permanent repayment of Indebtedness in connection therewith and assuming that any commitments with respect to Indebtedness entered into in connection therewith are each fully drawn at such time, on a Pro Forma Basis and based on the most recently completed Reference Period for which financial statements have been delivered hereunder, either (i) the Total Net Leverage Ratio shall be at least 0.50 below the then applicable ratio set forth in Section 7.14 or (ii) (1) the First Lien Net Leverage Ratio is less than the First Lien Net Leverage Ratio immediately prior to the consummation of such Acquisition and (2) the Total Net Leverage Ratio is less than the Total Net Leverage Ratio immediately prior to the consummation of such Acquisition; (f) if the Permitted Acquisition Consideration for any such Acquisition (or series of related Acquisitions) exceeds $25,000,000 in the aggregate, no later than five (5) Business Days prior to the proposed closing date of such Acquisition (or such shorter period as may be agreed to by the Administrative Agent), the Borrower, to the extent requested by the Administrative Agent, (i) shall have delivered to the Administrative Agent promptly upon the finalization thereof copies of substantially final Permitted Acquisition Documents, which shall be in form and substance reasonably satisfactory to the Administrative Agent, and (ii) shall have delivered to, or made available for inspection by, the Administrative Agent substantially complete Permitted Acquisition Diligence Information, which shall be in form and substance reasonably satisfactory to the Administrative Agent; (g) no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such Acquisition and any Indebtedness incurred in connection therewith; (h) the Borrower shall demonstrate, in form and substance reasonably satisfactory to the Administrative Agent, that either (x) the entity to be acquired had positive Consolidated EBITDA for the most recently completed Reference Period prior to the proposed closing date of such Acquisition or (y) Liquidity is not less than $25,000,000 on a Pro Forma Basis after giving effect to such Acquisition; and (i) if the Permitted Acquisition Consideration for any such Acquisition (or series of related Acquisitions) exceeds $25,000,000 in the aggregate, the Borrower shall have (i) delivered to the Administrative Agent a certificate of a Responsible Officer certifying that all of the requirements set forth above have been satisfied or will be satisfied on or prior to the consummation of such purchase or other Acquisition (including calculations demonstrating compliance with clause (e) above in form and substance reasonably satisfactory to the Administrative Agent) and (ii) provided such other documents and other information as may be reasonably requested by the Administrative Agent in connection with such purchase or other Acquisition. “Permitted Acquisition Consideration” means the aggregate amount of the purchase price, including, but not limited to, any assumed debt, earn-outs (valued at the maximum amount payable thereunder), deferred payments, or Equity Interests of Holdings, to be paid on a singular basis in connection with any applicable Permitted Acquisition as set forth in the applicable Permitted Acquisition Documents executed by the Borrower or any of its Subsidiaries in order to consummate the applicable Permitted Acquisition. “Permitted Acquisition Diligence Information” means with respect to any applicable Acquisition, to the extent applicable, all material financial information, all material contracts, all material customer lists, all material supply agreements, and all other material information, in each case, reasonably requested to be delivered to the Administrative Agent in connection with such Acquisition (except with respect to
38 174504702_2 information (a) in respect of which, and to the extent that, disclosure to the Administrative Agent or any Lender (or any of their respective representatives) is prohibited by Applicable Law, (b) to the extent that such information is subject to any confidentiality agreement (unless mutually agreeable arrangements can be made to preserve such information as confidential in the good faith determination of the Borrower), (c) to the extent that such information is classified or otherwise constitutes non-financial trade secrets or non-financial proprietary information of any Person or (d) to the extent that such information is subject to any attorney-client privilege or similar privilege or constitutes attorney work product); provided that the Borrower shall notify the Administrative Agent if any such information is being withheld as a result of any of clauses (a) through (d) above and shall use its commercially reasonable efforts to describe, to the extent both feasible and permitted under Applicable Law or applicable confidentiality obligation, or without waiving such attorney-client privilege, as applicable, the applicable information (including via redaction) and seek to obtain necessary waivers to the disclosure of such information and (y) any such confidentiality obligation was not entered into in contemplation of the requirements of this definition. “Permitted Acquisition Documents” means with respect to any Acquisition proposed by the Borrower or any Subsidiary Guarantor, final copies or substantially final drafts if not executed at the required time of delivery of the purchase agreement, sale agreement, merger agreement or other agreement evidencing such Acquisition, including all schedules, exhibits and annexes thereto and each other material document executed, delivered, contemplated by or prepared in connection therewith and any amendment, modification or supplement to any of the foregoing. “Permitted Indebtedness Conditions” means, with respect to any applicable Indebtedness (including any Incremental Term Loan) that such Indebtedness meets each of the following requirements: (a) the stated maturity date of such Indebtedness shall be no earlier than, and the terms of such Indebtedness do not provide for any scheduled payment, mandatory repayment or redemption or sinking fund or similar obligations at any time prior to (i) in the case of such Indebtedness that is Pari Passu Indebtedness, the Latest Maturity Date in effect at the time of such incurrence; provided that such Pari Passu Indebtedness may have scheduled payments, mandatory repayments or redemptions or similar obligations prior to its stated maturity so long as (x) such Indebtedness does not have a shorter Weighted Average Life to Maturity than the remaining Weighted Average Life to Maturity of any Class of Term Loans then outstanding at the time of incurrence, (y) any mandatory prepayment (other than scheduled amortization payments which shall be determined by the Borrower and the lenders of such Indebtedness) of such Pari Passu Indebtedness shall be made on a pro rata basis with all then existing Term Loans, except that the Borrower and the lenders of such Pari Passu Indebtedness may, in their sole discretion, elect to prepay or receive, as applicable, any prepayments on a less than pro rata basis (but not on a greater than pro rata basis); and (z) such mandatory repayments or redemptions or similar obligations are no more restrictive on Holdings or its Subsidiaries than the provisions of Section 2.4 hereof and (ii) in all other cases, the date that is 91 days after the Latest Maturity Date in effect at the time of such incurrence (other than, in each case, subject to any applicable subordination and intercreditor terms with respect thereto, customary offers or obligations to repurchase or repay such Indebtedness upon a change of control, excess cash flow sweep, asset sale or casualty or condemnation event, in each case and customary acceleration rights after an event of default); provided that the restrictions of this clause (a) shall not apply to the extent such Indebtedness constitutes a customary bridge or similar facility that is to be automatically converted or exchanged into notes or other permitted Indebtedness that otherwise would satisfy this clause (a) so long as such conversion or exchange is subject only to conditions customary for similar conversions and exchanges and the applicable Credit Party irrevocably agrees at the time of incurrence thereof to take all actions necessary to convert or exchange such Indebtedness); (b) except as otherwise set forth in this definition, the terms, covenants and conditions with respect to such Indebtedness will, to the extent not consistent with the then outstanding Term Loans, be
39 174504702_2 determined by the Borrower and the lenders of such Indebtedness; provided that (i) such terms, covenants and conditions, when taken as a whole, are not materially more restrictive on Holdings and its Subsidiaries than the terms and conditions of this Agreement, taken as a whole (except for (A) terms, covenants and conditions with respect to such Indebtedness that are applicable only to the periods after the Latest Maturity Date in effect at the time of incurrence or assumption of such Indebtedness and (B) any materially more restrictive terms and/or financial maintenance covenant added for the benefit of any such Indebtedness, if such materially more restrictive terms and/or financial maintenance covenant is also added for the benefit of the Lenders hereunder with respect to any Term Loans or Term Loan Commitments remaining outstanding after giving effect to the incurrence or assumption of such Indebtedness and the application of the proceeds thereof) and (ii) in the case of Junior Indebtedness or unsecured Indebtedness the other terms, covenants and conditions thereof shall, taken as a whole, reflect then current market terms for such type of financings, including with respect to customary differences, cushions and conditions from the corresponding terms, covenants and conditions applicable to the existing Term Loans); provided that a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to the incurrence or assumption of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or substantially final drafts of the documentation related thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement; provided further that with respect to any Indebtedness under this Agreement, to the extent not consistent with the Initial Term Loan, the operational and agency provisions and terms related to the operational and agency functions of the Administrative Agent shall be reasonably satisfactory to the Administrative Agent; (c) such Indebtedness may only be recourse to or guaranteed by a Credit Party; (d) if such Indebtedness is secured, it is secured only by assets included within the Collateral and, unless such Indebtedness constitutes Obligations hereunder, the holders thereof (or a duly authorized agent or trustee on their behalf) shall enter into (1) in the case of Pari Passu Indebtedness, a joinder or amendment or restatement of the Closing Date Intercreditor Agreement and, if applicable, a joinder to, restatement of or new Acceptable Junior Lien Intercreditor Agreement and (2) in the case of Indebtedness secured by a Lien on the Collateral on a junior basis to the Liens securing the Secured Obligations, an Acceptable Junior Lien Intercreditor Agreement; (e) such Indebtedness shall have pricing (including interest rates, fees and premiums), amortization (subject to clause (a) above), optional prepayment and redemption terms as may be agreed to by the Borrower and the lenders or holders of such Indebtedness; provided that if such Indebtedness constitutes Pari Passu Indebtedness (other than revolving Indebtedness), the MFN Protection shall apply; (f) subject to Section 1.10 in the case of any Incremental Term Loan or Incremental Equivalent Indebtedness incurred to finance a substantially concurrent Limited Condition Transaction, immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, no Default or Event of Default shall have occurred and be continuing or would result therefrom; (g) subject to Section 1.10 in the case of any Incremental Term Loan or Incremental Equivalent Indebtedness incurred to finance a substantially concurrent Limited Condition Transaction, the Borrower is in compliance on a Pro Forma Basis (based on the most recently completed Reference Period) with the financial covenant contained in Section 7.14 after giving effect to the incurrence of such Indebtedness and any permanent repayment of Indebtedness or any Acquisition or Investment in connection therewith; and (h) in the case of any Incremental Term Loan or Incremental Equivalent Indebtedness, the Administrative Agent shall have received a certificate from a Responsible Officer of the Borrower
40 174504702_2 certifying that the incurrence of such Indebtedness which certificate shall provide the calculations and basis for the certifications therein (including calculations demonstrating compliance with clause (g) above). “Permitted Investors” means, collectively, Mudrick and the Co-Investors. “Permitted Liens” means the Liens permitted pursuant to Section 7.2. “Permitted Refinancing Indebtedness” means any Indebtedness (the “Refinancing Indebtedness”), the proceeds of which are used to refinance, refund, renew, extend or replace outstanding Indebtedness (such outstanding Indebtedness, the “Refinanced Indebtedness”); provided that: (a) the principal amount (or accreted value, if applicable) of such Refinancing Indebtedness (including any unused commitments thereunder) is not greater than the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness at the time of such refinancing, refunding, renewal, extension or replacement, except by an amount equal to any original issue discount thereon and the amount of unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such refinancing, refunding, renewal, extension or replacement, and by an amount equal to any existing commitments thereunder that have not been utilized at the time of such refinancing, refunding, renewal, extension or replacement; (b) the final stated maturity and Weighted Average Life to Maturity of such Refinancing Indebtedness shall not be prior to or shorter than that applicable to the Refinanced Indebtedness and such Refinancing Indebtedness does not require any scheduled payment of principal, mandatory repayment, redemption or repurchase that is more favorable to the holders of the Refinancing Indebtedness than the corresponding terms (if any) of the Refinanced Indebtedness (including by virtue of such Refinancing Indebtedness participating on a greater basis in any mandatory repayment, redemption or repurchase as compared to the Refinanced Indebtedness, but excluding any scheduled payment of principal, mandatory repayment, redemption or repurchase occurring on or after the date that is 91 days after the Latest Maturity Date in effect at the time of the issuance or incurrence of such Refinancing Indebtedness); provided that the restrictions of this clause (b) shall not apply to the extent such Refinancing Indebtedness constitutes a customary bridge or similar facility that is to be automatically converted or exchanged into notes or other Indebtedness that otherwise would satisfy this clause (b) so long as such conversion or exchange is subject only to conditions customary for similar conversions and exchanges and Holdings irrevocably agrees at the time of incurrence thereof to take, and cause each applicable Subsidiary to take, all actions necessary to convert or exchange such Refinancing Indebtedness); (c) such Refinancing Indebtedness shall not be secured by (i) Liens on assets other than assets securing the Refinanced Indebtedness at the time of such refinancing, refunding, renewal, extension or replacement or (ii) Liens having a higher priority than the Liens, if any, securing the Refinanced Indebtedness at the time of such refinancing, refunding, renewal, extension or replacement; provided that (A) the holders of any Refinancing Term Loans or Refinancing Equivalent Indebtedness (or a duly authorized agent on their behalf) are subject to (1) in the case of Pari Passu Indebtedness, the Closing Date Intercreditor Agreement and, if applicable, an Acceptable Junior Lien Intercreditor Agreement and (2) in the case of Indebtedness secured by a Lien on the Collateral on a junior basis to the Liens securing the Secured Obligations, an Acceptable Junior Lien Intercreditor Agreement and (B) any Refinancing Term Loans or Refinancing Equivalent Indebtedness are not secured by any assets that do not also constitute Collateral; (d) such Refinancing Indebtedness shall not be guaranteed by or otherwise recourse to any Person other than the Person(s) to whom the Refinanced Indebtedness is recourse or by whom it is guaranteed, in each case as of the time of such refinancing, refunding, renewal, extension or replacement;
41 174504702_2 (e) to the extent such Refinanced Indebtedness is subordinated in right of payment to the Obligations (or the Liens securing such Indebtedness were originally contractually subordinated to the Liens securing the Collateral pursuant to the Security Documents), such refinancing, refunding, renewal, extension or replacement is subordinated in right of payment to the Obligations (or the Liens securing such Indebtedness shall be subordinated to the Liens securing the Collateral pursuant to the Security Documents) on terms at least as favorable to the Lenders as those contained in the documentation governing such Refinanced Indebtedness or otherwise reasonably acceptable to the Administrative Agent; (f) except in the case of a refinancing, refunding, renewal, extension or replacement of Refinanced Indebtedness that was originally incurred under Section 7.1(f), the covenants with respect to such Refinancing Indebtedness, when taken as a whole, are not materially more restrictive to Holdings and its Subsidiaries than those in the Refinanced Indebtedness (taken as a whole) (except (i) for covenants with respect to such Indebtedness that are applicable only to the periods after the Latest Maturity Date in effect at the time of incurrence of such Refinancing Indebtedness, (ii) to the extent that any financial maintenance covenant is added for the benefit of any such Refinancing Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such financial maintenance covenant is also added for the benefit of the Lenders hereunder with respect to any Term Loans or Term Loan Commitments remaining outstanding after giving effect to the incurrence of such Refinancing Indebtedness and the application of the proceeds thereof and (iii) to the extent that such materially more restrictive terms are added for the benefit of any Refinancing Indebtedness that is Pari Passu Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such materially more restrictive terms are also added for the benefit of the Lenders hereunder with respect to any Term Loans or Term Loan Commitments remaining outstanding after giving effect to the incurrence of such Refinancing Indebtedness and the application of the proceeds thereof); provided that a certificate of a Responsible Officer of Holdings delivered to the Administrative Agent at least two (2) Business Days (or such shorter period as the Administrative Agent may agree to) prior to the incurrence of such Refinancing Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Refinancing Indebtedness or substantially final drafts of the documentation related thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement; (g) no Default or Event of Default shall have occurred and be continuing at the time of, or would result from, such refinancing, refunding, renewal, extension or replacement; and (h) the Refinancing Indebtedness shall have pricing (including interest rates, fees and premiums), optional prepayment and redemption terms as may be agreed to by Holdings and the lenders or holders of such Refinancing Indebtedness; provided that if such Refinancing Indebtedness constitutes Pari Passu Indebtedness (other than revolving Indebtedness), the MFN Protection shall apply. “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. “Plan of Reorganization” has the meaning assigned thereto in Section 10.9(h)(iii). “Planned Expenditures” has the meaning assigned thereto in the definition of “Excess Cash Flow”. “Platform” means Debt Domain, Intralinks, SyndTrak or a substantially similar electronic transmission system. “Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of
42 174504702_2 the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. “Pro Forma Basis” means for purposes of calculating Consolidated EBITDA, the First Lien Net Leverage Ratio or the Total Net Leverage Ratio (including any component definition thereof): (a) for any period during which one or more Specified Transactions occurs, that (i) such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement, (ii) there shall be included in determining Consolidated EBITDA for such period, without duplication, the Acquired EBITDA of any Person or business, or attributable to any property or asset, acquired by Holdings or any Subsidiary during such period (but not the Acquired EBITDA of any related Person or business or any Acquired EBITDA attributable to any assets or property, in each case to the extent not so acquired) in connection with a Permitted Acquisition to the extent not subsequently sold, transferred, abandoned or otherwise disposed of by Holdings or such Subsidiary during such period, based on the actual Acquired EBITDA of such acquired entity or business for such period (including the portion thereof occurring prior to such acquisition) and (iii) there shall be excluded in determining Consolidated EBITDA for such period, without duplication, the Disposed EBITDA of any Person or business, or attributable to any property or asset, disposed of by Holdings or any Subsidiary during such period in connection with a Specified Disposition or discontinuation of operations, based on the Disposed EBITDA of such disposed entity or business or discontinued operations for such period (including the portion thereof occurring prior to such disposition or discontinuation); provided that the foregoing amounts shall be without duplication of any adjustments that are already included in the calculation of Consolidated EBITDA; and (b) in the event that Holdings or any Subsidiary thereof incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement, discharge, defeasance or extinguishment) any Indebtedness included in the calculations of any financial ratio or test (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable measurement period or (ii) subsequent to the end of the applicable measurement period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the first day of the applicable measurement period (assuming that the entire amount of such Indebtedness is fully funded on such date but without netting any cash proceeds of such Indebtedness) and any such Indebtedness that is incurred (including by assumption or guarantee) that has a floating or formula rate of interest shall have an implied rate of interest for the applicable period determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination. “Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Equity Interests. “PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time. “Public Lenders” has the meaning assigned thereto in Section 6.2. “Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests. “Qualified Swap Counterparty” means any swap or hedge counterparty designated by the Borrower in writing to the Administrative Agent that is reasonably acceptable to the Administrative Agent and that
43 174504702_2 also executes and delivers a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which, amongst other things, such counterparty acknowledges and accepts the appointment of Administrative Agent under the Loan Documents and agrees to be bound by all the applicable provisions thereof (including, without limitation, the provisions of Article IX of this Agreement) as if a Lender under this Agreement. “Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable. “Reference Period” means, as of any date of determination, the period of four (4) consecutive fiscal quarters ended on or immediately prior to such date for which financial statements of Holdings and its Subsidiaries have been delivered to the Administrative Agent hereunder. “Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 11:00 a.m. on the day that is two (2) U.S. Securities Business Days preceding the date of such setting, and (2) if such Benchmark is not Term SOFR, the time determined by the Administrative Agent in its reasonable discretion. “Refinance” has the meaning assigned thereto in the definition of “Credit Agreement Refinancing Indebtedness”. “Refinancing Amendment” means an amendment to this Agreement executed by each of (a) the Borrower, (b) the Administrative Agent, and (c) each lender of any portion of Refinancing Term Loans incurred pursuant thereto, in accordance with Section 3.15. “Refinancing Equivalent Indebtedness” has the meaning assigned thereto in the definition of “Credit Agreement Refinancing Indebtedness”. “Refinancing Term Loans” has the meaning assigned thereto in the definition of “Credit Agreement Refinancing Indebtedness”. “Register” has the meaning assigned thereto in Section 10.9(c). “Regulated Bank” means a commercial bank with a consolidated combined capital and surplus of at least $5,000,000,000 that is (a) a U.S. depository institution the deposits of which are insured by the FDIC, (b) a corporation organized under section 25A of the U.S. Federal Reserve Act of 1913, (c) a branch, agency or commercial lending company of a foreign bank operating pursuant to approval by and under the supervision of the FRB under 12 CFR part 211, (d) a non-U.S. branch of a foreign bank managed and controlled by a U.S. branch referred to in clause (c) or (e) any other U.S. or non-U.S. depository institution or any branch, agency or similar office thereof supervised by a bank regulatory authority in any jurisdiction. “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates. “Relevant Governmental Body” means the FRB or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New York, or any successor thereto. “Removal Effective Date” has the meaning assigned thereto in Section 9.6(b). “Repricing Transaction” has the meaning assigned thereto in Section 2.4(c).
44 174504702_2 “Required Lenders” means, at any time, Lenders holding Term Loans and unfunded Term Loan Commitments representing more than fifty percent (50%) of the sum of (a) the aggregate Term Loan Commitments of all Lenders and (b) the aggregate outstanding Term Loans of all Lenders. The Term Loans of any Defaulting Lender shall be disregarded in determining Required Lenders at any time. “Resignation Effective Date” has the meaning assigned thereto in Section 9.6(a). “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “Responsible Officer” means, as to any Person, the chief executive officer, president, chief financial officer, controller, treasurer or assistant treasurer of such Person or any other officer of such Person designated in writing by the Borrower or such Person and reasonably acceptable to the Administrative Agent; provided that, to the extent requested thereby, the Administrative Agent shall have received a certificate of such Person certifying as to the incumbency and genuineness of the signature of each such officer. Any document delivered hereunder or under any other Loan Document that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Person. “Restricted Junior Debt Payment” has the meaning assigned thereto in Section 7.9(b). “Restricted Payment” means any dividend on, or the making of any payment or other distribution on account of, or the purchase, redemption, retirement or other acquisition (directly or indirectly) of, or the setting apart assets for a sinking or other analogous fund for the purchase, redemption, retirement or other acquisition of, any class of Equity Interests of any Credit Party or any Subsidiary thereof or the making of any distribution of cash, property or assets to the holders of any Equity Interests of any Credit Party or any Subsidiary thereof on account of such Equity Interests. “Retained Excess Cash Flow” means the cumulative amount of Excess Cash Flow (but not less than zero in any period) in respect of all fiscal quarters (commencing with the fiscal quarter ending June 30, 2021) that is not required to be applied in prepayment of the Term Loans pursuant to Section 2.4 (but excluding the amount of any repayments, prepayments or redemptions made during any fiscal quarter that are applied to reduce the amount of such required prepayment in accordance with Section 2.4(b)(iv)). “S&P” means Standard & Poor’s Rating Service, a division of S&P Global Inc. and any successor thereto. “Sale Leaseback” has the meaning assigned thereto in Section 7.13. “Sanctioned Country” means at any time, a country, region or territory which is itself (or whose government is) the subject or target of any Sanctions (as of the Closing Date, Cuba, Iran, North Korea, Syria and Crimea). “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security Council, the European Union or His Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any such Person or Persons described in clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the
45 174504702_2 ownership of such legal entity by Sanctioned Person(s) or (d) any Person otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union or His Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority in any jurisdiction in which (a) the Borrower or any of its Subsidiaries or Affiliates is located or conducts business, (b) in which any of the proceeds of the Term Loans will be used, or (c) from which repayment of the Term Loans will be derived. “SEC” means the U.S. Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. “Secured Cash Management Agreement” means (a) any Cash Management Agreement in effect on the Closing Date between or among any Credit Party and a counterparty that is (i) a Lender, (ii) the Administrative Agent or (iii) an Affiliate of a Lender or the Administrative Agent, in each case as determined as of the Closing Date or (b) any Cash Management Agreement entered into after the Closing Date between or among any Credit Party and a counterparty that is (i) a Lender, (ii) the Administrative Agent or (iii) an Affiliate of a Lender or the Administrative Agent, in each case as determined at the time such Cash Management Agreement is entered into and, in each case, only if, and then only to the extent, (i) not secured under the ABL Documents and (ii) not designated as a “Bank Product” under and as defined in the ABL Credit Agreement pursuant to, and in accordance with, the terms thereof. “Secured Cash Management Obligations” means all existing or future payment and other obligations owing by any Credit Party under any Secured Cash Management Agreement. “Secured Hedge Agreement” means (a) any Hedge Agreement in effect on the Closing Date between or among any Credit Party and a counterparty that is (i) a Lender, (ii) the Administrative Agent, (iii) an Affiliate of a Lender or the Administrative Agent or (iv) a Qualified Swap Counterparty, in each case, as determined as of the Closing Date or (b) any Hedge Agreement entered into after the Closing Date between or among any Credit Party and a counterparty that is (i) a Lender, (ii) the Administrative Agent, (iii) an Affiliate of a Lender or the Administrative Agent or (iv) a Qualified Swap Counterparty, in each case, as determined at the time such Hedge Agreement is entered into and, in each case, only if, and then only to the extent, (x) not secured under the ABL Documents or (y) not designated as a “Bank Product” under and as defined in the ABL Credit Agreement pursuant to, and in accordance with, the terms thereof. “Secured Hedge Obligations” means all existing or future payment and other obligations owing by any Credit Party under any Secured Hedge Agreement; provided that the “Secured Hedge Obligations” of a Credit Party shall exclude any Excluded Swap Obligations with respect to such Credit Party. “Secured Obligations” means, collectively, (a) the Obligations, (b) any Secured Hedge Obligations and (c) any Secured Cash Management Obligations. “Secured Parties” means, collectively, the Administrative Agent (including in its capacity as the Australian Security Trustee), the Lenders, the holders of any Secured Hedge Obligations, the holders of any Secured Cash Management Obligations, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.5, any other holder from time to time of any of any Secured Obligations and, in each case, their respective successors and permitted assigns. “Securities Act” means the Securities Act of 1933 (15 U.S.C. § 77 et seq.).
46 174504702_2 “Security Documents” means the collective reference to the Collateral Agreement, the Australian Security Documents and each other agreement or writing pursuant to which any Credit Party pledges or grants a security interest in any Property or assets securing the Secured Obligations. “Sensis Holdings” means Sensis Holding Limited, a private limited company incorporated under the laws of England and Wales. “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Loan” means any Loan bearing interest at a rate based on Adjusted Term SOFR as provided in Section 3.1(a). “Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the Property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. For purposes of this definition, the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. “Specified Disposition” means any Asset Disposition having gross sales proceeds in excess of the Threshold Amount. “Specified Equity Contribution” has the meaning assigned thereto in Section 8.7. “Specified Transactions” means (a) any Specified Disposition, (b) any Permitted Acquisition or other similar Investment, (c) the Transactions, (d) any capital contribution in respect of Qualified Equity Interests or any issuance of Qualified Equity Interests (other than any Specified Equity Contribution), and (e) any other event that by the terms of the Loan Documents requires pro forma compliance with a test or covenant hereunder or requires such test or covenant to be calculated on a pro forma basis. “Subordinated Indebtedness” means the collective reference to any Indebtedness incurred by Holdings or any of its Subsidiaries that is subordinated in right and time of payment to the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent. “Subsidiary” means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding Equity Interests having ordinary voting power to elect a majority of the board of directors (or equivalent governing body) or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by (directly or indirectly) or the management is otherwise controlled by (directly or indirectly) such Person (irrespective of whether, at the time, Equity Interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any
47 174504702_2 contingency). Where it relates to any Australian Credit Party “Subsidiary” means a subsidiary within the meaning given in Part 1.2 Division 6 of the Australian Corporations Act. Unless otherwise qualified, references to “Subsidiary” or “Subsidiaries” herein shall refer to those of Holdings. “Subsidiary Guarantors” means, collectively, (a) the Subsidiaries of Holdings listed on Schedule 5.1 that are identified as a “Guarantor” and (b) each other Subsidiary of Holdings that shall be required to execute and deliver a guaranty or guaranty supplement pursuant to Section 6.13. “Sunshine Acquisition” means the acquisition of all of the Equity Interests of the Acquired Entities by Thryv Ausco pursuant to the Sunshine Acquisition Agreement. “Sunshine Acquisition Agreement” means that certain Share Purchase Agreement, dated as of the Sunshine Acquisition Effective Date, by and among Thryv Ausco, Sensis Holdings, Sunshine SPV, the Sunshine Sellers and the other parties thereto, together with all schedules, exhibits and annexes to such Share Purchase Agreement. “Sunshine Acquisition Condition” has the meaning assigned thereto in Section 4.2. “Sunshine Acquisition Effective Date” has the meaning assigned thereto in Section 4.2. “Sunshine Acquisition Outside Date” has the meaning assigned thereto in Section 4.2. “Sunshine Reserve Account” has the meaning assigned thereto in Section 4.2. “Sunshine Reserve Amount” has the meaning assigned thereto in Section 4.2. “Sunshine Sellers” means, collectively, (a) the Sunshine SPV Shares Seller, (b) certain Affiliates of Platinum Equity Partners L.P. that own Sensis Holdings immediately prior to the consummation of the Sunshine Acquisition and (c) those other Persons identified as sellers in the Sunshine Acquisition Agreement. “Sunshine SPV” means Sunshine NewCo Pty Ltd., an Australian proprietary limited company, 100% of the Equity Interests of which are directly owned by the Sunshine SPV Shares Seller immediately prior to the consummation of the Sunshine Acquisition. “Sunshine SPV Shares Seller” means Telstra Corporation Limited, an Australian public limited liability company. “Sunshine Target” means Project Sunshine I Pty Limited ACN 167 275 818, an Australian proprietary limited company, (a) 30% of the Equity Interests of which is directly owned by Sunshine SPV immediately prior to the consummation of the Sunshine Acquisition and (b) 70% of the Equity Interests of which is indirectly owned by Sensis Holdings immediately prior to the consummation of the Sunshine Acquisition. “Swap Obligation” means, with respect to any Credit Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act. “Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP.
48 174504702_2 “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto. “Term Loan Commitment” means (a) as to any Lender, the obligation of such Lender to make a portion of the Initial Term Loan and/or any other Class of Term Loans, as applicable, to the account of the Borrower hereunder on the Closing Date (in the case of the Initial Term Loan) or the applicable borrowing date (in the case of any other Class of Term Loans) in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on the Register and (b) as to all Lenders, the aggregate commitment of all Lenders to make such Term Loans. The aggregate Term Loan Commitment with respect to the Initial Term Loan of all Lenders on the Closing Date shall be $700,000,000. “Term Loan Maturity Date” means the first to occur of (a) March 1, 2026, and (b) the date of acceleration of the Term Loans pursuant to Section 8.2(a); provided that the Term Loan Maturity Date applicable to Incremental Term Loans, Extended Term Loans and Refinancing Term Loans shall be the final maturity date specified in the relevant documentation for such Incremental Term Loans, Extended Term Loans or Refinancing Term Loans, as applicable. “Term Loan Note” means a promissory note made by the Borrower in favor of a Lender evidencing the portion of the Term Loans made by such Lender, substantially in the form attached as Exhibit A, and any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part. “Term Loan Percentage” means, with respect to any Lender at any time, the percentage of the total outstanding principal balance of the Term Loans represented by the outstanding principal balance of such Lender’s Term Loans. “Term Loan Priority Collateral” has the meaning assigned to “Term Priority Collateral” in the Closing Date Intercreditor Agreement. “Term Loans” means the Initial Term Loans, any Incremental Term Loans, any Extended Term Loans and any Refinancing Term Loans, and “Term Loan” means any of such Term Loans. “Term SOFR” means, (a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (Eastern time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor 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 such tenor 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 such tenor 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 (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 day, as such rate is published by the
49 174504702_2 Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (Eastern time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor 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 such tenor 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 such tenor 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, for any calculation with respect to a Base Rate Loan or a SOFR Loan, a percentage per annum as set forth below for the applicable type of such Term Loan and (if applicable) Interest Period therefor: Base Rate Loans: 0.11448% SOFR Loans: Interest Period Percentage One month 0.11448% Three months 0.26161% Six months 0.42826% “Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion). “Term SOFR Reference Rate” means the forward-looking term rate based on SOFR. “Termination Event” means the occurrence of any of the following which, individually or in the aggregate, has resulted or could reasonably be expected to result in a Material Adverse Effect: (a) a “Reportable Event” described in Section 4043 of ERISA, or (b) the withdrawal of any Credit Party or any ERISA Affiliate from a Pension Plan during a plan year in which it 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, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien pursuant to Section 430(k) of the Code or Section 303 of ERISA, or (g) the determination that any Pension Plan or Multiemployer Plan is considered an at-risk plan or plan in endangered or critical status within the meaning of Sections 430, 431 or 432 of the Code or Sections 303, 304 or 305 of ERISA or (h) the partial or complete withdrawal of any Credit Party or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (i) any event or condition which results in the insolvency of a Multiemployer Plan under Section 4245 of ERISA, or (j) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA, or (k) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate.
50 174504702_2 “Threshold Amount” means $25,000,000. “Thryv Ausco” means Thryv Australia Pty Ltd ACN 638 633 342, an Australian proprietary limited company and a wholly-owned indirect Subsidiary of the Borrower. “TIH” means Thryv International Holding, LLC, a Delaware limited liability company. “Total Net Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Net Indebtedness on such date to (b) Consolidated EBITDA for the most recently completed Reference Period. “Trade Date” has the meaning assigned thereto in Section 10.9(i)(i). “Transaction Costs” means for any period, all expenses, fees, charges and other amounts (other than depreciation or amortization expense) related to (a) the Transactions, (b) any Permitted Acquisitions and (c) any offerings of Equity Interests, Investments, Asset Dispositions, Restricted Payments, recapitalizations or incurrence of Indebtedness, in each case, whether or not consummated, (including, without limitation, any financing fees, merger and acquisition fees, legal fees and expenses, financial advisory fees, due diligence fees or any other fees and expenses in connection therewith), in each case to the extent paid within nine (9) months of the closing of the Credit Facility or the closing or termination of such other transaction, as applicable, including (i) such fees, expenses, or charges related to the incurrence of the Term Loans hereunder and all fees, costs, or expenses incurred or paid by Holdings, the Borrower, or any of their respective Affiliates in connection with the Transactions, this Agreement, and the other Loan Documents, and the transactions contemplated hereby and thereby, (ii) such fees, expenses, or charges related to the offering of the Loan Documents and any other credit facilities or debt issuances, and (iii) any amendment or other modification of the Term Loans hereunder or other Indebtedness, and, in each case, deducted (and not added back) in computing Consolidated Net Income. “Transactions” means, collectively, (a) the repayment in full of all Indebtedness outstanding under the Existing Credit Agreement, (b) the closing of the Credit Facility and the making of the Initial Term Loan, (c) the closing of the Sunshine Acquisition, (d) the closing of the Fifth ABL Amendment, (e) the repayment on the Closing Date of certain Indebtedness under the ABL Credit Agreement and (f) the payment of the Transaction Costs incurred in connection with the foregoing. “Tucker Lease” means, collectively, (a) that certain Sublease Agreement, dated as of January 1, 2013, between AT&T Services Inc., a Delaware corporation, as tenant, and YP Texas Region Yellow Pages LLC, a Delaware limited liability company, as subtenant, in respect of the real property located at 2245 Northlake Parkway, Tucker, Georgia and (b) that certain Sublease Agreement, dated as of January 1, 2013, between AT&T Services Inc., a Delaware corporation, as tenant, and YP Texas Region Yellow Pages LLC, a Delaware limited liability company, as subtenant, in respect of the real property located at 2247 Northlake Parkway, Tucker, Georgia. “UCC” means the Uniform Commercial Code as in effect in the State of New York or (as the context so requires) of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Administrative Agent’s Lien on any Collateral. “UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time)
51 174504702_2 promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Unrestricted” means when referring to cash and Cash Equivalents of Holdings and its Subsidiaries, that such cash and Cash Equivalents (a) do not appear or would not be required to appear as “restricted” on the financial statements of Holdings or any such Subsidiary (unless related to the Loan Documents or the ABL Documents or the Liens created hereunder or thereunder), (b) are not subject to a Lien (other than a Lien permitted pursuant to Section 7.2(l)) in favor of any Person other than the Administrative Agent under the Loan Documents, the ABL Administrative Agent under the ABL Documents or any holder of Indebtedness permitted hereunder that is permitted to be secured by such cash and Cash Equivalents and (c) are not otherwise unavailable to Holdings and its Subsidiaries; provided that only cash and Cash Equivalents that are (A) held by or owned by a Credit Party and subject to a Lien in favor of the Administrative Agent and/or the Australian Security Trustee, as applicable, on behalf of the Secured Parties and (B) held in the United States or in the country of organization of such Credit Party, in each case of clauses (A) and (B) of this proviso, shall constitute “Unrestricted” for purposes of this Agreement and the other Loan Documents. “United States” or “U.S.” means the United States of America. “U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities; provided, that for purposes of notice requirements in Sections 2.2(a), 2.4(a) and 3.2, in each case, such day is also a Business Day. “U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code. “U.S. Subsidiary” means any Subsidiary organized under the laws of the United States, any state thereof or the District of Columbia. “U.S. Tax Compliance Certificate” has the meaning assigned thereto in Section 3.11(g). “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness, in each case of clauses (a) and (b), without giving effect to the application of any prior prepayment to such installment, sinking fund, serial maturity or other required payment of principal. “Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.
52 174504702_2 “Wholly-Owned” means, with respect to a Subsidiary, that all of the Equity Interests of such Subsidiary are, directly or indirectly, owned or controlled by Holdings and/or one or more of its Wholly- Owned Subsidiaries (except for directors’ qualifying shares or other shares required by Applicable Law to be owned by a Person other than Holdings and/or one or more of its Wholly-Owned Subsidiaries). “Withholding Agent” means any Credit Party and the Administrative Agent. “Working Capital” means, for Holdings and its Subsidiaries on a Consolidated basis and calculated in accordance with GAAP, as of any date of determination, the excess of (a) current assets (other than cash, Cash Equivalents, taxes and deferred taxes) over (b) current liabilities, excluding, without duplication, (i) the current portion of any long-term Indebtedness, (ii) the current portion of current taxes and deferred income taxes, (iii) revolving Indebtedness and (iv) the current portion of accrued Consolidated Interest Expense. “Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail- In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. SECTION 1.2 Other Definitions and Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, (b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (c) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (d) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (e) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (f) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (h) 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, (i) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form and (j) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including”. SECTION 1.3 Accounting Terms. (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP, applied on a consistent basis, as in effect from time to time and in a manner consistent with that used in preparing the audited financial statements required by Section 4.1(e) and Section 6.1(a), except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any
53 174504702_2 covenant (including the computation of any financial covenant) contained herein, Indebtedness of Holdings and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP; provided further that (A) all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the effectiveness of FASB ASC 842 shall continue to be accounted for as operating leases for purposes of all financial definitions and calculations for purpose of this Agreement (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with FASB ASC 842 (on a prospective or retroactive basis or otherwise) to be treated as Capital Lease Obligations in the financial statements and (B) all financial statements delivered to the Administrative Agent hereunder shall contain a schedule showing the modifications necessary to reconcile the adjustments made pursuant to clause (A) above with such financial statements. SECTION 1.4 UCC Terms. Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the meanings provided by those definitions. Subject to the foregoing, the term “UCC” refers, as of any date of determination, to the UCC then in effect. SECTION 1.5 Rounding. Any financial ratios required to be maintained pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). SECTION 1.6 References to Agreement and Laws. Unless otherwise expressly provided herein, (a) any definition or reference to formation documents, governing documents, agreements (including the Loan Documents) and other contractual documents or instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) any definition or reference to any Applicable Law, including Anti-Corruption Laws, Anti-Money Laundering Laws, the Bankruptcy Code, the Code, the Commodity Exchange Act, ERISA, the Exchange Act, the PATRIOT Act, the Securities Act, the UCC, the Investment Company Act, the Trading with the Enemy Act of the United States or any of the foreign assets control regulations of the United States Treasury Department, shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law. SECTION 1.7 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). SECTION 1.8 Guarantees/Earn-Outs. Unless otherwise specified, (a) the amount of any Guarantee shall be the lesser of the amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument
54 174504702_2 embodying such Guarantee and (b) the amount of any earn-out or similar obligation shall be the amount of such obligation as reflected on the balance sheet of such Person in accordance with GAAP. SECTION 1.9 Covenant Compliance Generally. For purposes of determining compliance under Sections 7.1, 7.2, 7.3, 7.5 and 7.6, any amount in a currency other than Dollars will be converted to Dollars in a manner consistent with that used in calculating Consolidated Net Income in the most recent annual financial statements of Holdings and its Subsidiaries delivered pursuant to Section 6.1(a) or Section 4.1(e), as applicable. Notwithstanding the foregoing, for purposes of determining compliance with Sections 7.1, 7.2 and 7.3, with respect to any amount of Indebtedness or Investment in a currency other than Dollars, no breach of any basket contained in such sections shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred; provided that for the avoidance of doubt, the foregoing provisions of this Section 1.9 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred at any time under such Sections. SECTION 1.10 Limited Condition Transactions. In the event that the Borrower notifies the Administrative Agent in writing that any proposed Acquisition or Investment is a Limited Condition Transaction and that the Borrower wishes to test the conditions to such Limited Condition Transaction and any Incremental Term Loan or Incremental Equivalent Indebtedness that is to be used to finance such Limited Condition Transaction (if any) in accordance with this Section 1.10, then, so long as agreed to by the lenders providing such Incremental Term Loan or Incremental Equivalent Indebtedness, the following provisions shall apply: (a) any condition to such Limited Condition Transaction and/or such Indebtedness that requires that no Default or Event of Default shall have occurred and be continuing at the time of such Limited Condition Transaction and/or the incurrence of such Indebtedness, shall be satisfied if (i) no Default or Event of Default shall have occurred and be continuing at the time of the execution of the purchase agreement, merger agreement, acquisition agreement or other definitive agreement governing such Limited Condition Transaction (the “LCT Test Date”) and (ii) no Event of Default under any of Section 8.1(a), 8.1(b), 8.1(h) or 8.1(i) shall have occurred and be continuing both immediately before and immediately after giving effect to such Limited Condition Transaction and any Indebtedness incurred in connection therewith (including any such additional Indebtedness); (b) any condition to such Limited Condition Transaction and/or such Indebtedness that the representations and warranties in this Agreement and the other Loan Documents shall be true and correct at the time of consummation of such Limited Condition Transaction and/or the incurrence of such Indebtedness shall be deemed satisfied if (i) all representations and warranties in this Agreement and the other Loan Documents are true and correct in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects) as of the LCT Test Date, or if such representation speaks as of an earlier date, as of such earlier date and (ii) as of the date of consummation of such Limited Condition Transaction, (A) the representations and warranties under the relevant definitive agreement governing such Limited Condition Transaction as are material to the lenders providing such Indebtedness shall be true and correct, but only to the extent that Holdings or its applicable Subsidiary has the right to terminate its obligations under such agreement or otherwise decline to close such Limited Condition Transaction as a result of a breach of such representations and warranties or the failure of those representations and warranties to be true and correct and (B) certain of the representations and warranties in this Agreement and the other Loan Documents which are customary for similar “funds certain” financings and required by the lenders providing such Indebtedness shall be true and correct in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects);
55 174504702_2 (c) any financial ratio test or condition to be tested in connection with such Limited Condition Transaction and the availability of such Indebtedness will be tested as of the LCT Test Date, in each case, after giving effect to the relevant Limited Condition Transaction and related incurrence of Indebtedness, on a Pro Forma Basis where applicable, and, for the avoidance of doubt, (i) such ratios and baskets shall not be tested at the time of consummation of such Limited Condition Transaction and (ii) if any of such ratios are exceeded or conditions are not met following the LCT Test Date, but prior to the closing of such Limited Condition Transaction, as a result of fluctuations in such ratio or amount (including due to fluctuations in Consolidated EBITDA of Holdings and its Subsidiaries or the Person subject to such Limited Condition Transaction), at or prior to the consummation of the relevant transaction or action, such ratios will not be deemed to have been exceeded and such conditions will not be deemed unmet as a result of such fluctuations solely for purposes of determining whether the relevant transaction or action is permitted to be consummated or taken; and (d) except as provided in the next sentence, in connection with any subsequent calculation of any ratio or basket on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated and the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated (i) on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including the incurrence or assumption of Indebtedness) have been consummated and (ii) assuming such Limited Condition Transaction and other transactions in connection therewith (including the incurrence or assumption of Indebtedness) have not been consummated. Notwithstanding the foregoing, any calculation of a ratio in connection with determining the Applicable ECF Percentage and determining whether or not Holdings and its Subsidiaries are in compliance with the financial covenant set forth in Section 7.14 shall, in each case be calculated assuming such Limited Condition Transaction and other transactions in connection therewith (including the incurrence or assumption of Indebtedness) have not been consummated. The foregoing provisions shall apply with similar effect during the pendency of multiple Limited Condition Transactions such that each of the possible scenarios is separately tested. SECTION 1.11 Rates. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative, successor or replacement rate thereto (including 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 3.8(c), will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes. The Administrative Agent and its Affiliates or other related entities may engage in transactions that affect the calculation of the 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 the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any other Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, 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),
56 174504702_2 for any error or calculation of any such rate (or component thereof) provided by any such information source or service. SECTION 1.12 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time. SECTION 1.13 Banking Code of Practice (Australia). The parties hereto agree that the Australian Banking Association Banking Code of Practice does not apply to the Loan Documents nor the transactions under them. ARTICLE II TERM LOAN FACILITY SECTION 2.1 Initial Term Loan. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, each Lender severally agrees to make the Initial Term Loan to the Borrower (or, if applicable, in the case of the Sunshine Reserve Amount, as set forth in Section 4.2) on the Closing Date in a principal amount equal to such Lender’s Term Loan Commitment as of the Closing Date. Notwithstanding the foregoing, if the total Term Loan Commitment as of the Closing Date is not drawn on the Closing Date, the undrawn amount shall automatically be cancelled. SECTION 2.2 Procedure for Advance of Term Loan. (a) Initial Term Loan. The Borrower shall give the Administrative Agent an irrevocable prior written notice substantially in the form of Exhibit B (a “Notice of Borrowing”) prior to 11:00 a.m. on the Closing Date requesting that the Lenders make the Initial Term Loan on such date. Upon receipt of such Notice of Borrowing from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Not later than 1:00 p.m. on the Closing Date, each Lender will make available to the Administrative Agent for the account of the Borrower, at the Administrative Agent’s Office in immediately available funds, the amount of such Initial Term Loan to be made by such Lender on the Closing Date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of the Initial Term Loan in immediately available funds by wire transfer to such Person or Persons as may be designated by the Borrower in writing. (b) Incremental Term Loans. Any Incremental Term Loans shall be borrowed pursuant to, and in accordance with Section 3.13. SECTION 2.3 Repayment of Term Loans. (a) Initial Term Loan. The Borrower shall repay the aggregate outstanding principal amount of the Initial Term Loan in consecutive quarterly installments on the last Business Day of each of March, June, September and December commencing June 30, 2021 as set forth below, except as the amounts of individual installments may be adjusted pursuant to Section 2.4 hereof: PAYMENT DATE PRINCIPAL INSTALLMENT
57 174504702_2 June 30, 2021 $17,500,000 September 30, 2021 $17,500,000 December 31, 2021 $17,500,000 March 31, 2022 $17,500,000 June 30, 2022 $17,500,000 September 30, 2022 $17,500,000 December 31, 2022 $17,500,000 March 31, 2023 $17,500,000 June 30, 2023 $17,500,000 September 30, 2023 $17,500,000 December 31, 2023 $17,500,000 March 31, 2024 $17,500,000 June 30, 2024 $17,500,000 September 30, 2024 $17,500,000 December 31, 2024 $17,500,000 March 31, 2025 $17,500,000 June 30, 2025 $17,500,000 September 30, 2025 $17,500,000 December 31, 2025 $17,500,000 Term Loan Maturity Date Remaining principal amount of the Initial Term Loan If not sooner paid, the Initial Term Loan shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date. (b) Incremental Term Loans. The Borrower shall repay the aggregate outstanding principal amount of each Incremental Term Loan (if any) as determined pursuant to, and in accordance with, Section 3.13. SECTION 2.4 Prepayments of Term Loans. (a) Optional Prepayments. The Borrower shall have the right at any time and from time to time, without premium (other than as specified in clause (c) below) or penalty, to prepay the Term Loans, in whole or in part, upon delivery of prior written notice to the Administrative Agent substantially in the form attached as Exhibit C (a “Notice of Prepayment”) not later than 11:00 a.m. (i) on the same Business Day as each Base Rate Loan and (ii) at least three (3) U.S. Government Securities Business Days before each SOFR Loan, specifying the date and amount of repayment, whether the repayment is of SOFR Loans or Base Rate Loans or a combination thereof, and if a combination thereof, the amount allocable to each and the applicable Class of Term Loans being prepaid, and if a combination thereof, the amount allocable to each. Each optional prepayment of the Term Loans hereunder shall be in an aggregate principal amount of at least $5,000,000 or any whole multiple of $1,000,000 in excess thereof (or, if less, the remaining outstanding principal amount thereof). Each such prepayment of Initial Term Loans shall be applied to reduce the scheduled principal amortizations payments under Section 2.3(a) as directed by the Borrower, and in the absence of such direction, in direct order of maturity of such payments. Each repayment shall be accompanied by any amount required to be paid pursuant to Section 3.9 hereof. A Notice of Prepayment received after 11:00 a.m. shall be deemed received on the next Business Day or U.S. Government Securities Business Day, as applicable. The Administrative Agent shall promptly notify the applicable Lenders of each Notice of Prepayment. Notwithstanding the foregoing, any Notice of Prepayment delivered in connection with any refinancing of all of the Credit Facility with the proceeds of such refinancing or of any
58 174504702_2 other incurrence of Indebtedness or the occurrence of some other identifiable event or condition, may be, if expressly so stated to be, contingent upon the consummation of such refinancing or incurrence or occurrence of such other identifiable event or condition and may be revoked by the Borrower in the event such contingency is not met; provided that the delay or failure of such contingency shall not relieve the Borrower from its obligations in respect thereof under Section 3.9. (b) Mandatory Prepayments. (i) Debt Issuances. The Borrower shall make mandatory principal prepayments of the Term Loans and, to the extent required, any Other Applicable Pari Passu Indebtedness in the manner set forth in clause (viii) below in an amount equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any Debt Issuance of Credit Agreement Refinancing Indebtedness (other than in connection with a Refinancing of Refinancing Equivalent Indebtedness) and any other Debt Issuance not otherwise permitted pursuant to Section 7.1. Such prepayment shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds of any such Debt Issuance. (ii) Asset Dispositions and Insurance and Condemnation Events. The Borrower shall make mandatory principal prepayments of the Term Loans and, to the extent required, any Other Applicable Pari Passu Indebtedness in the manner set forth in clause (viii) below in amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from (A) any Asset Disposition (other than (x) any Asset Disposition permitted pursuant to, and in accordance with, clauses (a) through (m) or (o) through (q) of Section 7.5 and (y) any Asset Disposition of ABL Priority Collateral, the proceeds of which are used to prepay the ABL Obligations or cash collateralize undrawn letters of credit thereunder), (B) any Insurance and Condemnation Event (other than any Insurance and Condemnation Event relating to ABL Priority Collateral, the proceeds of which are used to prepay the ABL Obligations or cash collateralize undrawn letters of credit thereunder) or (C) any Asset Disposition of all or any material portion of the assets comprising the Borrower’s “Software as a Service” business. Such prepayments shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds; provided that, so long as no Default or Event of Default has occurred and is continuing, no prepayment shall be required under clauses (A) and (B) of this Section 2.4(b)(ii) with respect to such portion of such Net Cash Proceeds that the Borrower shall have, on or prior to such date given written notice to the Administrative Agent of its intent to reinvest in accordance with Section 2.4(b)(iii); provided further that no prepayment under this Section 2.4(b)(ii) shall be required unless, and solely to the extent that, the amount thereof exceeds $250,000 per Fiscal Year (with only amounts in excess of such threshold subject to be prepaid). (iii) Reinvestment Option. With respect to any Net Cash Proceeds realized or received with respect to any Asset Disposition (other than any Asset Disposition of all or any material portion of the assets comprising the Borrower’s “Software as a Service” business described in clause (ii)(C) of this Section 2.4(b)) or any Insurance and Condemnation Event by any Credit Party of any Subsidiary thereof, at the option of the Borrower, the Credit Parties may reinvest all or any portion of such Net Cash Proceeds in long-term assets (including in the form of Capital Expenditures, Acquisitions and Investments (other than Investments in cash or Cash Equivalents) permitted by this Agreement) used or useful for the business of the Credit Parties and their Subsidiaries within (x) twelve (12) months following receipt of such Net Cash Proceeds or (y) if such Credit Party enters into a bona fide commitment to reinvest such Net Cash Proceeds within twelve (12) months following receipt thereof, within the later of (A) twelve (12) months following receipt thereof and (B) six (6) months of the date of such commitment; provided that if any Net Cash Proceeds are no longer intended to be or cannot be so reinvested at any time after delivery of a notice of reinvestment election, an amount equal to any such Net Cash Proceeds shall be applied
59 174504702_2 within three (3) Business Days after the applicable Credit Party reasonably determines that such Net Cash Proceeds are no longer intended to be or cannot be so reinvested to the prepayment of the Term Loans as set forth in this Section 2.4(b); provided further that any Net Cash Proceeds relating to Term Loan Priority Collateral shall be reinvested in assets constituting Term Loan Priority Collateral. Pending the final application of any such Net Cash Proceeds, the applicable Credit Party may invest an amount equal to such Net Cash Proceeds in any manner that is not prohibited by this Agreement. (iv) Excess Cash Flow. After the end of each fiscal quarter of the Borrower (commencing with the fiscal quarter ending June 30, 2021), within five (5) Business Days after the earlier to occur of (x) the delivery of the financial statements and related Compliance Certificate for such fiscal quarter and (y) the date on which the financial statements and the related Compliance Certificate for such fiscal quarter are required to be delivered pursuant to Section 6.1(a) or (b), as applicable, and Section 6.2(a), the Borrower shall make mandatory principal prepayments of the Term Loans and, to the extent required, any Other Applicable Pari Passu Indebtedness in the manner set forth in clause (viii) below in an amount equal to (A) the Applicable ECF Percentage of Excess Cash Flow, if any, for such fiscal quarter minus (B) if not deducted in any prior fiscal quarter, the aggregate amount of (1) all optional prepayments of any Term Loan from internally generated cash during such fiscal quarter or after the end of such fiscal quarter but prior to the date of the required Excess Cash Flow prepayment, (2) all repayments of any Term Loan under Section 2.3 during such fiscal quarter and (3) all repurchases and cancellations of Term Loans made pursuant to Section 10.9(g) during such fiscal quarter, in each case, solely to the extent that such prepayments or repurchases are not funded with (A) proceeds of long-term Indebtedness of Holdings or any of its Subsidiaries other than intercompany loans permitted hereunder and revolving Indebtedness or (B) the issuance of Equity Interests. (v) Foreign Dispositions and Excess Cash Flow. Notwithstanding anything to the contrary contained in this Section 2.4(b), (A) to the extent that any of or all the Net Cash Proceeds of any Asset Disposition by a Foreign Subsidiary (“Foreign Disposition”) or Excess Cash Flow attributable to Foreign Subsidiaries (“Foreign Excess Cash Flow”) are prohibited or delayed by applicable local law from being repatriated to the United States or the Borrower believes in good faith that the repatriation to the United States would conflict with the fiduciary and/or statutory duties of such Foreign Subsidiary’s directors (or equivalent managers) or could reasonably be expected to result in a material risk of personal or criminal liability for any such officer, director, employee, manager or member of management of such Foreign Subsidiary, the portion of such Net Cash Proceeds or Foreign Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.4 but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States and/or repatriation would conflict with the applicable fiduciary and/or statutory duties (it being agreed that, solely within 365 days following the end of the applicable Excess Cash Flow period or the event giving rise to the relevant Net Cash Proceeds, the Borrower shall take all commercially reasonable actions required by Applicable Law to permit such repatriation (it being understood that if the repatriation of the relevant Foreign Excess Cash Flow or Net Cash Proceeds, as the case may be, is permitted under the Applicable Law and, to the extent applicable, would no longer conflict with the fiduciary and/or statutory duties of such director, or result in, or be reasonably expected to result in, a material risk of personal or criminal liability for the Persons described above, then in either case, within 365 days following the end of the applicable Excess Cash Flow period or the event giving rise to the relevant Net Cash Proceeds, the Borrower hereby agrees to cause the applicable Foreign Subsidiary to promptly take all actions required by the Applicable Law or applicable fiduciary and/or statutory duties to permit such repatriation and such repatriation will be effected as promptly as practicable and such repatriated Net Cash Proceeds or
60 174504702_2 Foreign Excess Cash Flow will be promptly (and in any event not later than two (2) Business Days after such repatriation) applied (net of additional Taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to this Section 2.4(b)) and (B) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Cash Proceeds of any Foreign Disposition or any Foreign Excess Cash Flow would have adverse tax cost consequences with respect to such Net Cash Proceeds or Foreign Excess Cash Flow (including, without limitation, creating a tax obligation or requiring the use of net operating losses or similar tax credits to reduce such tax obligation), such Net Cash Proceeds or Foreign Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary; provided that, in the case of this clause (B), on or before the date on which any such Net Cash Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to Section 2.4(b)(ii) or any such Foreign Excess Cash Flow would have been required to be applied to prepayments pursuant to Section 2.4(b)(iv), the Borrower may, at its option, apply an amount equal to such Net Cash Proceeds or Foreign Excess Cash Flow to such reinvestments or prepayments, as applicable, as if such Net Cash Proceeds or Foreign Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against (or, if applicable, the net operating losses that would have been applied) if such Net Cash Proceeds or Foreign Excess Cash Flow had been repatriated (or, if less, the Net Cash Proceeds or Foreign Excess Cash Flow that would be calculated if received by such Foreign Subsidiary). Notwithstanding anything to the contrary in this clause (v), if any such Foreign Excess Cash Flow or Net Cash Proceeds of any Foreign Disposition are applied to the repayment or repurchase of any other Other Applicable Pari Passu Indebtedness, any such amounts that are declined shall be applied to the prepayment of the Initial Term Loans in accordance with clause (viii) below. (vi) Rejection Right. Holdings shall notify the Administrative Agent in writing of any mandatory prepayment of the Term Loans required to be made pursuant to clauses (i) through (iv) of this Section 2.4(b) at least three (3) Business Days prior to the required date of such prepayment. Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount to be prepaid in connection with such prepayment. The Administrative Agent will promptly notify each Lender holding Term Loans entitled to such prepayment of the contents of such prepayment notice and of such Lender’s pro rata share of such prepayment. Each Lender may, by written notice (each a “Notice of Prepayment Rejection”) received by the Administrative Agent no later than 3:00 p.m. (Eastern) one (1) Business Day prior to the date of such prepayment, reject all or a portion, of its pro rata share of such prepayment (other than a prepayment as a result of the events described in Section 2.4(b)(i)). If a Lender fails to deliver a Notice of Prepayment Rejection within the time frame specified above, any such failure will be deemed to be an acceptance of the total amount of such Lender’s pro rata share of such prepayment. Any amounts rejected by a Lender pursuant to a Notice of Prepayment Rejection received within the time frame specified above (such amounts, the “Declined Proceeds”) shall (x) to the extent required thereby, be offered to the holders of any Indebtedness secured by a Lien on the Collateral that ranks junior to the Liens securing the Secured Obligations on a pro rata basis amongst the holders of such Indebtedness (based on the outstanding principal amount thereof) and (y) after giving effect to clause (x) of this Section 2.4(b)(vi) be retained by Holdings and its Subsidiaries. (vii) Sunshine Acquisition. In the event that the Sunshine Acquisition Effective Date does not occur on or prior to 1:00 p.m. on the Sunshine Acquisition Outside Date, the Borrower shall no later than 2:00 p.m. on the Sunshine Acquisition Outside Date make a mandatory principal prepayment of the Initial Term Loans in an amount equal to the Sunshine Reserve Amount, which the Borrower authorizes the Administrative Agent to pay from amounts on deposit in the Sunshine Reserve Account.
61 174504702_2 (viii) Notice; Manner of Payment. (A) Upon the occurrence of any event triggering the prepayment requirement under clauses (i) through and including (vi) above, the Borrower shall promptly (and in any event no later than the date the applicable prepayment is due under clauses (i) through (vi)) deliver notice thereof to the Administrative Agent and upon receipt of such notice, the Administrative Agent shall promptly so notify the Lenders. Each prepayment of the Term Loans under clauses (i) through and including (vi) of this Section shall be applied ratably between the Initial Term Loans and any Other Applicable Pari Passu Indebtedness (in accordance with the respective outstanding principal amounts of the Term Loans and such Other Applicable Pari Passu Indebtedness at the time of such prepayment) (unless the applicable lenders providing such Other Applicable Pari Passu Indebtedness agree to a lesser share of such prepayment) to (x) reduce the remaining scheduled principal installments of the Initial Term Loans pursuant to Section 2.3, as directed by the Borrower (or in the absence of such direction, in direct order of maturity to the next eight (8) scheduled principal installments and thereafter on a pro rata basis to the remaining scheduled principal installments (including the installment payment on the Term Loan Maturity Date)) and (y) reduce the remaining scheduled principal installments of any other Class of Term Loans, such Incremental Equivalent Indebtedness or Refinancing Equivalent Indebtedness (in each case, as determined by Holdings and the applicable lenders providing such Indebtedness); provided that the portion of such prepayment amount allocated to the Other Applicable Pari Passu Indebtedness shall not exceed the amount required to be allocated to such Other Applicable Pari Passu Indebtedness pursuant to the requirements of the definitive documentation for such Other Applicable Pari Passu Indebtedness; provided further that to the extent the lenders or holders of such Other Applicable Pari Passu Indebtedness decline such prepayment or do not accept the applicable offer to repurchase, the declined amount shall be promptly (and in any event within five (5) Business Days of such rejection) applied to prepay the Initial Term Loans and any Other Applicable Pari Passu Indebtedness in accordance with the terms of this clause (viii). Proceeds of any Credit Agreement Refinancing Indebtedness referred to clause (i) above shall be applied solely to prepay each applicable Class(es) of Term Loans so refinanced. (B) Any prepayment of the Initial Term Loans under clause (vii) of this Section shall be applied solely to reduce the remaining scheduled principal installments of the Initial Term Loans pursuant to Section 2.3 (including the installment payment on the Term Loan Maturity Date) on a pro rata basis. (ix) Prepayment of SOFR Loans. Each prepayment of SOFR Loans shall be accompanied by any amount required to be paid pursuant to Section 3.9; provided that, so long as no Default or Event of Default shall have occurred and be continuing, if any prepayment of SOFR Loans is required to be made under this Section 2.4(b) prior to the last day of the Interest Period therefor, in lieu of making any payment pursuant to this Section 2.4(b) in respect of any such SOFR Loan prior to the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit an amount sufficient to make any such prepayment otherwise required to be made thereunder together with accrued interest to the last day of such Interest Period into an account held at, and subject to the sole control of, the Administrative Agent until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Credit Party) to apply such amount to the prepayment of such Term Loans in accordance with this Section 2.4(b). Upon the occurrence and during the continuance of any Default or Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Credit Party) to apply
62 174504702_2 such amount to the prepayment of the outstanding Term Loans in accordance with the relevant provisions of this Section 2.4(b). (x) No Reborrowings. Amounts prepaid under the Term Loan pursuant to this Section may not be reborrowed. (c) Call Premium. In the event that, on or prior to the twenty four (24) month anniversary of the Closing Date, the Borrower (i) makes any prepayment of the Initial Term Loans in connection with any Repricing Transaction (as defined below) or (ii) effects any amendment of this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each applicable Lender, a fee in an amount equal to: (x) in the case of clause (i), a prepayment premium of (A) in the case of any such prepayment occurring on or prior to the twelve (12) month anniversary of the Closing Date, 2.0% of the amount of the Initial Term Loan being prepaid and (B) in the case of any such prepayment occurring after the twelve (12) month anniversary of the Closing Date, but on or prior to the twenty four (24) month anniversary of the Closing Date, 1.0% of the amount of the Initial Term Loans being prepaid; and (y) in the case of clause (ii), a payment equal to (A) in the case of any such amendment occurring on or prior to the twelve (12) month anniversary of the Closing Date, 2.0% of the aggregate amount of the applicable Initial Term Loans outstanding immediately prior to such amendment and (B) in the case of any such amendment occurring after the twelve (12) month anniversary of the Closing Date, but on or prior to the twenty four (24) month anniversary of the Closing Date, 1.0% of the aggregate amount of the applicable Initial Term Loans outstanding immediately prior to such amendment. Such fees shall be due and payable within three (3) Business Days of the date of the effectiveness of such Repricing Transaction. For the purpose of this clause (c), “Repricing Transaction” means (a) any prepayment or repayment of the Initial Term Loans with the proceeds of, or any conversion of the Initial Term Loans into, any new or replacement Indebtedness that (i) is secured by any Lien on any assets of Holdings and its Subsidiaries that is not expressly subordinated or junior in priority to the Liens on such assets securing the Secured Obligations (other than ABL Obligations or other revolving Indebtedness) and (ii) bears interest with an All-In Yield less than the All-In Yield applicable to the Initial Term Loans and (b) any amendment to the pricing terms of the Initial Term Loans which reduces the “effective yield” applicable to the Initial Term Loans. ARTICLE III GENERAL LOAN PROVISIONS SECTION 3.1 Interest. (a) Interest Rate Options. Subject to the provisions of this Section, at the election of the Borrower, the Term Loans (including, for the avoidance of doubt, any outstanding principal amount in the Sunshine Reserve Account, until, if applicable, the prepayment of the Sunshine Reserve Amount pursuant to Section 2.4(b)(vii)) shall bear interest at (A) the Base Rate plus the Applicable Margin or (B) Adjusted Term SOFR plus the Applicable Margin. The Borrower shall select the rate of interest and Interest Period,
63 174504702_2 if any, applicable to any Term Loan at the time a Notice of Borrowing is given or at the time a Notice of Conversion/Continuation is given pursuant to Section 3.2. (b) Default Rate. Subject to Section 10.3, if any principal of or interest on any Term Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Term Loan, 2.00% per annum plus the rate otherwise applicable to such Term Loan as provided in the preceding paragraph of this Section or (ii) in the case of any other overdue amount, 2.00% per annum plus the rate applicable to Base Rate Loans as provided in paragraph (a) of this Section. All accrued and unpaid interest under this Section 3.1(b) shall be due and payable on demand of the Administrative Agent. Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any Debtor Relief Law. (c) Interest Payment and Computation. Interest on each Base Rate Loan shall be due and payable in arrears on the last Business Day of each calendar quarter commencing June 30, 2021; and interest on each SOFR Loan shall be due and payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period; provided that (i) in the event of any repayment or prepayment of any SOFR Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (ii) in the event of any conversion of any SOFR Loan prior to the end of the Interest Period therefor, accrued interest on such SOFR Loan shall be payable on the effective date of such conversion. All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest provided hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365/366-day year). (d) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent’s option (i) promptly refund to the Borrower any interest received by the Lenders in excess of the maximum lawful rate or (ii) apply such excess to the principal balance of the Obligations. It is the intent hereof that the Borrower not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law. (e) Term SOFR Conforming Changes. In connection with the use or administration of Term SOFR, the Administrative Agent will (in consultation with the Borrower) 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. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Benchmark Replacement Conforming Changes in connection with the use or administration of Term SOFR. SECTION 3.2 Notice and Manner of Conversion or Continuation of Term Loans. Provided that no Default or Event of Default has occurred and is then continuing, the Borrower shall have the option to
64 174504702_2 (a) convert all or any portion of any outstanding Base Rate Loans in a principal amount equal to $2,000,000 or any whole multiple of $1,000,000 in excess thereof (or such lesser amount as shall represent all of the Base Rate Loans then outstanding) into one or more SOFR Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding SOFR Loans in a principal amount equal to $1,000,000 or a whole multiple of $500,000 in excess thereof (or such lesser amount as shall represent all of the SOFR Loans then outstanding) into Base Rate Loans or (ii) continue such SOFR Loans as SOFR Loans. Whenever the Borrower desires to convert or continue Term Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit D (a “Notice of Conversion/Continuation”) not later than 11:00 a.m. three (3) U.S. Government Securities Business Days before the day on which a proposed conversion or continuation of such Term Loan is to be effective specifying (A) the Term Loans to be converted or continued, and, in the case of any SOFR Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Term Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued SOFR Loan. If the Borrower fails to give a timely Notice of Conversion/Continuation prior to the end of the Interest Period for any SOFR Loan, then the applicable SOFR Loan shall be automatically converted to a Base Rate Loan. Any such automatic conversion to a Base Rate Loan shall be effective as of the last day of the Interest Period then in effect with respect to the applicable SOFR Loan. If the Borrower requests a conversion to, or continuation of, SOFR Loans, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. The Administrative Agent shall promptly notify the affected Lenders of such Notice of Conversion/Continuation. SECTION 3.3 Fees. The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Engagement Letter. The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. SECTION 3.4 Manner of Payment. Each payment by the Borrower on account of the principal of or interest on the Term Loans or of any fee, commission or other amounts payable to the Lenders under this Agreement shall be made not later than 1:00 p.m. on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent’s Office for the account of the Lenders entitled to such payment in Dollars, in immediately available funds and shall be made without any setoff, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. on such day shall be deemed a payment on such date for the purposes of Section 8.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each such Lender at its address for notices set forth herein its Term Loan Percentage in respect of the relevant Credit Facility (or other applicable share as provided herein) of such payment and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of Administrative Agent’s fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 3.9, 3.10, 3.11 or 10.3 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to the definition of Interest Period, if any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. SECTION 3.5 Evidence of Indebtedness. The Term Loan made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Term Loan made by the Lenders
65 174504702_2 to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. In the event of any conflict between the accounts and records maintained by the Administrative Agent and/or the accounts and records of any Lender in respect of such matters and the Register, the Register shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Term Loan Note, which shall evidence such Lender’s Term Loans, in addition to such accounts or records. Each Lender may attach schedules to its Term Loan Note and endorse thereon the date, amount and maturity of its Term Loans and payments with respect thereto. SECTION 3.6 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Term Loans and accrued interest thereon or other such obligations (other than pursuant to Sections 3.9, 3.10, 3.11 or 10.3) greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Term Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans and other amounts owing them; provided that: (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender or a Disqualified Institution) or (B) any payment obtained by a Lender as consideration for the assignment of, or sale of, a participation in any of its Term Loans to any assignee or participant, other than to Holdings or any of its Subsidiaries or Affiliates (other than pursuant to Section 10.9 (g) or (h)), as to which the provisions of this paragraph shall apply. Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation. SECTION 3.7 Administrative Agent’s Clawback. (a) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender (i) in the case of Base Rate Loans, not later than 12:00 noon on the date of any proposed borrowing and (ii) otherwise, prior to the proposed date of any borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.2 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay
66 174504702_2 to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the daily average Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Term Loan included in such borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent. (b) Payments by the Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (c) Nature of Obligations of Lenders. The obligations of the Lenders under this Agreement to make the Term Loans and to make payments under this Section, Section 3.11(e), Section 10.3(c) and Section 10.7, as applicable, are several and are not joint or joint and several. The failure of any Lender to make available its Term Loan Percentage of any Term Loan requested by the Borrower shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Term Loan Percentage of such Term Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Term Loan Percentage of such Term Loan available on the borrowing date. SECTION 3.8 Changed Circumstances. (a) Circumstances Affecting Benchmark Availability. Subject to clause (c) below, in connection with any request for a SOFR Loan or a conversion to or continuation thereof or otherwise, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for ascertaining Adjusted Term SOFR for such Interest Period with respect to a proposed SOFR Loan on or prior to the first day of such Interest Period or (ii) the Required Lenders shall determine (which determination shall be conclusive and binding absent manifest error) that Adjusted Term SOFR does not adequately and fairly reflect the cost to such Lenders of making or maintaining such Term Loans during such Interest Period, and, in the case of clause (ii), the Required Lenders have provided notice of such determination to the Administrative Agent, then, in each case, the Administrative Agent shall promptly give notice thereof to the Borrower. Upon notice thereof by the Administrative Agent to the Borrower, any obligation of the Lenders to make SOFR Loans, and any right of the Borrower to convert any Term Loan to or continue any Term Loan as a SOFR Loan, shall be suspended (to the extent of the affected SOFR Loans or the affected Interest Periods) until the Administrative Agent (with respect to clause (ii), at the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (A) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or the affected
67 174504702_2 Interest Periods) or, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans in the amount specified therein and (B) any outstanding affected SOFR Loans will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 3.9. (b) Laws Affecting SOFR Availability. If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any SOFR Loan, or to determine or charge interest based upon SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders (an “Illegality Notice”). Thereafter, until each affected Lender notifies the Administrative Agent and the Administrative Agent notifies the Borrower that the circumstances giving rise to such determination no longer exist, (i) any obligation of the Lenders to make SOFR Loans, and any right of the Borrower to convert any Loan to a SOFR Loan or continue any Loan as a SOFR Loan, shall be suspended and (ii) if necessary to avoid such illegality, the Administrative Agent shall compute the Base Rate without reference to clause (c) of the definition of “Base Rate”. Upon receipt of an Illegality Notice, the Borrower shall, if necessary to avoid such illegality, upon demand from any Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all SOFR Loans to Base Rate Loans (in each case, if necessary to avoid such illegality, the Administrative Agent shall compute the Base Rate without reference to clause (c) of the definition of “Base Rate”), on the last day of the Interest Period therefor, if all affected Lenders may lawfully continue to maintain such SOFR Loans to such day, or immediately, if any Lender may not lawfully continue to maintain such SOFR Loans to such day. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 3.9. (c) Benchmark Replacement Setting. (i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and any Hedge Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 3.8(c)), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the applicable time of any setting of the then- current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) 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 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 (b) 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 in respect of any Benchmark setting 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 Document so long as the Administrative Agent has not received, by
68 174504702_2 such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. (ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time in consultation with the Borrower 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. (iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, (B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Benchmark Replacement Conforming Changes, (D) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.8(c)(iv) below and (E) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.8(c), 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 3.8(c). (iv) 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), (A) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (1) 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 the Administrative Agent in its reasonable discretion or (2) 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 the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, (A) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans and (B) any outstanding affected SOFR Loans will be deemed to have been converted to Base Rate Loans at the end of the applicable Interest Period. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available
69 174504702_2 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. SECTION 3.9 Indemnity. The Borrower hereby indemnifies each of the Lenders against any loss or expense (including any loss or expense arising from the liquidation or reemployment of funds or from fees payable) which may arise or be attributable to (a) any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a SOFR Loan, (b) any failure of the Borrower to borrow or continue a SOFR Loan or convert to a SOFR Loan on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c) any payment, prepayment or conversion of any SOFR Loan on a date other than the last day of the Interest Period therefor. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. All of the obligations of the Credit Parties under this Section 3.9 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Loan Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. SECTION 3.10 Increased Costs. (a) Increased Costs Generally. If any Change in Law shall: (i) impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of the FRB, as amended and in effect from time to time)), special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, any Lender; (ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or (iii) impose on any Lender any other condition, cost or expense (other than Taxes) affecting this Agreement or Term Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Term Loan (or of maintaining its obligation to make any such Term Loan), or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender or other Recipient, the Borrower shall promptly pay to any such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered. (b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Term Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies
70 174504702_2 and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time upon written request of such Lender, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) Certificates for Reimbursement. A certificate of a Lender or such other Recipient setting forth the amount or amounts necessary to compensate such Lender, such other Recipient or any of their respective holding companies, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender or such other Recipient, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof. (d) Delay in Requests. Failure or delay on the part of any Lender or such other Recipient to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such other Recipient’s right to demand such compensation; provided that the Borrower shall not be required to compensate any Lender or any other Recipient pursuant to this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or such other Recipient, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or such other Recipient’s intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine- month period referred to above shall be extended to include the period of retroactive effect thereof). (e) Survival. All of the obligations of the Credit Parties under this Section 3.10 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Loan Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. SECTION 3.11 Taxes. (a) Defined Terms. For purposes of this Section 3.11, the term “Applicable Law” includes FATCA. (b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Credit Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. (c) Payment of Other Taxes by the Credit Parties. The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes. (d) Indemnification by the Credit Parties. The Credit Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable
71 174504702_2 under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error. (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.9(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to setoff and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e). (f) Evidence of Payments. As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section 3.11, such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (g) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.11(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing,: (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the
72 174504702_2 Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from United States federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (2) executed copies of IRS Form W-8ECI; (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E; or (4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
73 174504702_2 (D) if a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. (h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.11 (including by the payment of additional amounts pursuant to this Section 3.11), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (i) Survival. Each party’s obligations under this Section 3.11 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Loan Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. SECTION 3.12 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.10, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.11, then such Lender shall, at the request of the Borrower, use reasonable efforts to designate a different Lending Office for funding or booking its Term Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment
74 174504702_2 (i) would eliminate or reduce amounts payable pursuant to Section 3.10 or Section 3.11, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) Replacement of Lenders. If any Lender requests compensation under Section 3.10, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.11, and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 3.12(a), or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.9), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.10 or Section 3.11) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that: (i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.9; (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Term Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.9) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including any amounts under Section 2.4(c)); (iii) in the case of any such assignment resulting from a claim for compensation under Section 3.10 or payments required to be made pursuant to Section 3.11, such assignment will result in a reduction in such compensation or payments thereafter; (iv) such assignment does not conflict with Applicable Law; and (v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent. A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that (x) an assignment required pursuant to this Section 3.12 may be effected pursuant to an Assignment and Assumption or an Affiliated Lender Assignment and Assumption, as applicable executed by the Borrower, the Administrative Agent and the assignee and (y) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender or the Administrative Agent; provided further that any such documents shall be without recourse to or warranty by the parties thereto.
75 174504702_2 (c) Selection of Lending Office. Subject to Section 3.12(a), each Lender may make any Term Loan to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligations of the Borrower to repay the Term Loan in accordance with the terms of this Agreement or otherwise alter the rights of the parties hereto. SECTION 3.13 Incremental Term Loans. (a) Request for Incremental Term Loan. At any time after the Closing Date, upon written notice to the Administrative Agent, the Borrower may, from time to time, request additional term loans, the principal amount of which will be added to the outstanding principal amount of the Class of existing Term Loans having the latest maturity, or which shall constitute one or more additional Classes of term loans (each, additional term loan, an “Incremental Term Loan”); provided that (A) the aggregate initial principal amount of such requested Incremental Term Loan shall not exceed the then available Incremental Facility Limit (after giving effect to such Incremental Term Loans and any Incremental Equivalent Indebtedness being incurred concurrently therewith), (B) any such request for increase shall be in a minimum amount of $25,000,000 (or such lesser amount as agreed to by the Administrative Agent) or, if less, the remaining amount permitted pursuant to the foregoing clause (A), (C) no Lender will be required or otherwise obligated to provide any portion of such Incremental Term Loan (it being agreed that the Borrower shall not be obligated to offer the opportunity to any Lender to participate in any Incremental Term Loan) and (D) unless otherwise agreed to by the Administrative Agent, no more than five (5) Incremental Term Loans shall be permitted to be requested during the term of this Agreement. (b) Incremental Lenders. Each notice from the Borrower pursuant to this Section 3.13 shall set forth the requested amount and proposed terms of the relevant Incremental Term Loan. Incremental Term Loans may be provided by any existing Lender or by any other Persons (each such Lender or other Person, an “Incremental Lender”), other than Disqualified Institutions; provided that the Administrative Agent and the Borrower each shall have consented (not to be unreasonably withheld or delayed) to such Incremental Lender’s providing such Incremental Term Loans to the extent any such consent would be required under Section 10.9(b) for an assignment of Term Loans to such Incremental Lender and any portion of such Incremental Term Loans provided by an Affiliated Lender shall comply with Section 10.9(h). At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each proposed Incremental Lender is requested to respond, which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the proposed Incremental Lenders (or such shorter period as agreed to by the Administrative Agent). Each proposed Incremental Lender may elect or decline, in its sole discretion, and shall notify the Borrower and the Administrative Agent within such time period whether it agrees, to provide an Incremental Term Loan and, if so, whether by an amount equal to, greater than or less than requested. Any Person not responding within such time period shall be deemed to have declined to provide an Incremental Term Loan. (c) Incremental Term Loan Effective Date and Allocations. The Administrative Agent and the Borrower shall determine the effective date (the “Incremental Effective Date”) and the final allocation of such Incremental Term Loan (limited in the case of the Incremental Lenders to their own respective allocations thereof). The Administrative Agent shall promptly notify the Borrower and the Incremental Lenders of the final allocation of such Incremental Term Loans and the Incremental Effective Date. (d) Terms of Incremental Term Loans. The terms of each Incremental Term Loan (which shall be set forth in the relevant Incremental Amendment) shall be determined by the Borrower and the applicable Incremental Lenders; provided that (i) each Incremental Term Loan (A) shall constitute Obligations of the Borrower and be secured on a pari passu basis with the Initial Term Loans; and (B) will satisfy each of the Permitted Indebtedness Conditions and (ii) the proceeds of any Incremental Term Loan may be used by the Borrower and its Subsidiaries for general corporate purposes, including the financing of Permitted
76 174504702_2 Acquisitions and other Investments, Restricted Payments and Restricted Junior Debt Payments permitted hereunder. (e) Other Conditions to Effectiveness of Incremental Term Loans. Any Incremental Term Loan shall become effective as of such Incremental Effective Date and shall be subject to the following additional conditions precedent, which, in the case of an Incremental Term Loan incurred solely to finance a substantially concurrent Limited Condition Transaction, shall be subject to Section 1.10: (i) all of the representations and warranties set forth in Article V shall be true and correct in all material respects (or if qualified by materiality or Material Adverse Effect, in all respects) as of such Incremental Effective Date, or if such representation speaks as of an earlier date, as of such earlier date; (ii) the Credit Parties shall have executed an Incremental Amendment in form and substance reasonably acceptable to the Borrower and the applicable Incremental Lenders; and (iii) the Administrative Agent shall have received from the Borrower, any customary legal opinions or other documents (including a resolution duly adopted by the board of directors (or equivalent governing body) of each Credit Party authorizing such Incremental Term Loan), reasonably requested by Administrative Agent in connection with such Incremental Term Loan. (f) Incremental Amendments. Each such Incremental Term Loan shall be effected pursuant to an amendment (an “Incremental Amendment”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Credit Parties, the Administrative Agent and the applicable Incremental Lenders, which Incremental Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 3.13. SECTION 3.14 Amend and Extend Transactions. (a) The Borrower may, by written notice to the Administrative Agent from time to time, request an extension (each, an “Extension”) of the maturity date of any Class of Term Loans to the extended maturity date specified in such notice. Such notice shall (i) set forth the amount of the applicable Class of Term Loans that will be subject to the Extension (which shall be in a minimum amount of $50,000,000 (or such other amounts as may be agreed to by the Administrative Agent in its sole discretion)), (ii) set forth the date on which such Extension is requested to become effective (which shall be not less than ten (10) Business Days nor more than sixty (60) days after the date of such Extension notice (or such longer or shorter periods as the Administrative Agent shall agree in its sole discretion)) and (iii) identify the relevant Class of Term Loans to which such Extension relates. Each Lender of the applicable Class shall be offered (an “Extension Offer”) an opportunity to participate in such Extension on a pro rata basis and on the same terms and conditions as each other Lender of such Class pursuant to procedures established by, or reasonably acceptable to, the Administrative Agent and the Borrower; provided that no Lender shall be obligated to participate in any such Extension. If the aggregate principal amount of Term Loans in respect of which Lenders shall have accepted the relevant Extension Offer shall exceed the maximum aggregate principal amount of Term Loans subject to the Extension Offer as set forth in the Extension notice, then the Term Loans of Lenders of the applicable Class shall be extended ratably up to such maximum amount based on the respective principal amounts with respect to which such Lenders have accepted such Extension Offer. (b) The following shall be conditions precedent to the effectiveness of any Extension: (i) no Default or Event of Default shall have occurred and be continuing immediately prior to and immediately
77 174504702_2 after giving effect to such Extension, (ii) the representations and warranties set forth in Article V and in each other Loan Document shall be deemed to be made and shall be true and correct in all material respects on and as of the effective date of such Extension and (iii) the terms of such Extended Term Loans shall comply with paragraph (c) of this Section 3.14. (c) The terms of each Extension shall be determined by the Borrower and the applicable extending Lenders and set forth in an Extension Amendment; provided that (i) the final maturity date of any Extended Term Loan shall be no earlier than the later of (A) the Term Loan Maturity Date and (B) the maturity date applicable to the Class of Term Loans being extended, (ii) the average life to maturity of the Extended Term Loans shall be no shorter than the remaining average life to maturity of (A) the Initial Term Loans and (B) the Class of Term Loans being extended, (iii) the Extended Term Loans will rank pari passu in right of payment and with respect to security with the existing Term Loans and the borrower and guarantors of the Extended Term Loans shall be the same as the Borrower and Guarantors with respect to the existing Term Loans, (iv) the interest rate margin, rate floors, fees, original issue discount and premium applicable to Extended Term Loans shall be determined by the Borrower and the applicable extending Lenders, (v) the Extended Term Loans may participate on a pro rata or less than pro rata (but not greater than pro rata) basis in mandatory prepayments with the other Term Loans and (vi) the terms of the Extended Term Loans, as applicable, shall be substantially identical to the terms set forth herein (except as set forth in clauses (i) through (v) above). (d) In connection with any Extension, the Credit Parties, the Administrative Agent and each applicable extending Lender shall execute and deliver to the Administrative Agent an Extension Amendment and such other documentation as the Administrative Agent shall reasonably specify to evidence the Extension (including, without limitation, any customary legal opinions or other documents (including a resolution duly adopted by the board of directors (or equivalent governing body) of each Credit Party authorizing such Extension), reasonably requested by Administrative Agent in connection with such Extension). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Extension. Any Extension Amendment may, without the consent of any other Lender, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to implement the terms of any such Extension, including any amendments necessary to establish Extended Term Loans as a new Class or tranche of Term Loans and such other technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the establishment of such new Class or tranche (including to preserve the pro rata treatment of the extended and non-extended Classes or tranches), in each case on terms consistent with this Section 3.14. SECTION 3.15 Refinancing Facilities. (a) On one or more occasions after the Closing Date, the Borrower may obtain, from any Lender or any Person meets the requirements of an Eligible Assignee, Credit Agreement Refinancing Indebtedness in respect of all or any portion of any Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Extended Term Loans, Refinancing Term Loans or Incremental Term Loans), in the form of Refinancing Term Loans pursuant to a Refinancing Amendment or Refinancing Equivalent Indebtedness; provided that in the case of any Refinancing Equivalent Indebtedness that is secured by Liens on the Collateral, the holders thereof (or a duly authorized agent or trustee on their behalf) shall enter into (i) in the case of Pari Passu Indebtedness, a joinder or restatement of the Closing Date Intercreditor Agreement and, if applicable, a joinder to, restatement of or new Acceptable Junior Lien Intercreditor Agreement and (2) in the case of Indebtedness secured by a Lien on the Collateral on a junior basis to the Liens securing the Secured Obligations, an Acceptable Junior Lien Intercreditor Agreement, in each case duly executed by the holders thereof (or a duly authorized agent or trustee on their behalf).
78 174504702_2 (b) The effectiveness of any Refinancing Amendment shall be subject to the receipt by the Administrative Agent of (i) to the extent reasonably requested by the Administrative Agent, items similar to those in Article IV with respect to the transactions contemplated by any Refinancing Amendment (with references to the Closing Date being replaced by the effective date of such Refinancing Amendment), including, without limitation, customary legal opinions, board resolutions and officers’ certificates consistent with those delivered on the Closing Date (conformed as appropriate) and (ii) reaffirmation agreements and/or such amendments to the Security Documents as may be reasonably requested by the Administrative Agent in order to ensure that such Refinancing Term Loan is provided with the benefit of the applicable Loan Documents. (c) Each issuance of Refinancing Term Loans under Section 3.15(a) shall be in an aggregate principal amount that is (x) not less than $5,000,000 and (y) an integral multiple of $1,000,000 in excess thereof (or such other amount necessary to repay any Class of outstanding Term Loans or existing Credit Agreement Refinancing Indebtedness in full). (d) Each of the parties hereto hereby agrees that this Agreement and the other Loan Documents may be amended pursuant to a Refinancing Amendment, without the consent of any other Lenders, to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto and (ii) effect such other amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 3.15, and the Lenders hereby expressly authorize the Administrative Agent to enter into any such Refinancing Amendment. ARTICLE IV CONDITIONS OF CLOSING AND BORROWING SECTION 4.1 Conditions to Closing and Initial Term Loan. Except for those items that are permitted to be satisfied on a post-closing basis pursuant to Section 6.18, the obligation of the Lenders to close this Agreement and to make the Initial Term Loans is subject to the satisfaction (or waiver in accordance with Section 10.2) of each of the following conditions: (a) Executed Loan Documents. This Agreement, a Term Loan Note in favor of each Lender requesting a Term Loan Note (if applicable), the Guaranty Agreement, the Closing Date Intercreditor Agreement and the Security Documents to be delivered on the Closing Date, together with any other applicable Loan Documents, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto. (b) Closing Certificates; Etc. The Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent: (i) Officer’s Certificate. A certificate from a Responsible Officer of Holdings and the Borrower to the effect that (A) all representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true, correct and complete in all material respects (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true, correct and complete in all respects); (B) after giving effect to the Transactions, no Default or Event of Default has occurred and is continuing; (C) the condition set forth in Section 4.1(e)(v) has been satisfied, (D) each of the Credit Parties, as applicable, has satisfied each of the conditions set forth in this Section 4.1; and (E) certifying that attached thereto is a true, correct and complete full executed copy of the Fifth ABL Amendment.
79 174504702_2 (ii) Certificate of Secretary of each Credit Party. A certificate of a Responsible Officer of each Credit Party certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation (or equivalent), as applicable, of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, organization or formation (or equivalent), as applicable, (B) the bylaws or equivalent governing documents of such Credit Party as in effect on the Closing Date, (C) resolutions duly adopted by the board of directors (or other governing body) of such Credit Party authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 4.1(b)(iii). (iii) Certificates of Good Standing. Certificates as of a recent date of the good standing of each Credit Party (other than in relation to the Australian Credit Parties) under the laws of its jurisdiction of incorporation, organization or formation (or equivalent), as applicable. (iv) Opinions of Counsel. A customary written opinion of Weil, Gotshal & Manges LLP in its capacity as special counsel to the Credit Parties and, to the extent applicable, customary written opinions of any local counsel as may be reasonably requested by the Administrative Agent, in each case addressed to the Administrative Agent and the Lenders with respect to the Credit Parties, the Loan Documents and such other matters as the Administrative Agent shall request. (c) Personal Property Collateral. (i) Filings and Recordings. Subject to the limitations and qualifications in the Security Documents, the Administrative Agent shall have received duly executed copies of all documents and copies of all instruments necessary to establish that the Administrative Agent will have a first priority security interest in the Term Loan Priority Collateral and a second priority security interest in the ABL Priority Collateral (subject, in each case, to Permitted Liens), which shall be, if applicable, in proper form for filing. (ii) Pledged Collateral. The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the certificated Equity Interests pledged pursuant to the Security Documents, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof and (B) to the extent constituting Term Loan Priority Collateral, each original promissory note pledged pursuant to the Security Documents together with an undated allonge for each such promissory note duly executed in blank by the holder thereof (and, to the extent constituting ABL Priority Collateral such note and allonge shall have been received by the ABL Administrative Agent). (iii) Lien Search. The Administrative Agent shall have received the results of a Lien search (including a search as to bankruptcy, tax and U.S. intellectual property matters), in form and substance reasonably satisfactory thereto, made against the Credit Parties under the Uniform Commercial Code (or applicable judicial docket) as in effect in each jurisdiction in which filings or recordations under the Uniform Commercial Code should be made to evidence or perfect security interests in all assets of such Credit Party, indicating among other things that the assets of each such Credit Party are free and clear of any Lien (except for Permitted Liens). (iv) [reserved.]
80 174504702_2 (v) Intellectual Property. The Administrative Agent shall have received security agreements duly executed by the applicable Credit Parties for all U.S. federally registered copyrights, copyright applications, patents, patent applications, trademarks and trademark applications included in the Collateral, in each case, in proper form for filing with the U.S. Patent and Trademark Office or U.S. Copyright Office, as applicable. (d) Consents; Defaults. (i) Governmental and Third Party Approvals. The Credit Parties shall have received all material governmental, shareholder and third party consents and approvals necessary in connection with the Transactions, which shall be in full force and effect. (ii) No Injunction, Etc. No action, suit, proceeding or investigation shall be pending or, to the knowledge of the Borrower, threatened in any court or before any arbitrator or any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. (e) Financial Matters. (i) Financial Statements. The Administrative Agent shall have received (A) with respect to the Acquired Entities and their respective Subsidiaries (1) the audited consolidated financial statements of Sensis Holdings for the fiscal years ended June 30, 2018, June 30, 2019 and June 30, 2020, (2) the audited consolidated financial statements of the Sunshine Target for the fiscal years ended June 30, 2018, June 30, 2019 and June 30, 2020, (3) the unaudited consolidated financial statements of Sensis Holdings for the five months ended on November 30, 2020 and (4) the unaudited consolidated financial statements of the Sunshine Target for the five months ended on November 30, 2020 and (B) any other financial statements provided by the Sunshine Sellers to the Borrower or its Subsidiaries in connection with the Sunshine Acquisition Agreement. (ii) Pro Forma Financial Statements. The Administrative Agent shall have received pro forma financial statements for Holdings and its Subsidiaries for the most recently completed Reference Period prior to the Closing Date, calculated on a Pro Forma Basis after giving effect to the Transactions. (iii) Financial Projections. The Administrative Agent shall have received projections prepared by management of Holdings, of key capital structure items, income statements and cash flow statements on an annual basis reflecting the term of the Credit Facility, which shall not be inconsistent with any financial information or projections previously delivered to the Administrative Agent. (iv) Financial Condition/Solvency Certificate. Holdings shall have delivered to the Administrative Agent a certificate, in form and substance reasonably satisfactory to the Administrative Agent, and certified as accurate by the chief financial officer, treasurer or assistant treasurer (or another financial officer with reasonably equivalent duties and responsibilities that is reasonably acceptable to the Administrative Agent) of Holdings, that (A) after giving effect to the Transactions, each of Holdings and each of its Subsidiaries, taken as a whole, are Solvent and (B) attached thereto are calculations evidencing compliance on a Pro Forma Basis after giving effect to the Transactions with the covenant contained in Section 7.14. (v) No Material Adverse Effect. Since September 30, 2020, no event has occurred or condition arisen, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
81 174504702_2 (vi) Payment at Closing. The Borrower shall have paid or made arrangements to pay contemporaneously with closing (A) to the Administrative Agent, the Arranger and the Lenders the fees set forth or referenced in Section 3.3 and any other accrued and unpaid fees or commissions due hereunder, (B) all reasonable and documented out-of-pocket fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent accrued and unpaid prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent) to the extent an invoice therefor is received by the Borrower by the date that is at least three (3) Business Days prior to the Closing Date or approved in a funds flow or settlement statement executed by the Borrower and (C) to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents to the extent an invoice therefor is received by the Borrower by the date that is at least three (3) Business Days prior to the Closing Date or approved in a funds flow or settlement statement executed by the Borrower, in each case, which amounts may be offset against the proceeds of the Initial Term Loans as directed by the Borrower. (f) [reserved.] (g) Miscellaneous. (i) Existing Indebtedness. All existing Indebtedness of Holdings and its Subsidiaries (including Indebtedness under the Existing Credit Agreement, but excluding the ABL Credit Agreement and any other Indebtedness permitted pursuant to Section 7.1) shall be repaid in full, all commitments (if any) in respect thereof shall have been terminated and all guarantees therefor and security therefor shall be released, and the Administrative Agent shall have received pay-off letters in form and substance satisfactory to it evidencing such repayment, termination and release. (ii) ABL Amendment. The Credit Parties shall have concurrently entered into the Fifth ABL Amendment, together with all other ABL Documents executed in connection therewith, and shall have provided a copy of the Fifth ABL Amendment, together with all other ABL Documents executed in connection therewith, to the Administrative Agent, each of which shall be on terms and conditions reasonably satisfactory to the Administrative Agent. (iii) PATRIOT Act, etc. (A) The Administrative Agent and the Lenders shall have received, at least three (3) Business Days prior to the Closing Date, all documentation and other information requested by the Administrative Agent or any Lender at least seven (7) Business Days in advance of the Closing Date in order for the Administrative Agent and the Lenders to comply with requirements of any Anti-Money Laundering Laws, including the PATRIOT Act and any applicable “know your customer” rules and regulations. (B) The Borrower shall have delivered to the Administrative Agent, and directly to any Lender requesting the same at least seven (7) Business Days in advance of the Closing Date, a Beneficial Ownership Certification in relation to it, in each case, at least three (3) Business Days prior to the Closing Date.
82 174504702_2 All opinions, certificates and other instruments and all proceedings delivered pursuant to this Section 4.1 shall be reasonably satisfactory in form and substance to the Administrative Agent. Without limiting the generality of the provisions of Section 9.3(c) and Section 9.4, for purposes of determining compliance with the conditions specified in this Section 4.1, the Administrative Agent and each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto. SECTION 4.2 Sunshine Acquisition. (a) No later than thirty-one (31) days after the Closing Date (such date, the “Sunshine Acquisition Outside Date”), each of the following shall occur (each, a “Sunshine Acquisition Condition”), (the date on which the Sunshine Acquisition Conditions are satisfied (or waived in accordance with Section 10.2, the “Sunshine Acquisition Effective Date”)): (i) the Sunshine Acquisition shall have been consummated, substantially concurrently with the release of the Sunshine Reserve Amount (if any), in accordance with the Sunshine Acquisition Agreement. (ii) the Arranger shall have received a true, correct and fully executed copy of all documentation for the Sunshine Acquisition, including, without limitation, the Sunshine Acquisition Agreement, in each case in form and substance reasonably satisfactory to the Arranger; and (iii) each of the representations made by the Acquired Entities, the Sunshine Sellers or any of their respective Subsidiaries or Affiliates or with respect to the Acquired Entities or their respective Subsidiaries or its business in the Sunshine Acquisition Agreement that are material to the interests of the Lenders are true and correct, but only to the extent that in the event of an inaccuracy with respect to, or a breach of, such representations Holdings or its Affiliates have the right to terminate their respective obligations under the Sunshine Acquisition Agreement or otherwise decline to close the Sunshine Acquisition. (b) Notwithstanding anything herein to the contrary, if the Sunshine Acquisition Effective Date does not occur on the Closing Date, $200,000,000 of the Initial Term Loan (such amount, the “Sunshine Reserve Amount”) shall be funded on the Closing Date into a segregated account at the Administrative Agent (the “Sunshine Reserve Account”) and shall not be released to the Borrower or any other Person. On the Sunshine Acquisition Effective Date, the Sunshine Reserve Amount shall be released to the Borrower to be used in accordance with Section 6.14. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make the Term Loans, the Credit Parties hereby represent and warrant to the Administrative Agent and the Lenders both before and after giving effect to the transactions contemplated hereunder that: SECTION 5.1 Organization; Power; Qualification. Each Credit Party and each Subsidiary thereof (a) is duly organized, validly existing and in good standing (to the extent the concept is applicable in such
83 174504702_2 jurisdiction) under the Applicable Law of the jurisdiction of its incorporation or formation, (b) has the requisite power and authority to own its Properties and to carry on its business as now being and hereafter proposed to be conducted, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and (c) is duly qualified and authorized to do business in each jurisdiction in which the character of its Properties or the nature of its business requires such qualification and authorization except in jurisdictions where the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The jurisdictions in which each Credit Party and each Subsidiary thereof are organized as of the Closing Date are described on Schedule 5.1. Schedule 5.1 identifies each Subsidiary Guarantor as of the Closing Date. No Credit Party nor any Subsidiary thereof is an Affected Financial Institution. SECTION 5.2 Ownership. Each Subsidiary of each Credit Party as of the Closing Date is listed on Schedule 5.2. As of the Closing Date, Schedule 5.2 sets forth (x) the shareholders or other owners, as applicable, of the Borrower and each of its Subsidiaries, (y) the number of shares issued by the Borrower or such Subsidiary and outstanding and (z) the number and percentage of such outstanding shares owned by each owner thereof. All of the shares set forth on Schedule 5.2 have been duly authorized and validly issued and are fully paid and nonassessable and not subject to any preemptive or similar rights, except as described in Schedule 5.2. As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or require the issuance of Equity Interests of the Borrower or any Subsidiary thereof, except as described on Schedule 5.2. SECTION 5.3 Authorization; Enforceability. Each Credit Party has the right, power and authority and has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by duly authorized officers of each Credit Party that is a party thereto, and each such document constitutes the legal, valid and binding obligation of each Credit Party that is a party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal Debtor Relief Laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies. SECTION 5.4 Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by each Credit Party of the Loan Documents to which each such Person is a party, in accordance with their respective terms, and the performance by each such Credit Party of its respective obligations thereunder (including, in the case of the Borrower the borrowing of the Term Loans hereunder) do not and will not, by the passage of time, the giving of notice or otherwise, (a) require any Governmental Approval or violate any Applicable Law relating to any Credit Party where the failure to obtain such Governmental Approvals or such violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute a default under the Organizational Documents of such Credit Party, (c) conflict with, result in a breach of or constitute a default under any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Permitted Liens or (e) require any consent or authorization of, filing with, or other act in respect of any Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, other than (i) consents, authorizations, filings or other acts that have been obtained or taken and that are still in full force and effect, (ii) consents, authorizations, filings or other acts for which the failure to obtain or make could not, individually or in the aggregate, reasonably be expected to have a
84 174504702_2 Material Adverse Effect, (iii) consents or filings under the UCC (or any equivalent registry or filing system of any Applicable Law in connection with the creation, perfection or priority of Liens on the Collateral) and (iv) filings with the United States Copyright Office and/or the United States Patent and Trademark Office (or any equivalent registry or filing system of any Applicable Law in connection with the creation, perfection or priority of Liens on the Collateral). SECTION 5.5 Compliance with Law; Governmental Approvals. Each Credit Party and each Subsidiary thereof (a) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to its knowledge, threatened attack by direct or collateral proceeding, (b) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties and (c) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under Applicable Law, except in each case of clauses (a), (b) or (c) where the failure to have, comply or file could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 5.6 Tax Returns and Payments. Each Credit Party and each Subsidiary thereof has duly filed or caused to be filed all federal, state, local and other tax returns required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal, state, local and other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable, except (a) any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of the relevant Credit Party or (b) any of which the failure to so file or pay could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. SECTION 5.7 Intellectual Property Matters. Each Credit Party and each Subsidiary thereof owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights, copyrights and other rights with respect to the foregoing which are reasonably necessary to the conduct of its business (such rights, the “IP Rights”), except where the failure to own or possess such IP Rights, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any IP Rights, except where such revocations or terminations, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No Credit Party nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any IP Rights as a result of its business operations, except where such liabilities, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. SECTION 5.8 Environmental Matters. (a) The properties owned, leased or operated by each Credit Party and each Subsidiary thereof now or in the past do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which constitute or constituted a violation of applicable Environmental Laws that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; (b) Each Credit Party and each Subsidiary thereof and such properties and all operations conducted in connection therewith are in compliance, and have been in compliance, with all applicable Environmental Laws except where the failure to do so could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and there is no contamination at, under or about such
85 174504702_2 properties or such operations that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; (c) No Credit Party nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws that, if adversely determined, could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, nor does any Credit Party or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened; (d) Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by any Credit Party or any Subsidiary thereof in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; (e) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Borrower, threatened in writing, under any Environmental Law to which any Credit Party or any Subsidiary thereof is or will be named as a potentially responsible party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any applicable Environmental Law with respect to any Credit Party, any Subsidiary thereof, with respect to any real property owned, leased or operated by any Credit Party or any Subsidiary thereof or operations conducted in connection therewith that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and (f) There has been no release, or to its knowledge, threat of release, of Hazardous Materials at or from properties owned, leased or operated by any Credit Party or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give rise to liability under applicable Environmental Laws that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. SECTION 5.9 Employee Benefit Matters. (a) As of the Closing Date, no Credit Party nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans subject to Title IV of ERISA other than those identified on Schedule 5.9; (b) Each Credit Party and each ERISA Affiliate is in compliance with all applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired. No liability has been incurred by any Credit Party or any ERISA Affiliate which remains unsatisfied for any taxes or penalties assessed with respect to any Employee Benefit Plan or any Multiemployer Plan except for a liability that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
86 174504702_2 (c) As of the Closing Date, no Pension Plan has been terminated, nor has any Pension Plan become subject to funding based upon benefit restrictions under Section 436 of the Code, nor has any funding waiver from the IRS been received or requested with respect to any Pension Plan, nor has any Credit Party or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Sections 412 or 430 of the Code, Section 302 of ERISA or the terms of any Pension Plan on or prior to the due dates of such contributions under Sections 412 or 430 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan; (d) Except where the failure of any of the following representations to be correct could not, individually or in the aggregate, reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no Credit Party nor any ERISA Affiliate has: (i) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (ii) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (iii) failed to make a required contribution or payment to a Multiemployer Plan, or (iv) failed to make a required installment or other required payment under Sections 412 or 430 of the Code; (e) No Termination Event has occurred or is reasonably expected to occur; (f) Except where the failure of any of the following representations to be correct could not, individually or in the aggregate, reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to its knowledge, threatened concerning or involving (i) any employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any Credit Party or any ERISA Affiliate, (ii) any Pension Plan or (iii) any Multiemployer Plan. (g) As of the Closing Date the Borrower is not nor will be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Term Loans or the Term Loan Commitment. SECTION 5.10 Margin Stock. No Credit Party nor any Subsidiary thereof is engaged principally or as one of its important activities in the business of extending credit for the purpose of “purchasing” or “carrying” (as each such term is defined or used, directly or indirectly, in Regulation U of the FRB) any Margin Stock. No part of the proceeds of the Term Loans will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the FRB. Following the application of the proceeds of each Term Loan, not more than twenty-five percent (25%) of the value of the assets (either of the Borrower only or of Holdings and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 7.2 or Section 7.5 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness in excess of the Threshold Amount will be Margin Stock. SECTION 5.11 Government Regulation. No Credit Party nor any Subsidiary thereof is an “investment company” or a company “controlled” by an “investment company” (as each such term is defined or used in the Investment Company Act) and no Credit Party nor any Subsidiary thereof is subject to regulation under the Investment Company Act or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable.
87 174504702_2 SECTION 5.12 Employee Relations. As of the Closing Date, no Credit Party nor any Subsidiary thereof is, or at any time during the five (5) year period preceding the Closing Date has been, party to any collective bargaining agreement, nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 5.12. The Borrower knows of no pending, threatened or contemplated strikes, lockouts, work stoppage, or other collective labor disputes or unfair labor practice charges involving its employees or those of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Credit Party nor any Subsidiary thereof has been involved in a strike, lockout, work stoppage, or other collective labor dispute, or has been accused of or a party to an unfair labor practice, in each case during the five (5) year period preceding the Closing Date that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. SECTION 5.13 Financial Statements. The audited and unaudited financial statements delivered pursuant to Section 4.1(e)(i) are complete and correct and fairly present on a Consolidated basis the assets, liabilities and financial position of Holdings and its Subsidiaries and the Acquired Entities and their respective Subsidiaries, as at such dates, and the results of the operations and changes of financial position for the periods then ended (other than customary year-end adjustments for unaudited financial statements and the absence of footnotes from unaudited financial statements). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP. Such financial statements show all material indebtedness and other material liabilities, direct or contingent, of Holdings and its Subsidiaries and the Acquired Entities and their respective Subsidiaries as of the date thereof, including material liabilities for taxes, material commitments, and Indebtedness, in each case, to the extent required to be disclosed under GAAP. The pro forma financial statements delivered pursuant to Section 4.1(e)(ii) and the projections delivered pursuant to Section 4.1(e)(iii) and were prepared in good faith on the basis of the assumptions stated therein, which assumptions are believed to be reasonable in light of then existing conditions except that such financial projections and statements shall be subject to normal year end closing and audit adjustments (it being recognized that projections are not to be viewed as facts and are subject to significant uncertainties and contingencies many of which are beyond the Borrower’s control, that no assurance can be given that any particular financial projections will be realized, that actual results may differ from projected results and that such differences may be material). SECTION 5.14 No Material Adverse Change. Since September 30, 2020, no event has occurred or condition arisen, either individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. SECTION 5.15 Solvency. The Credit Parties, on a Consolidated basis, are Solvent. SECTION 5.16 Title to Properties. As of the Closing Date, the real property listed on Schedule 5.16 constitutes all of the real property that is owned, leased, subleased or used by any Credit Party or any of its Subsidiaries. Each Credit Party and each Subsidiary thereof has such good, sufficient and legal title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid, good and sufficient title to all of its personal property and assets, except for Permitted Liens and those properties which have been disposed of by the Credit Parties and their Subsidiaries subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder. SECTION 5.17 Litigation. Except for matters existing on the Closing Date and set forth on Schedule 5.17, there are no actions, suits or proceedings pending nor, to its knowledge, threatened in writing against or in any other way relating adversely to or affecting any Credit Party or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
88 174504702_2 SECTION 5.18 Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions. (a) None of (i) the Borrower, any Subsidiary or, to the knowledge of the Borrower or such Subsidiary, any of their respective directors, officers, employees or Affiliates, or (ii) to the knowledge of the Borrower, any agent or representative of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the Credit Facility, (A) is a Sanctioned Person or currently the subject or target of any Sanctions, (B) has its assets located in a Sanctioned Country, (C) is under administrative, civil or criminal investigation for an alleged violation of, or received notice from or made a voluntary disclosure to any governmental entity regarding a possible violation of, Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions by a governmental authority that enforces Sanctions or any Anti-Corruption Laws or Anti-Money Laundering Laws, or (D) directly or, to the knowledge of the Borrower, indirectly derives revenues from investments in, or transactions with, Sanctioned Persons. (b) Each of the Borrower and its Subsidiaries has implemented and maintains in effect policies and procedures designed to promote and achieve compliance by the Borrower and its Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all Anti-Corruption Laws, Anti-Money Laundering Laws and applicable Sanctions. (c) Each of the Borrower and its Subsidiaries, and to the knowledge of the Borrower, director, officer, employee, agent and Affiliate of Borrower and each such Subsidiary, is in compliance with all Anti- Corruption Laws, Anti-Money Laundering Laws and applicable Sanctions, in all material respects. (d) No proceeds of any Term Loans have been used, directly or indirectly, by the Borrower, any of its Subsidiaries or any of its or their respective directors, officers, employees and agents in violation of Section 6.14(c). SECTION 5.19 Absence of Defaults. No event has occurred or is continuing which constitutes a Default or an Event of Default. SECTION 5.20 Senior Indebtedness Status. The Obligations of each Credit Party and each Subsidiary thereof under this Agreement and each of the other Loan Documents ranks and all appropriate actions have been taken to cause such Obligations to continue to rank at least senior in priority of payment to all Subordinated Indebtedness and senior in Lien priority to all senior unsecured Indebtedness of each such Person and, to the extent applicable, such Obligations have been designated as “Senior Indebtedness” (or any other similar term) under the intercreditor, subordination or other applicable agreements relating to such Subordinated Indebtedness and such senior unsecured Indebtedness of such Person. SECTION 5.21 Disclosure. Holdings and/or its Subsidiaries have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any Credit Party and any Subsidiary thereof are subject, and all other matters known to them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No financial statement, material report, material certificate or other material information furnished in writing by or on behalf of any Credit Party or any Subsidiary thereof to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken together as a whole, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, pro forma financial information, estimated financial information and other projected or estimated information, such information was prepared in good faith based upon assumptions believed to be reasonable at the time such projected information was made available to the Administrative Agent or the Lenders (it being recognized that projections are not to be viewed as facts and are subject to
89 174504702_2 significant uncertainties and contingencies many of which are beyond the Borrower's control, that no assurance can be given that any particular financial projections will be realized, that actual results may differ from projected results and that such differences may be material). As of the Closing Date, all of the information included in the Beneficial Ownership Certification is true and correct. As of the Closing Date, all of the Affiliates of the Borrower that would, if such Affiliate were becoming a Lender on the Closing Date, satisfy the requirements in the definition of Designated Affiliated Lender are identified by name in a writing on a list delivered to the Arranger at least two (2) Business Days prior to the Closing Date. SECTION 5.22 Security Interest in Collateral. Subject to the provisions, limitations and/or exceptions set forth in this Agreement and/or any other Loan Document, the Security Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and, subject to certain filings and recordations and/or any other perfection action required under the terms of any Loan Document, such Liens constitute perfected Liens (with the priority that such Liens are expressed to have under the relevant Loan Documents, unless otherwise permitted hereunder or under any Loan Document) on the Collateral (to the extent such Liens are then required to be perfected under the terms of the Loan Documents) securing the Secured Obligations, in each case as and to the extent set forth therein. SECTION 5.23 Tax Consolidation and Payment of Taxes. On and with effect from the time that they form an Australian Tax Consolidated Group, each Australian Credit Party is a member of an Australian Tax Consolidated Group for which the Head Company (as defined in the Income Tax Assessment Act 1997 (Cth) is Thryv Ausco. ARTICLE VI AFFIRMATIVE COVENANTS Until all of the Obligations (other than contingent indemnification obligations not then due) have been paid and satisfied in full in cash and the Term Loan Commitments terminated, Holdings and the Borrower will, and will cause each of its respective Subsidiaries to: SECTION 6.1 Financial Statements. Deliver to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice): (a) Annual Financial Statements. As soon as practicable and in any event within one hundred and twenty (120) days (or, if earlier, on the date of any required public filing thereof) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2020), an audited Consolidated balance sheet of Holdings and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements of income, changes in stockholders’ equity and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year. Such annual financial statements shall be audited by Ernst & Young or another independent certified public accounting firm of recognized national standing, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit (except for qualifications relating to (i) changes in accounting principles or practices reflecting changes in GAAP or the upcoming maturity date of any Indebtedness being scheduled to occur within twelve months from the time such report is delivered, in each case, required or approved by such independent certified public accountants and/or (ii) breach or anticipated breach of any financial covenant); provided that if Holdings switches from one independent public accounting firm to another, the audit report of any such new accounting firm may contain a
90 174504702_2 qualification or exception as to the scope of such consolidated or consolidating financial statements that relate to any fiscal year prior to its retention which, for the avoidance of doubt, shall have been the subject of an audit report of the previous accounting firm meeting the criteria set forth above) or with respect to accounting principles followed by Holdings or any of its Subsidiaries not in accordance with GAAP. (b) Quarterly Financial Statements. As soon as practicable and in any event within sixty (60) days (or, if earlier, on the date of any required public filing thereof) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended March 31, 2021), an unaudited Consolidated balance sheet of Holdings and its Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated statements of income, changes in stockholders’ equity and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by Holdings in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of Holdings to present fairly in all material respects the financial condition of Holdings and its Subsidiaries on a Consolidated basis as of their respective dates and the results of operations of Holdings and its Subsidiaries for the respective periods then ended, subject to normal year- end adjustments and the absence of footnotes. SECTION 6.2 Certificates; Other Reports. Deliver to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice): (a) at each time financial statements are delivered pursuant to Sections 6.1(a) or (b), a duly completed Compliance Certificate, together with a report containing management’s discussion and analysis of such financial statements and Holdings’ and its Subsidiaries’ material quarterly and annual operating results. Such Compliance Certificate shall, among other things, (i) state that no Default or Event of Default is continuing as of the date of delivery of such Compliance Certificate or, if a Default or Event of Default is continuing, state the nature thereof and the action that the Borrower proposes to take with respect thereto, (ii) demonstrate compliance with the financial covenant set forth in Section 7.14 as of the last day of the applicable Reference Period ending on the last day of the Reference Period covered by such financial statements, (iii) set forth as and at the end of such quarterly period or Fiscal Year, as the case may be, reasonably detailed calculations of the amount of the Available Amount and the amount of Excess Cash Flow for the most recently ended fiscal quarter, (iv) include a list of each Subsidiary of Holdings that identifies whether or not such Subsidiary is an Excluded Subsidiary and/or an Immaterial Subsidiary as of the date of such Compliance Certificate which shall include with respect to each Immaterial Subsidiary, the percentage of Consolidated total assets and Consolidated revenues of Holdings and its Subsidiaries attributable to such Immaterial Subsidiary, and a calculation of the First Lien Net Leverage Ratio, in each case as of the last day of the fiscal period covered by the financial statements accompanying such Compliance Certificate, (v) include a supplement to Schedule 1.1 with respect to any Designated Operational FX Hedge entered into and designated as such during the applicable fiscal quarter or Fiscal Year, as the case may be and (vi) include, to the extent applicable, changes in the list of beneficial owners to the extent required by Section 6.15(b); (b) [reserved]; (c) promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Credit Party or any Subsidiary thereof with any Environmental Law that could reasonably be expected to have a Material Adverse Effect; (d) [reserved];
91 174504702_2 (e) promptly upon the request thereof, such other information and documentation required under applicable “know your customer” rules and regulations, the PATRIOT Act or any applicable Anti- Money Laundering Laws or Anti-Corruption Laws, in each case as from time to time reasonably requested by the Administrative Agent or any Lender; (f) to the extent not otherwise delivered to the Administrative Agent hereunder, (i) all financial statements and notices of default as may be delivered to or received from the ABL Administrative Agent pursuant to the terms of the ABL Credit Agreement simultaneously with the delivery of the same to, or receipt from, the ABL Administrative Agent and (ii) promptly after the occurrence thereof, notice of any mandatory prepayment or the commencement of a “Cash Dominion Trigger Period” (as defined in the ABL Credit Agreement) or a “Reporting Trigger Period” (as defined in the ABL Credit Agreement), in each case, under the ABL Documents; and (g) such other information regarding the operations, business affairs and financial condition of any Credit Party or any Subsidiary thereof as the Administrative Agent or any Lender may reasonably request; provided that neither Holdings nor any Subsidiary shall be required to disclose or provide any information (i) in respect of which, and to the extent that, disclosure to the Administrative Agent or any Lender (or any of their respective representatives) is prohibited by Applicable Law, (ii) to the extent that such information is subject to any confidentiality agreement (unless mutually agreeable arrangements can be made to preserve such information as confidential in the good faith determination of the Borrower), (iii) to the extent that such information is classified or otherwise constitutes non-financial trade secrets or non-financial proprietary information of any Person or (iv) to the extent that such information is subject to any attorney-client privilege or similar privilege or constitutes attorney work product); provided that the Borrower shall notify the Administrative Agent if any such information is being withheld as a result of any of clauses (i) through (iv) above and shall use its commercially reasonable efforts to describe, to the extent both feasible and permitted under Applicable Law or applicable confidentiality obligation, or without waiving such attorney-client privilege, as applicable, the applicable information (including via redaction) and seek to obtain necessary waivers to the disclosure of such information and (y) any such confidentiality obligation was not entered into in contemplation of the requirements of this clause (g). Documents required to be delivered pursuant to Section 6.1(a) or (b) or Section 6.2(e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Holdings or the Borrower posts such documents, or provides a link thereto on Holdings’ or the Borrower’s website on the Internet; or (ii) on which such documents are posted on Holdings’ or the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). Notwithstanding anything contained herein, in every instance Holdings and the Borrower shall be required to provide copies of the Compliance Certificates required by Section 6.2 to the Administrative Agent in accordance with the procedures set forth in Section 10.1. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by Holdings or the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. Notwithstanding anything to the contrary herein, the obligations in Section 6.1(a) and 6.1(b) may instead be satisfied with respect to any financial statements of Holdings by furnishing Holdings’ (or any other parent company thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC or any securities exchange, in each case, within the time periods specified in such paragraphs and, so long as such filings are publicly available, without any requirement to provide notice of such filing to the Administrative Agent or any Lender; provided that, (A) to the extent (x) such financial statements relate to any parent
92 174504702_2 company and (y) either (1) such parent company (or any other parent company that is a subsidiary of such parent company) has any material third party Indebtedness and/or material operations (as determined by the Borrower in good faith and other than any operations that are attributable solely to such parent company ownership of Holdings and its Subsidiaries) or (2) there are material differences between the financial statements of such parent company and its Consolidated Subsidiaries, on the one hand, and Holdings and its Consolidated Subsidiaries, on the other hand, such financial statements or Form 10-K or Form 10-Q, as applicable, shall be accompanied by unaudited consolidating information that summarizes in reasonable detail the differences between the information relating to such parent company and its Consolidated Subsidiaries, on the one hand, and the information relating to Holdings and its Subsidiaries on a stand-alone basis, on the other hand, which consolidating information shall be certified by a Responsible Officer of the Borrower as having been fairly presented in all material respects and (B) to the extent such statements are in lieu of statements required to be provided under Section 6.1(a), such statements shall be accompanied by a report and opinion of an independent certified public accounting firm of recognized national standing, which report and opinion shall satisfy the applicable requirements set forth in Section 6.1(a). The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on the Platform and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, means that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.10); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.” SECTION 6.3 Notice of Litigation and Other Matters. Promptly (but in no event later than ten (10) days after any Responsible Officer of any Credit Party obtains knowledge thereof), the Borrower shall notify the Administrative Agent in writing of (which shall promptly make such information available to the Lenders in accordance with its customary practice): (a) the occurrence of any Default or Event of Default under any Loan Document; (b) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving any Credit Party or any Subsidiary thereof or any of their respective properties, assets or businesses in each case that if adversely determined could reasonably be expected to result in a Material Adverse Effect; (c) any notice of any violation received by any Credit Party or any Subsidiary thereof from any Governmental Authority including any notice of violation of Environmental Laws which in any such case could reasonably be expected to have a Material Adverse Effect; (d) [reserved];
93 174504702_2 (e) (i) any unfavorable determination letter from the IRS regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by any Credit Party or any ERISA Affiliate of the PBGC’s intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by any Credit Party or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or reason to know that any Credit Party or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and (f) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. Each notice pursuant to Section 6.3 (other than Section 6.3(g)) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.3(a) shall indicate with reasonable specificity any and all provisions of this Agreement and any other Loan Document, as applicable, that have been breached. SECTION 6.4 Preservation of Corporate Existence and Related Matters. Except as permitted by Section 7.4 or Section 7.5, (a) preserve and maintain its separate corporate existence or equivalent form and all rights, franchises, licenses and privileges material to the conduct of its business; and (b) qualify and remain qualified as a foreign corporation or other entity and authorized to do business in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect. SECTION 6.5 Maintenance of Property and Licenses. (a) In addition to the requirements of any of the Security Documents, protect and preserve all Properties necessary in and material to its business; maintain in good working order and condition, ordinary wear and tear excepted, all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all repairs, renewals and replacements thereof and additions to such Property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner, except, in each case, as such action or inaction could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (b) Maintain, in full force and effect in all material respects, each and every license, permit, certification, qualification, approval or franchise issued by any Governmental Authority required for each of them to conduct their respective businesses as presently conducted, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 6.6 Insurance. Maintain insurance with financially sound and reputable insurance companies against at least such risks and in at least such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as the Borrower and its Subsidiaries) as are customarily maintained by similarly situated Persons engaged in the same or similar businesses as the Borrower and its Subsidiaries and as may be required by Applicable Law and as are required by any Security Documents (including hazard and business interruption insurance). All such insurance shall, (a) provide that no cancellation or material modification thereof shall be effective until
94 174504702_2 at least 30 days after receipt by the Administrative Agent of written notice thereof (except as a result of non-payment of premium in which case only 10 days’ prior written notice shall be required), (b) in the case of liability insurance, name the Administrative Agent as an additional insured party thereunder and (c) in the case of each property insurance policy, name the Administrative Agent as lender’s loss payee. On the Closing Date and from time to time thereafter, the Borrower shall deliver to the Administrative Agent promptly following its reasonable request information in reasonable detail as to the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. SECTION 6.7 Accounting Methods and Financial Records. Maintain a system of accounting, and keep proper books, records and accounts (which shall be accurate and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance in all material respects with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its Properties. SECTION 6.8 Payment of Taxes and Other Obligations. Pay and perform (a) all Taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its Property and (b) all other obligations and liabilities in respect of Indebtedness in excess of the Threshold Amount in accordance with customary trade practices, except where the failure to pay or perform such items described in clauses (a) or (b) of this Section could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 6.9 Compliance with Laws and Approvals. Observe and remain in compliance with all Applicable Laws (including all Anti-Corruption Laws, Anti-Money Laundering Laws and applicable Sanctions) and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business except where the failure to do so could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 6.10 Environmental Laws. In addition to and without limiting the generality of Section 6.9, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) comply with, and use its commercially reasonable efforts to ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and use its commercially reasonable efforts to ensure that all tenants and subtenants, if any, obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws. SECTION 6.11 Compliance with ERISA. In addition to and without limiting the generality of Section 6.9, (a) except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could reasonably be expected to result in a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to the Administrative Agent upon the Administrative Agent’s reasonable request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent.
95 174504702_2 SECTION 6.12 Visits and Inspections; Lender Calls. Permit representatives of the Administrative Agent, from time to time upon prior reasonable notice and at such times during normal business hours, all at the expense of the Borrower, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects; provided that excluding any such visits and inspections during the continuation of an Event of Default, the Administrative Agent shall not exercise such rights more often than one (1) time during any calendar year at the Borrower’s expense; provided further that upon the occurrence and during the continuance of an Event of Default, the Administrative Agent or any Lender may do any of the foregoing at the expense of the Borrower at any time upon prior reasonable notice and at such times during normal business hours; provided further that neither Holdings nor any Subsidiary shall be required to disclose or provide any information (i) in respect of which, and to the extent that, disclosure to the Administrative Agent or any Lender (or any of their respective representatives) is prohibited by Applicable Law, (ii) to the extent that such information is subject to any confidentiality agreement (unless mutually agreeable arrangements can be made to preserve such information as confidential in the good faith determination of the Borrower), (iii) to the extent that such information is classified or otherwise constitutes non-financial trade secrets or non-financial proprietary information of any Person or (iv) to the extent that such information is subject to any attorney- client privilege or similar privilege or constitutes attorney work product); provided that the Borrower shall notify the Administrative Agent if any such information is being withheld as a result of any of clauses (i) through (iv) above and shall use its commercially reasonable efforts to describe, to the extent both feasible and permitted under Applicable Law or applicable confidentiality obligation, or without waiving such attorney-client privilege, as applicable, the applicable information (including via redaction) and seek to obtain necessary waivers to the disclosure of such information and (y) any such confidentiality obligation was not entered into in contemplation of the requirements of this Section 6.12. If at any time Holdings ceases to be a public company, Holdings shall participate in a call of the Administrative Agent and Lenders once during each Fiscal Year, which call shall be held at such reasonable time as may be agreed by Holdings and the Administrative Agent. SECTION 6.13 Additional Guarantors and Collateral. (a) Additional Subsidiaries. Subject to Section 6.18 with respect to the Australian Subsidiaries, promptly, but in any event with fifteen (15) Business Days (as such time period may be extended by the Administrative Agent in its sole discretion), notify the Administrative Agent after (i) the creation or acquisition (including by division) of a Person that becomes a Subsidiary (other than an Excluded Subsidiary), (ii) any Subsidiary that is an Excluded Subsidiary failing to constitute an Excluded Subsidiary or (iii) the designation of any Discretionary Guarantor and, within forty-five (45) days (or in the case of any Australian Subsidiary formed or acquired after the Closing Date, such later date upon which any applicable “Whitewash” transaction or similar applicable legal requirements have been satisfied) after such event, as such time period may be extended by the Administrative Agent in its sole discretion, cause such Subsidiary to (A) become a Subsidiary Guarantor by delivering to the Administrative Agent a duly executed Joinder Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, (B) grant a security interest in all Collateral (subject to the exceptions specified in the Collateral Agreement) owned by such Subsidiary by delivering to the Administrative Agent a duly executed Joinder Agreement and a supplement to each applicable Security Document or such other document as the Administrative Agent shall deem appropriate for such purpose and comply with the terms of each applicable Security Document, (C) deliver to the Administrative Agent such opinions, documents and certificates of the type referred to in Section 4.1 as may be reasonably requested by the Administrative Agent, (D) if such Equity Interests are certificated, deliver to the Administrative Agent such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of such Person as and to the extent required by the applicable Security Documents, (E) deliver to the Administrative Agent such updated Schedules to the applicable Security Documents as requested by the Administrative
96 174504702_2 Agent with respect to such Subsidiary, and (F) deliver to the Administrative Agent such other documents as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent. Notwithstanding anything to the contrary, the Credit Parties shall execute and deliver to the Administrative Agent, for the benefit of the Secured Parties, such other Security Documents to the extent provided to ABL Administrative Agent or executed in respect of the ABL Obligations. (b) Additional First Tier Foreign Subsidiaries and CFC Holdcos. In each case, subject to the limitation set forth in clause (d) below, notify the Administrative Agent promptly, but in any event with fifteen (15) Business Days (as such time period may be extended by the Administrative Agent in its sole discretion), notify the Administrative Agent after, after any Person becomes a First Tier Foreign Subsidiary or a CFC Holdco (other than an Australian Subsidiary, all of the Equity Interests of which shall be pledged pursuant to, and in accordance with, Section 6.13(a) and Section 6.18 hereof), and at the request of the Administrative Agent, promptly thereafter (and, in any event, within forty five (45) days (or in the case of any Australian Subsidiary formed or acquired after the Closing Date, such later date upon which any applicable “Whitewash” transaction or similar applicable legal requirements have been satisfied) after such request, as such time period may be extended by the Administrative Agent in its sole discretion), cause (i) the applicable Credit Party to deliver to the Administrative Agent Security Documents pledging sixty-five percent (65%) of the total outstanding voting Equity Interests (and one hundred percent (100%) of the non-voting Equity Interests) of any such new First Tier Foreign Subsidiary that is a CFC or any such CFC Holdco and 100% of the Equity Interests of any First Tier Foreign Subsidiary that is not a CFC and a consent thereto executed by such new First Tier Foreign Subsidiary (including, if applicable, original certificated Equity Interests (or the equivalent thereof pursuant to the Applicable Laws and practices of any relevant foreign jurisdiction) evidencing the Equity Interests of such new First Tier Foreign Subsidiary or CFC Holdco, as applicable, together with an appropriate undated stock or other transfer power for each certificate duly executed in blank by the registered owner thereof), (ii) such Person to deliver to the Administrative Agent such opinions, documents and certificates of the type referred to in Section 4.1 as may be reasonably requested by the Administrative Agent, (iii) such Person to deliver to the Administrative Agent such updated Schedules to the Loan Documents as requested by the Administrative Agent with regard to such Person and (iv) such Person to deliver to the Administrative Agent such other documents as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent. Notwithstanding anything to the contrary, the Credit Parties shall execute and deliver to the Administrative Agent, for the benefit of the Secured Parties, such other Security Documents to the extent provided to ABL Administrative Agent or executed in respect of the ABL Obligations. (c) Merger Subsidiaries. Notwithstanding the foregoing, to the extent any new Subsidiary is created solely for the purpose of consummating a merger transaction pursuant to a Permitted Acquisition, and such new Subsidiary at no time holds any assets or liabilities other than any merger consideration contributed to it contemporaneously with the closing of such merger transaction, such new Subsidiary shall not be required to take the actions set forth in Section 6.13(a) or (b), as applicable, until the consummation of such Permitted Acquisition (at which time, the surviving entity of the respective merger transaction shall be required to so comply with Section 6.13(a) or (b), as applicable, within forty-five (45) days of the consummation of such Permitted Acquisition, as such time period may be extended by the Administrative Agent in its sole discretion). (d) Exclusions. The provisions of this Section 6.13 shall be subject to the limitations and exclusions set forth in the Security Documents. SECTION 6.14 Use of Proceeds.
97 174504702_2 (a) Use the proceeds of the Initial Term Loans (i) to finance the Transactions and (ii) pay fees, costs and expenses in connection with the Transactions; provided that no part of the proceeds of any of the Initial Term Loans shall be used for purchasing or carrying Margin Stock (within the meaning of Regulation T, U or X of the FRB) or for any purpose which violates the provisions of Regulation T, U or X of the FRB; provided that the Sunshine Reserve Amount shall only be used to either (x) finance the Sunshine Acquisition (including, without limitation, the repayment of Indebtedness of the Acquired Entities and the payment of Transaction Costs in connection with the Sunshine Acquisition) and, to the extent of any remaining amounts after the financing of the Sunshine Acquisition, for general corporate purposes of the Borrower and its Subsidiaries or (y) repay the Initial Term Loans in accordance with Section 2.4(b)(vii). (b) Use the proceeds of any Incremental Term Loan as permitted pursuant to Section 3.13, as applicable. (c) Not request any Term Loans, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Term Loans, directly or indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto. SECTION 6.15 Compliance with Anti-Corruption Laws; Beneficial Ownership Regulation, Anti- Money Laundering Laws and Sanctions. (a) Maintain in effect and enforce policies and procedures designed to promote and achieve compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws, Anti-Money Laundering Laws and applicable Sanctions; (b) with respect to any change to the list of beneficial owners identified in the latest Beneficial Ownership Certification, on the date on which the financial statements and the related Compliance Certificate for such fiscal quarter are required to be delivered pursuant to Section 6.1(a) or (b), as applicable, and Section 6.2(a), notify the Administrative Agent of such change and (c) promptly following the Administrative Agent’s request therefor, provide the Administrative Agent any information and documentation reasonably requested by it for purposes of compliance with the Beneficial Ownership Regulation. SECTION 6.16 Further Assurances. Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), which may be required under any Applicable Law, or which the Administrative Agent or Australian Security Trustee (on its own behalf or on behalf of the Required Lenders) may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Credit Parties in accordance with Section 10.3. The Borrower also agrees to provide to the Administrative Agent and the Australian Security Trustee, from time to time upon the reasonable request by the Administrative Agent or the Australian Security Trustee, evidence reasonably satisfactory to the Administrative Agent or the Australian Security Trustee, as applicable, as to the perfection and priority of the Liens created or intended to be created by the applicable Security Documents. SECTION 6.17 Maintenance of Debt Ratings. Use commercially reasonable efforts to maintain Debt Ratings (but not any specific rating) from both Moody’s and S&P.
98 174504702_2 SECTION 6.18 Post-Closing Matters. Execute and deliver the documents, take the actions and complete the tasks set forth on Schedule 6.18, in each case within the applicable corresponding time limits specified on such schedule (or such later dates as may be determined by the Administrative Agent in its sole discretion). ARTICLE VII NEGATIVE COVENANTS Until all of the Obligations (other than contingent, indemnification obligations not then due) have been paid and satisfied in full in cash and the Term Loan Commitments terminated, the Borrower will not, and will not permit any of its Subsidiaries to (and solely in the case of Sections 7.14 and 7.15, Holdings will not): SECTION 7.1 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except: (a) the Obligations (including, for the avoidance of doubt, any Incremental Term Loans incurred in accordance with Section 3.13 and any Extended Term Loans incurred in accordance with Section 3.14) and any Credit Agreement Refinancing Indebtedness incurred in accordance with Section 3.15 (it being understood that Incremental Term Loans, Extended Term Loans and Credit Agreement Refinancing Indebtedness shall only be incurred pursuant to this clause (a)); (b) the ABL Obligations in an amount not to exceed, at any one time outstanding, $200,000,000 plus accrued but unpaid interest with respect to the ABL Obligations and the amount of any fees, premiums or expenses incurred in connection therewith; provided that, for the avoidance of doubt, the Indebtedness described in this clause (b) may consist of Indebtedness of Foreign Subsidiaries; provided further, that, to the extent secured, the Indebtedness described in this clause (b) shall at all times be subject to the Closing Date Intercreditor Agreement; (c) Indebtedness (i) owing under Hedge Agreements entered into in order to manage existing or anticipated interest rate, exchange rate, commodity price or foreign currency risks and not for speculative purposes and (ii) in respect of Cash Management Agreements entered into in the ordinary course of business; provided that if any such Indebtedness under this clause (c) constitutes ABL Obligations, such Indebtedness shall be subject to the terms of the Closing Date Intercreditor Agreement; (d) Indebtedness existing on the Closing Date and listed on Schedule 7.1, and any Permitted Refinancing Indebtedness in respect thereof; (e) Attributable Indebtedness with respect to Capital Lease Obligations and Indebtedness incurred in connection with purchase money Indebtedness, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (other than by an amount not greater than fees and expenses, including premium and defeasance costs, associated therewith) or result in a decreased average weighted life thereof; provided that (i) such Indebtedness or Attributable Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness and Attributable Indebtedness permitted by this clause (e), shall not exceed $30,000,000 at any time outstanding; (f) Indebtedness of a Person existing at the time such Person became a Subsidiary or assets were acquired from such Person in connection with an Investment permitted pursuant to Section 7.3 and any Permitted Refinancing Indebtedness in respect thereof; provided that (i) such Indebtedness was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or the acquisition
99 174504702_2 of such assets and (ii) the aggregate principal amount of such Indebtedness does not exceed $50,000,000 at any time outstanding; (g) (i) Guarantees of Indebtedness of any Credit Party and (ii) Guarantees by any Credit Party of Indebtedness of any Non-Guarantor Subsidiary to the extent permitted pursuant to Section 7.3 (other than clause (l) thereof); provided further that any Guarantee of Permitted Refinancing Indebtedness shall only be permitted if it meets the requirements of the definition of Permitted Refinancing Indebtedness; (h) intercompany Indebtedness (i) owed by any Credit Party (other than Holdings) to another Credit Party, (ii) owed by any Credit Party (other than Holdings) to any Non-Guarantor Subsidiary (provided that such Indebtedness shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent), (iii) owed by any Non-Guarantor Subsidiary to any other Non- Guarantor Subsidiary; and (iv) owed by any Non-Guarantor Subsidiary to any Credit Party to the extent permitted pursuant to Section 7.3(c); (i) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or other similar instrument drawn against insufficient funds in the ordinary course of business; (j) Subordinated Indebtedness of the Borrower and its Subsidiaries and any Permitted Refinancing Indebtedness in respect thereof; provided, that in the case of each incurrence of such Subordinated Indebtedness, (i) no Default or Event of Default shall have occurred and be continuing or would be caused by the incurrence of such Subordinated Indebtedness, (ii) after giving effect to such Indebtedness, any permanent repayment of Indebtedness in connection therewith and any concurrent Acquisition or Investment made with the proceeds thereof and assuming that any commitments with respect to Indebtedness entered into in connection therewith are each fully drawn at such time, on a Pro Forma Basis and based on the most recently completed Reference Period for which financial statements have been delivered hereunder, either (A) the Total Net Leverage Ratio shall be at least 0.50 below the then applicable ratio set forth in Section 7.14 or (B) the Total Net Leverage Ratio is less than the Total Net Leverage Ratio immediately prior to such incurrence and the consummation of any such Acquisition or Investment and the Administrative Agent shall have received satisfactory written evidence that the Borrower shall be in compliance with this clause (ii), (iii) such Subordinated Indebtedness does not mature, or require any principal amortization or mandatory prepayment, put right or sinking fund obligation prior to the date that is 180 days after the then latest scheduled maturity date of the Term Loans and Term Loan Commitments; provided that any Indebtedness consisting of a customary bridge facility shall be deemed to satisfy this requirement so long as such Indebtedness automatically converts into long-term debt which satisfies this clause (iii), and (iv) the terms of such Subordinated Indebtedness reflect then current market terms (taken as a whole) at the time of issuance, including with respect to customary differences, cushions and conditions from the corresponding terms, covenants and conditions applicable to the then existing Term Loans and (other than pricing, fees, rate floors, premiums and optional prepayment or redemption provisions), taken as a whole, are not materially more restrictive on Holdings and its Subsidiaries than the terms and conditions of this Agreement, taken as a whole (except for terms with respect to such Subordinated Indebtedness that are applicable only to the period after the date that is 180 days after the Latest Maturity Date in effect at the time of incurrence of such Subordinated Indebtedness); provided further that a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to the incurrence or assumption of such Subordinated Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Subordinated Indebtedness or substantially final drafts of the documentation related thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement of clause (iv);
100 174504702_2 (k) Indebtedness under performance bonds, surety bonds, release, appeal and similar bonds, statutory obligations or with respect to workers’ compensation claims, in each case incurred in the ordinary course of business, and reimbursement obligations in respect of any of the foregoing; (l) Indebtedness consisting of promissory notes issued to current or former officers, directors and employees (or their respective family members, estates or trusts or other entities for the benefit of any of the foregoing) of Holdings or its Subsidiaries to purchase or redeem Equity Interests or options of Holdings permitted pursuant to Section 7.6(e); provided that the aggregate principal amount of all such Indebtedness shall not exceed $5,000,000 at any time outstanding; (m) endorsement of instruments or other payment items for deposit in the ordinary course of business; (n) Indebtedness owed to any Person providing property, casualty, liability, or other insurance to Holdings or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year; (o) unsecured contingent liabilities in respect of any indemnification obligation incurred in the ordinary course of business or any reasonable and customary indemnification obligation, adjustment of purchase price, non-compete, earn-out or similar obligation of any Credit Party or any of its Subsidiaries entered into in connection with a Permitted Acquisition; (p) Indebtedness consisting of Cash Equivalents; (q) unsecured Indebtedness incurred in respect of netting services, overdraft protection, and other like services, in each case, incurred in the ordinary course of business; (r) Indebtedness of any Credit Party not otherwise permitted pursuant to this Section in an aggregate principal amount not to exceed $25,000,000 at any time outstanding; (s) Indebtedness (including Indebtedness in the form of Disqualified Equity Interests) and preferred stock of the Borrower in an aggregate principal amount of up to 100% of the Net Cash Proceeds received by the Borrower since immediately after the Closing Date from the issuance or sale of Qualified Equity Interests of the Borrower or cash contributed to common equity capital of the Borrower (in each case, other than proceeds of Disqualified Equity Interests, Specified Equity Contributions or issuances or sales of Equity Interests to Holdings or any of its Subsidiaries) as determined in accordance with clauses (c) and (d) of the definition of “Available Amount”; (t) Indebtedness in the form of pari passu, junior or subordinated secured or senior or subordinated unsecured notes and/or term loans (and/or commitments in respect thereof) issued or incurred by the Borrower in lieu of Incremental Term Loans and subject to the satisfaction of each of the Permitted Indebtedness Conditions (such notes or loans, “Incremental Equivalent Indebtedness”) and any Permitted Refinancing Indebtedness in respect thereof; provided that the original principal amount of such Incremental Equivalent Indebtedness to be incurred shall not exceed the Incremental Facility Limit (after giving effect to such Incremental Equivalent Indebtedness and any Incremental Term Loans incurred concurrently therewith; (u) Indebtedness (other than Indebtedness of the type permitted under clauses (f) through (h) of this Section 7.1) constituting Investments permitted under Section 7.3 (other than clauses (g) or (l) of Section 7.3); and
101 174504702_2 (v) bank guarantees in connection with the letters of credit of the Acquired Entities in an aggregate amount not to exceed the amount set forth on Schedule 7.1. Notwithstanding the foregoing or anything else herein to the contrary, Indebtedness incurred in the form of the ABL Obligations may only be incurred pursuant to clauses (b) and (c) of this Section. SECTION 7.2 Liens. Create, incur, assume or suffer to exist, any Lien on or with respect to any of its Property, whether now owned or hereafter acquired, except: (a) Liens created pursuant to the Loan Documents; (b) Liens on Collateral (other than Collateral consisting of the Sunshine Reserve Account and amounts on deposit therein) securing (i) the ABL Obligations; provided that such Liens are subject at all times to the Closing Date Intercreditor Agreement and (ii) Incremental Equivalent Indebtedness or Refinancing Equivalent Indebtedness; provided that such Liens are subject at all times to the Closing Date Intercreditor Agreement and, if applicable, an Acceptable Junior Lien Intercreditor Agreement; (c) Liens in existence on the Closing Date and described on Schedule 7.2, and the replacement, renewal or extension thereof (including Liens incurred, assumed or suffered to exist in connection with any Permitted Refinancing Indebtedness permitted pursuant to Section 7.1(c) (solely to the extent that such Liens were in existence on the Closing Date and described on Schedule 7.2)); provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, as applicable, beyond that in existence on the Closing Date, except for products and proceeds of the foregoing; (d) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) (i) not yet delinquent and payable or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or (ii) which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (e) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which (i) are not overdue for a period of more than thirty (30) days, or if more than thirty (30) days overdue, such Liens are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (f) deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business; (g) encumbrances in the nature of zoning restrictions, easements, rights of way, encroachments, other survey defects, rights or restrictions that would be shown by a current, accurate survey or physical inspection, and similar encumbrances or irregularities in title or on record of real property, which in the aggregate are not substantial in amount and which do not, in any case, materially detract from the value of such property or impair the use thereof in the ordinary conduct of business; (h) Liens arising from the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to operating leases entered into in the ordinary course of business;
102 174504702_2 (i) Liens securing Indebtedness permitted under Section 7.1(e); provided that (i) such Liens shall be created substantially simultaneously with the acquisition, repair, construction, improvement or lease, as applicable, of the related Property, (ii) such Liens do not at any time encumber any property other than the Property financed or improved by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed one hundred percent (100%) of the original price for the purchase, repair, construction, improvement or lease amount (as applicable) of such Property at the time of purchase, repair, construction, improvement or lease (as applicable); (j) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.1(l) or securing appeal or other surety bonds relating to such judgments; (k) Liens on Property (i) of a Person that becomes a Subsidiary existing at the time that such Person becomes a Subsidiary in connection with an acquisition permitted hereunder and (ii) of the Borrower or any of its Subsidiaries existing at the time such Property is purchased or otherwise acquired by the Borrower or such Subsidiary pursuant to a transaction permitted hereunder and, in each case any modification, replacement, renewal and extension thereof; provided that, with respect to each of the foregoing clauses (i) and (ii), (A) such Liens are not incurred in connection with, or in anticipation of, such Permitted Acquisition, purchase or other acquisition, (B) such Liens do not encumber any Property other than Property encumbered at the time of such acquisition or such Person becoming a Subsidiary and the proceeds and products thereof and are not all asset Liens, (C) such Liens do not attach to any other Property of Holdings or any of its Subsidiaries (other than the proceeds of the Property subject to the Lien permitted under this clause (k)) and (D) such Liens will secure only those obligations which it secures at the time such acquisition or purchase occurs; (l) (i) Liens of a collecting bank arising in the ordinary course of business under Section 4- 210 of the Uniform Commercial Code in effect in the relevant jurisdiction, (ii) Liens of any depositary bank in connection with statutory, common law and contractual rights of setoff and recoupment with respect to any deposit account of the Borrower or any Subsidiary thereof, (iii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of any assets or property in the ordinary course of business and (iv) Liens or rights of setoff against credit balances of Holdings or any of its Subsidiaries with credit card issuers or credit card processors, or amounts owing by such credit card issuers or credit card processors to Holdings or any of its Subsidiaries in the ordinary course of business, but not Liens on or rights of setoff against any other property or assets of Holdings or any of its Subsidiaries, pursuant to applicable credit card agreements to secure the obligations of Holdings or any of its Subsidiaries to such credit card issuers or credit card processors as a result of fees and chargebacks; (m) (i) Liens of landlords arising in the ordinary course of business to the extent relating to the property and assets relating to any lease agreements with such landlord, and (ii) Liens of suppliers (including sellers of goods) or customers arising in the ordinary course of business to the extent limited to the property or assets relating to such contract; (n) (i) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (A) interfere in any material respect with the business of Holdings or its Subsidiaries or (B) secure any Indebtedness and (ii) any interest or title of a licensor, sub-licensor, lessor or sub-lessor under leases, licenses, subleases or sublicenses entered into by any of Holdings and its Subsidiaries as licensee, sub-licensee, lessee or sub-lessee in the ordinary course of business or any customary restriction or encumbrance with respect to the Property subject to any such lease, license, sublease or sublicense;
103 174504702_2 (o) (i) Liens on Equity Interests of joint ventures securing capital contributions thereto and (ii) customary rights of first refusal and tag, drag and similar rights in joint venture agreements and agreements with respect to Non-Wholly-Owned Subsidiaries; (p) the licensing or sublicensing (other than exclusive licenses or sublicenses) of intellectual property in the ordinary course of business in a manner that does not, or could not reasonably be expected to, materially interfere with the business of Holdings and its Subsidiaries; (q) any provision for the retention of title to any property by the vendor or transferor of such property, which property is acquired by Holdings or a Subsidiary of Holdings in a transaction entered into in the ordinary course of business of Holdings or such Subsidiary of Holdings and for which kind of transaction it is normal market practice for such retention of title provision to be included; (r) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under Section 7.1(n); (s) Liens on cash collateral and deposit accounts maintained by the lienholder as depository bank to secure (i) Indebtedness incurred pursuant to Section 7.1(c) and/or (ii) Indebtedness incurred pursuant to Section 7.1(v); provided that the amount of such cash collateral shall not exceed the aggregate amount of the Indebtedness permitted pursuant to Section 7.1(v); (t) Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; (u) Liens not otherwise permitted hereunder on assets other than the Collateral securing Indebtedness or other obligations in the aggregate principal amount not to exceed $25,000,000 at any time outstanding; and (v) Liens in respect of an Australian Credit Party that is a deemed security interest under section 12(3) of the Australian PPSA which does not secure payment or performance of an obligation. Notwithstanding the foregoing, (x) no Credit Party will, or will permit any of their respective Subsidiaries to, create, incur, assume or suffer to exist any Lien on or with respect to any of its fee-owned or leased real property, whether now owned or leased or hereafter acquired or leased, other than Liens described above in clauses (a), (b), (d), (e), (g), (i), (j), (k), (m) and (n) of this Section 7.2, as applicable, (y) Liens on all or any material portion of the Borrower’s “Software as a Service” business shall not be permitted pursuant this Section, other than Liens described above in clauses (a), (b), (d), (n) or (p) of this Section 7.2 and (z) in no event shall the Sunshine Reserve Account or any amounts on deposit therein be subject to any Lien other than Liens of the Administrative Agent for the account of the Secured Parties and Liens of the Administrative Agent described in clause (l) above. SECTION 7.3 Investments. Make, hold or otherwise permit to exist any Investment, except: (a) Investments existing on the Closing Date (other than Investments in Subsidiaries existing on the Closing Date) and described on Schedule 7.3 and any modification, replacement, renewal or extension thereof so long as such modification, renewal or extension thereof does not increase the amount of such Investment except as otherwise permitted by this Section 7.3;
104 174504702_2 (b) Investments (i) existing on the Closing Date in Subsidiaries existing on the Closing Date, (ii) made after the Closing Date by any Credit Party in any other Credit Party (other than Holdings), (iii) made after the Closing Date by any Non-Guarantor Subsidiary in any Credit Party and (iv) made after the Closing Date by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary; (c) Investments made after the Closing Date by any Credit Party in any Non-Guarantor Subsidiary in an aggregate amount at any time outstanding not to exceed $25,000,000 (provided that any Investments in the form of loans or advances made by any Credit Party to any Non-Guarantor Subsidiary pursuant to this clause (c) shall be evidenced by a note in form and substance reasonably satisfactory to the Administrative Agent and shall be pledged and, to the extent constituting Term Loan Priority Collateral, shall be delivered to the Administrative Agent pursuant to the Security Documents (or, to the extent constituting ABL Priority Collateral, shall be delivered to the ABL Administrative Agent pursuant to the ABL Documents); (d) Investments in cash and Cash Equivalents; (e) Investments by the Borrower or any of its Subsidiaries consisting of Capital Expenditures permitted by this Agreement; (f) deposits made in the ordinary course of business to secure the performance of leases or other obligations as permitted by Section 7.2; (g) Hedge Agreements permitted pursuant to Section 7.1; (h) purchases of assets in the ordinary course of business; (i) Investments by the Borrower or any Subsidiary thereof in the form of: (i) Permitted Acquisitions to the extent that any Person or Property acquired in such Acquisition becomes a part of the Borrower or a Subsidiary Guarantor or becomes (whether or not such Person is a Wholly-Owned Subsidiary) a Subsidiary Guarantor in the manner contemplated by Section 6.13; and (ii) Permitted Acquisitions to the extent that any Person or Property acquired in such Acquisition does not become a Subsidiary Guarantor or a part of a Subsidiary Guarantor in an aggregate amount at any time outstanding not to exceed $25,000,000; provided that the foregoing dollar cap shall not apply to any Acquisition to the extent the Person so acquired (or the Person owning the assets so acquired) becomes a Subsidiary Guarantor even though such Person owns Equity Interests in Persons that are not otherwise required to become Subsidiary Guarantors, if not less than 80% of the Consolidated EBITDA of the Person(s) acquired in such Acquisition (for this purpose and for the component definitions used therein, determined on a consolidated basis for such Persons and their respective Subsidiaries) is generated by Person(s) that will become Subsidiary Guarantors (i.e., disregarding any Consolidated EBITDA generated by Subsidiaries of such Subsidiary Guarantors that are not (or will not become) Subsidiary Guarantors); (j) Investments in the form of loans and advances to officers, directors and employees in the ordinary course of business in an aggregate amount not to exceed at any time outstanding $5,000,000 (determined without regard to any write-downs or write-offs of such loans or advances); (k) Investments in the form of Restricted Payments permitted pursuant to Section 7.6;
105 174504702_2 (l) Guarantees permitted pursuant to Section 7.1; (m) non-cash consideration received in connection with Asset Dispositions expressly permitted by Section 7.5; (n) so long as no Event of Default shall have occurred and be continuing, other Investments made with any portion of the Available Amount; (o) Investments (including debt obligations and equity securities) received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (p) extensions of trade credit in the ordinary course of business; (q) deposits of cash made in the ordinary course of business to secure performance of operating leases; (r) Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition; (s) Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business; (t) advances made in connection with purchases of goods or services in the ordinary course of business; (u) Investments received in settlement of amounts due to Holdings or any of its Subsidiaries effected in the ordinary course of business or owing to Holdings or any of its Subsidiaries as a result of proceedings under Debtor Relief Laws involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of Holdings or its Subsidiaries; (v) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; and (w) Investments not otherwise permitted pursuant to this Section in an aggregate amount not to exceed $25,000,000 at any time outstanding; provided that, subject to Section 1.10, immediately before and immediately after giving pro forma effect to any such Investments and any Indebtedness incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing. For purposes of determining the amount of any Investment outstanding for purposes of this Section 7.3, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired (without adjustment for subsequent increases or decreases in the value of such Investment), but, except to the extent of any Investments made utilizing the Available Amount, after giving effect to any permanent repayments in cash of principal and/or payments in cash of interest in the case of any Investment in the form of a loan and any amount realized in respect of such Investment in the form of an equity Investment upon the sale, collection or return of capital (whether as a distribution, dividend, redemption or sale, but not to exceed the original amount invested).
106 174504702_2 Notwithstanding the foregoing or anything else herein to the contrary, Investments of all or any material portion of the Borrower’s “Software as a Service” business shall not be permitted pursuant this Section 7.3 other than Investments described in clause (b)(ii) of this Section 7.3. SECTION 7.4 Fundamental Changes. Merge, consolidate, amalgamate or enter into any similar combination with (including by division), or enter into any Asset Disposition of all or substantially all of its assets (whether in a single transaction or a series of transactions) with, any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except: (a) (i) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated, liquidated, dissolved, wound up or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving entity) or (ii) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or consolidated with or into any Subsidiary Guarantor (provided that when any Subsidiary Guarantor is merging, amalgamating, liquidating, dissolving, winding up or consolidating with another Subsidiary, such Subsidiary Guarantor shall be the continuing or surviving entity or the continuing or surviving entity shall become a Subsidiary Guarantor to the extent required under, and within the time period set forth in Section 6.13, with which the Borrower shall comply in connection with such transaction); (b) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a U.S. Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary that is a U.S. Subsidiary; (c) any Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up, division or otherwise) to the Borrower or any Subsidiary Guarantor; provided that, with respect to any such disposition by any Non-Guarantor Subsidiary, the consideration for such disposition shall not exceed the fair value of such assets; (d) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up, division or otherwise) to any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a U.S. Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor Subsidiary that is a U.S. Subsidiary; (e) Asset Dispositions permitted by Section 7.5 (other than clause (b) thereof); (f) any Wholly-Owned Subsidiary of the Borrower may merge with or into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with any acquisition permitted hereunder (including any Permitted Acquisition permitted pursuant to Section 7.3(i)); provided that in the case of any merger involving a Wholly-Owned Subsidiary that is a U.S. Subsidiary (other than a merger in which an Excluded Subsidiary is the surviving entity), (i) a Subsidiary Guarantor shall be the continuing or surviving entity or (ii) simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor and the Borrower shall comply with Section 6.13 in connection therewith; (g) any Person may merge with or into the Borrower or any of its Wholly-Owned Subsidiaries in connection with a Permitted Acquisition permitted pursuant to Section 7.3(i); provided that (i) in the case of a merger involving the Borrower or a Subsidiary Guarantor, the continuing or surviving Person shall be the Borrower or such Subsidiary Guarantor and (ii) the continuing or surviving Person shall be the Borrower or a Wholly-Owned Subsidiary of the Borrower; and
107 174504702_2 (h) any Subsidiary (other than the Borrower) may liquidate, wind-up or dissolve (or suffer any liquidation or dissolution) if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders. Notwithstanding the foregoing or anything else herein to the contrary, Asset Dispositions or any other transfer of all or any material portion of the Borrower’s “Software as a Service” business shall only be permitted pursuant this Section to the extent such Asset Disposition or transfer is permitted pursuant to clause (o) of Section 7.5. SECTION 7.5 Asset Dispositions. Make any Asset Disposition except: (a) the sale of inventory in the ordinary course of business; (b) the sale, transfer or other disposition of assets to the Borrower or any Subsidiary Guarantor pursuant to any other transaction permitted pursuant to Section 7.4; (c) the write-off, discount, sale or other disposition, in each case without recourse, of accounts receivable and similar obligations in the ordinary course of business, but only in connection with the compromise or collection thereof and not for financing purposes; (d) the disposition, termination or unwinding of any Hedge Agreement; (e) dispositions of cash and Cash Equivalents; (f) Asset Dispositions (i) between or among Credit Parties, (ii) by any Non-Guarantor Subsidiary to any Credit Party (provided that in connection with any new transfer, such Credit Party shall not pay more than an amount equal to the fair market value of such assets as determined in good faith by Holdings at the time of such transfer) and (iii) by any Non-Guarantor Subsidiary to any other Non- Guarantor Subsidiary; (g) the sale or other disposition of obsolete, worn-out or surplus assets no longer used or useful in the business of the Borrower or any of its Subsidiaries; (h) non-exclusive licenses and sublicenses of intellectual property rights in the ordinary course of business not interfering, individually or in the aggregate, in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole; (i) leases, subleases, licenses or sublicenses of real or personal property granted by the Borrower or any of its Subsidiaries to others in the ordinary course of business not detracting from the value of such real or personal property or interfering in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole; (j) Asset Dispositions in connection with Insurance and Condemnation Events; provided that the requirements of Section 2.4(b) are complied with in connection therewith; and (k) Asset Dispositions of property in the form of an Investment permitted pursuant to Section 7.3 (other than clause (m) thereof); (l) the expiration of intellectual property in accordance with its statutory term or the abandonment or lapse of intellectual property in the ordinary course of business, in each case in a manner
108 174504702_2 that does not, and could not reasonably be expected to, materially interfere with the business of Holdings and its Subsidiaries, taken as a whole; (m) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; (n) Asset Dispositions not otherwise permitted pursuant to this Section (excluding any Asset Disposition of all or any material portion of the assets comprising the Borrower’s “Software as a Service” business); provided that (i) at the time of such Asset Disposition, no Default or Event of Default shall exist or would result from such Asset Disposition and (ii) such Asset Disposition is made for at least fair market value as determined in good faith by Holdings and the consideration received shall be no less than 75% in cash or Cash Equivalents; provided that for purposes of this clause (ii), any Designated Non-Cash Consideration received in respect of such Asset Disposition having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (ii) and Section 7.13 that is at that time outstanding, not in excess of $5,000,000 shall be deemed to be cash; (o) Asset Dispositions of all or material portion of the assets comprising the Borrower’s “Software as a Service” business; provided that (i) at the time of such Asset Disposition, no Default or Event of Default shall exist or would result from such Asset Disposition, (ii) such Asset Disposition is made for at least fair market value as determined in good faith by Holdings and the consideration received shall be in cash or Cash Equivalents and (iii) the Borrower shall have complied with Section 2.4(b)(ii) without giving effect to the reinvestment rights set forth in Section 2.4(b)(iii) thereof; and (p) Sale Leaseback transactions permitted under Section 7.13. Notwithstanding the foregoing or anything else herein to the contrary, Asset Dispositions of all or any material portion of the Borrower’s “Software as a Service” business shall only be permitted pursuant to clause (o) of this Section. SECTION 7.6 Restricted Payments. Declare or make any Restricted Payments; provided that: (a) Holdings or any of its Subsidiaries may pay dividends in shares of its own Qualified Equity Interests; (b) any Subsidiary of the Borrower may make Restricted Payments to any Credit Party (and, if applicable, to other holders of its outstanding Qualified Equity Interests on a pro rata basis); (c) (i) any Non-Guarantor Subsidiary that is a U.S. Subsidiary may make Restricted Payments to any other Non-Guarantor Subsidiary that is a U.S. Subsidiary (and, if applicable, to other holders of its outstanding Equity Interests on a ratable basis) and (ii) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may make Restricted Payments to any other Non-Guarantor Subsidiary (and, if applicable, to other holders of its outstanding Equity Interests on a ratable basis); (d) the Borrower may declare and make (and each Subsidiary of the Borrower may declare and make to enable the Borrower to do the same) Restricted Payments to Holdings, so that Holdings may, and Holdings shall be permitted to: (i) pay any Taxes which are due and payable by the Credit Parties as part of a consolidated group; and
109 174504702_2 (ii) pay corporate operating (including directors’ and manager’s fees and expenses and any costs associated with compliance with the requirements of the Sarbanes-Oxley Act of 2002 (or any similar Applicable Law under any applicable jurisdiction) and the rules and regulations promulgated in connection therewith, costs relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, and the rules of national securities exchanges, as applicable to companies with listed equity or debt securities, listing fees, costs relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance, in each case, to the extent arising as a result of becoming, or otherwise associated with or attributable to being, a public company and which are consistent with past practice of Holdings and its Subsidiaries or otherwise typical for public companies) and overhead expenses (including rent, utilities and salary), in each case, in the ordinary course of business and reasonable fees and expenses of attorneys, accountants, appraisers and the like. (e) so long as no Event of Default has occurred and is continuing or would result therefrom, redeem, retire or otherwise acquire shares of its Equity Interests or options or other equity or phantom equity in respect of its Equity Interests from present or former officers, employees, directors or consultants (or their family members or trusts or other entities for the benefit of any of the foregoing) or make severance payments to such Persons in connection with the death, disability or termination of employment or consultancy of any such officer, employee, director or consultant (A) to the extent that such purchase is made with the Net Cash Proceeds of any offering of equity securities of or capital contributions to Holdings or (B) otherwise in an aggregate amount not to exceed $4,000,000 in any Fiscal Year; (f) so long as (x) no Default or Event of Default has occurred and is continuing or would result therefrom at the time of declaration thereof and (y) after giving effect thereto (and any Indebtedness incurred in connection therewith) on a Pro Forma Basis, the Total Net Leverage Ratio is not greater than 1.25 to 1.00, Holdings and its Subsidiaries may make Restricted Payments in an amount not to exceed the Available Amount; (g) so long as no Default or Event of Default has occurred and is continuing or would result therefrom and after giving effect thereto (and any Indebtedness incurred in connection therewith) on a Pro Forma Basis, the Total Net Leverage Ratio is not greater than 1.50 to 1.00, other Restricted Payments in an aggregate amount, taken together with all other Restricted Payments made pursuant to this clause and all Restricted Junior Debt Payments made pursuant to Section 7.9(b)(vi), not to exceed $25,000,000 during the term of this Agreement; and (h) Restricted Payments deemed to have occurred in connection with cashless exercises of warrants and options. Notwithstanding the foregoing or anything else herein to the contrary, Restricted Payments of all or any material portion of the Borrower’s “Software as a Service” business shall not be permitted pursuant this Section. SECTION 7.7 Transactions with Affiliates. Directly or indirectly enter into any transaction, including any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any of its Affiliates, with respect to any transaction or series of related transactions involving consideration in excess of $5,000,000, other than: (i) transactions permitted by Sections 7.1, 7.3, 7.4, 7.5, 7.6, 7.9, 7.13 and 7.15; (ii) transactions existing on the Closing Date and described on Schedule 7.7;
110 174504702_2 (iii) transactions among Credit Parties not prohibited hereunder; (iv) other transactions in the ordinary course of business on terms not less favorable, taken as a whole, to the Credit Parties and their respective Subsidiaries as would be obtained by it on a comparable arm’s-length transaction with an independent, unrelated third party as determined by Holdings in good faith and, other than purchases of Term Loans by Affiliated Lenders pursuant to Section 10.9(h), approved by a majority of Disinterested Members of the board of directors (or equivalent governing body) of Holdings; (v) employment, severance and other similar compensation arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business; (vi) payment of customary fees and reasonable out of pocket costs to, and indemnities for the benefit of, directors (or equivalent governing body), officers and employees of Holdings, the Borrower and its Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Borrower and its Subsidiaries; (vii) consummation of the Transactions and payment of the related Transaction Costs with respect thereto; and (viii) to the extent not otherwise prohibited by this Agreement or the other Loan Documents, the issuance by Holdings or any Subsidiary of Equity Interests to, or the receipt of any capital contribution from, Holdings or a Subsidiary. SECTION 7.8 Accounting Changes; Organizational Documents. (a) Change its Fiscal Year end, or make (without the consent of the Administrative Agent) any material change in its accounting treatment and reporting practices except as required by GAAP. (b) Amend, modify or change its Organizational Documents in any manner materially adverse to the rights or interests of the Lenders. SECTION 7.9 Payments and Modifications of Indebtedness. (a) Other than amendments, modifications or supplements that comply with the terms of Permitted Refinancing Indebtedness, amend, modify, waive or supplement (or permit the modification, amendment, waiver or supplement of) any of the terms or provisions of any Junior Indebtedness or any Indebtedness (other than the ABL Obligations which shall be governed by Section 7.12) in excess of the Threshold Amount in any respect which would materially and adversely affect the rights or interests of the Administrative Agent and Lenders hereunder or would violate the subordination terms thereof. (b) Cancel, forgive, make (directly or indirectly) any payment or prepayment or other distribution (whether in cash, securities or other property) on, or purchase, redeem or acquire for value (including, without limitation, (x) by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due and (y) at the maturity thereof) or defease or otherwise satisfy prior to the scheduled maturity thereof, any Junior Indebtedness (each, a “Restricted Junior Debt Payment”), except: (i) from the proceeds of Permitted Refinancing Indebtedness;
111 174504702_2 (ii) payments of regularly scheduled cash interest, expenses and indemnities and payment of principal on the scheduled maturity date of any Junior Indebtedness (other than any such payments prohibited by any subordination provisions applicable thereto); (iii) the conversion of any Junior Indebtedness to Qualified Equity Interests of Holdings; (iv) so long as (x) no Default or Event of Default has occurred and is continuing or would result therefrom and (y) after giving effect thereto (and any Indebtedness incurred in connection therewith) on a Pro Forma Basis, the Total Net Leverage Ratio is not greater than 1.25 to 1.00, the Borrower may make Restricted Junior Debt Payments in an amount not to exceed the Available Amount; (v) payments of interest in respect of Junior Indebtedness in the form of payment in kind interest constituting Indebtedness permitted pursuant to Section 7.1 (other than any such payments prohibited by any subordination provisions applicable thereto); and (vi) so long as no Default or Event of Default has occurred and is continuing or would result therefrom and after giving effect thereto (and any Indebtedness incurred in connection therewith) on a Pro Forma Basis, the Total Net Leverage Ratio is not greater than 1.50 to 1.00, other Restricted Payments in an aggregate amount, taken together with all other Restricted Junior Debt Payments made pursuant to this clause and all Restricted Payments made pursuant to Section 7.6(g), not to exceed $25,000,000. SECTION 7.10 No Further Negative Pledges; Restrictive Agreements. (a) Enter into, assume or be subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation, except (i) pursuant to this Agreement and the other Loan Documents, (ii) pursuant to the ABL Documents, or any documentation governing any Incremental Equivalent Indebtedness or Refinancing Equivalent Indebtedness; provided that such restrictions contained therein shall not prohibit or restrict the granting of Liens to secure the Secured Obligations, (iii) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 7.1(e) (provided that any such restriction contained therein relates only to the asset or assets financed thereby), (iv) customary restrictions contained in the Organizational Documents of any Non-Guarantor Subsidiary as of the Closing Date, (v) customary restrictions in connection with any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien); provided that this clause (a) shall not apply to any restrictions or conditions imposed by any agreement related to the refinancing of Indebtedness (including in the case of any Permitted Refinancing Indebtedness); provided that the terms of restrictions or conditions are not, taken as a whole, materially less favorable to the Lenders than the restrictions or conditions contained in the predecessor agreements for the Indebtedness being refinanced. (b) Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party or any Subsidiary thereof to (i) pay dividends or make any other distributions to any Credit Party or any Subsidiary on its Equity Interests or with respect to any other interest or participation in, or measured by, its profits, (ii) pay any Indebtedness or other obligation owed to any Credit Party or (iii) make loans or advances to any Credit Party, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents and (B) Applicable Law.
112 174504702_2 (c) Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party or any Subsidiary thereof to (i) sell, lease or transfer any of its properties or assets to any Credit Party or (ii) act as a Credit Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents, (B) Applicable Law, (C) any document or instrument governing Indebtedness incurred pursuant to Section 7.1(e) (provided that any such restriction contained therein relates only to the asset or assets acquired in connection therewith), (D) any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien), (E) obligations that are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of the Borrower, so long as such obligations are not entered into in contemplation of such Person becoming a Subsidiary, (F) customary restrictions contained in an agreement related to the sale of Property (to the extent such sale is permitted pursuant to Section 7.5) that limit the transfer of such Property pending the consummation of such sale, (G) customary restrictions in leases, subleases, licenses and sublicenses or asset sale agreements otherwise permitted by this Agreement so long as such restrictions relate only to the assets subject thereto and (H) customary provisions restricting assignment of any agreement entered into in the ordinary course of business. SECTION 7.11 Nature of Business. Engage in any business other than the businesses conducted by the Borrower and its Subsidiaries as of the Closing Date and businesses and business activities reasonably related, incidental or ancillary thereto or reasonably similar thereto or that are reasonable extensions, developments or expansions thereof or ancillary thereto. SECTION 7.12 Amendments of Other Documents. Amend, modify, waive or supplement (or permit modification, amendment, waiver or supplement of) any of the terms or provisions of (a) the Sunshine Acquisition Agreement, in any respect which would materially and adversely affect the rights or interests of the Administrative Agent and the Lenders hereunder, in each case, without the prior written consent of the Administrative Agent or (b) any of the ABL Documents in any respect which would contravene or violate the terms of the Closing Date Intercreditor Agreement. SECTION 7.13 Sale Leasebacks. Directly or indirectly become or remain liable as lessee or as guarantor or other surety with respect to any lease, whether an operating lease, a finance lease or a capital lease, of any Property (whether real, personal or mixed), whether now owned or hereafter acquired, (a) which any Credit Party or any Subsidiary thereof has sold or transferred or is to sell or transfer to a Person which is not another Credit Party or Subsidiary of a Credit Party or (b) which any Credit Party or any Subsidiary of a Credit Party intends to use for substantially the same purpose as any other Property that has been sold or is to be sold or transferred by such Credit Party or such Subsidiary to another Person which is not another Credit Party or Subsidiary of a Credit Party in connection with such lease (each of the foregoing, a “Sale Leaseback”), except (i) any such sale of any fixed or capital assets that is made for cash consideration in an amount not less than the cost of such fixed or capital asset and is consummated within 90 days after Holdings or such Subsidiary acquires or completes the construction of such fixed or capital asset, to the extent all Capital Lease Obligations, Attributable Indebtedness and Liens associated with such Sale Leaseback are permitted by Sections 7.1(e) and 7.2(i) (treating the property subject thereto as being subject to a Lien securing the related Attributable Indebtedness, in the case of a Sale Leaseback not accounted for as a Capital Lease Obligation); provided that for purposes of this Section 7.13, any Designated Non-Cash Consideration received in respect of such Sale Leaseback having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to Section 7.5(n) and this Section 7.13 that is at that time outstanding, not in excess of $5,000,000 shall be deemed to be cash and (ii) Sale Leasebacks with respect to real property or equipment having a fair market value in the aggregate not to exceed $25,000,000. For the avoidance of doubt, the Net Cash Proceeds
113 174504702_2 received from a Sale Leaseback pursuant to subsection (ii) of this Section 7.13 are subject to the mandatory prepayment provisions of Section 2.4(b). SECTION 7.14 Total Net Leverage Ratio. As of the last day of each fiscal quarter of the Borrower then most recently ended for which financial statements of the type described in Section 6.1(a) or Section 6.1(b), as applicable, have been delivered (or are required to have been delivered), commencing with the fiscal quarter ending June 30, 2021, permit the Total Net Leverage Ratio to be greater than 3.00 to 1.00. SECTION 7.15 Limitations on Holdings. Permit Holdings to: (a) hold any assets other than (i) the Equity Interests of the Borrower (and/or intercompany advances to the Borrower), (ii) assets, properties or rights that are not capable of being sold, assigned, transferred or conveyed to the Borrower without the consent of any other Person, or if such assignment or attempted assignment would constitute a breach thereof, or a violation of any Applicable Law, (iii) agreements relating to the issuance, sale, purchase, repurchase or registration of securities of Holdings, (iv) minute books and other corporate books and records of Holdings and (v) other miscellaneous non- material assets; (b) incur any Indebtedness or have any other material liabilities other than (i) the Indebtedness under the Loan Documents, (ii) tax liabilities arising in the ordinary course of business, (iii) Guarantees of Indebtedness or other obligations of any Borrower and/or any Subsidiary that are otherwise permitted under Section 7.1, (iv) corporate, administrative and operating expenses in the ordinary course of business and (v) liabilities under any contracts or agreements described in clauses (a)(ii) and (iii) above; or (c) engage in any activities or business, other than (i) performing its obligations under the Loan Documents and other Indebtedness and Guarantees permitted by clause (b) of this Section 7.15, (ii) issuing shares of its own Equity Interests (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Equity Interests), (iii) holding the assets and incurring the liabilities described in this Section 7.15 and activities incidental and related thereto, (iv) filing Tax reports and paying Taxes and other customary obligations in the ordinary course of business (and contesting any Taxes); (v) preparing reports to Governmental Authorities and to its shareholders; (vi) holding director and shareholder meetings, preparing organizational records and other organizational activities required to maintain its separate organizational structure or to comply with Applicable Law; (vii) making any filings required to be made with the SEC or otherwise required for public companies and otherwise complying with Applicable Law (including with respect to the maintenance of its existence); (viii) holding (A) cash, Cash Equivalents and other assets received in connection with permitted distributions or dividends received from, or permitted Investments or permitted dispositions made by, any of its Subsidiaries or permitted contributions to the capital of, or proceeds from the issuance of Equity Interests of, Holdings pending the application thereof and (B) the proceeds of Indebtedness permitted by Section 7.1; (ix) opening and maintaining bank accounts; (x) providing indemnification for its officers, directors, members of management, employees and advisors or consultants in the ordinary course of business; (xi) participating in tax, accounting and other administrative matters in the ordinary course of business; (xii) making and holding Investments of the type permitted under Section 7.3(j); and (xiii) activities incidental and related to any of the foregoing. SECTION 7.16 Australian Tax Matters. No Credit Party will, nor permit any Australian Subsidiary to, become a member of an Australian Tax Consolidated Group without entering into an Australian TSA and an Australian TFA. The Australian TSA and Australian TFA may be amended or replaced from time to time, to the extent necessary, to ensure it remains a valid Australian TSA or an Australian TFA.
114 174504702_2 ARTICLE VIII DEFAULT AND REMEDIES SECTION 8.1 Events of Default. Each of the following shall constitute an Event of Default: (a) Default in Payment of Principal of Term Loans. The Borrower or any other Credit Party shall default in any payment of principal of any Term Loan when and as due (whether at maturity, by reason of acceleration or otherwise), including, without limitation, any failure to prepay the Initial Term Loans in accordance with Section 2.4(b)(vii). (b) Other Payment Default. The Borrower or any other Credit Party shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Term Loan or the payment of any other Obligation, and such default shall continue for a period of five (5) Business Days. (c) Misrepresentation. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party or any Subsidiary thereof in this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party or any Subsidiary thereof in this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made. (d) Default in Performance of Certain Covenants. Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any covenant or agreement contained in Section 6.3(a), 6.4, 6.14, 6.17 or 6.18 or Article VII. (e) Default in Performance of Other Covenants and Conditions. Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for in this Section 8.1) or any other Loan Document and such default shall continue for a period of thirty (30) days after the Administrative Agent’s delivery of written notice thereof to the Borrower. (f) Indebtedness Cross-Default. Any Credit Party or any Subsidiary thereof shall (i) default in the payment of the ABL Obligations (or any Permitted Refinancing Indebtedness in respect thereof) or any Indebtedness (other than the Term Loans) the aggregate principal amount (including undrawn committed or available amounts), or with respect to any Hedge Agreement, the Hedge Termination Value, each of which is in excess of the Threshold Amount beyond the period of grace if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to the ABL Obligations (or any Permitted Refinancing Indebtedness in respect thereof) or any Indebtedness (other than the Term Loans) the aggregate principal amount (including undrawn committed or available amounts), or with respect to any Hedge Agreement, the Hedge Termination Value, each of which is in excess of the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice and/or lapse of time, if required, any such Indebtedness to (A) become due, or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay,
115 174504702_2 defease or redeem such Indebtedness to be made, prior to its stated maturity (any applicable grace period having expired) or (B) be cash collateralized; provided that no such event under the ABL Documents (or Permitted Refinancing Indebtedness in respect thereof) shall constitute an Event of Default under this clause (f) (other than an event of default thereunder which constitutes an independent Event of Default under this Agreement without regard to the provisions of the ABL Documents (or Permitted Refinancing Indebtedness in respect thereof)) until the earliest to occur of (x) the conclusion of a 30-day grace period after such event or circumstance (but only if such event or circumstance has not been cured or waived prior to the expiration of such 30-day period), (y) the acceleration of the Indebtedness under the ABL Documents (or Permitted Refinancing Indebtedness in respect thereof) and/or termination of the commitments under the ABL Documents (or Permitted Refinancing Indebtedness in respect thereof) as a result of such event or (z) the exercise of any remedies by the ABL Administrative Agent or collateral agent or any lenders holding ABL Obligations (or Permitted Refinancing Indebtedness in respect thereof) in respect of any Collateral. (g) Change in Control. Any Change in Control shall occur. (h) Voluntary Bankruptcy Proceeding. Any Credit Party or any Subsidiary thereof shall (i) commence a voluntary case under any Debtor Relief Laws, (ii) file a petition seeking to take advantage of any Debtor Relief Laws, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under any Debtor Relief Laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, an administrator, a Controller, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due or (vi) make a general assignment for the benefit of creditors. (i) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Credit Party or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under any Debtor Relief Laws, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Credit Party or any Subsidiary thereof or for all or any substantial part of its assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding under such Debtor Relief Laws shall be entered. (j) Failure of Agreements. Any material provision of this Agreement or any material provision of any other Loan Document shall for any reason cease (other than solely as the result of an action or failure to act on the part of the Administrative Agent) to be valid and binding on any Credit Party or any Subsidiary thereof party thereto or any such Person shall so state in writing, or any Loan Document shall for any reason cease to create a valid and perfected first priority Lien (subject to Permitted Liens) on, or security interest in, any material portion of the Collateral purported to be covered thereby, in each case other than in accordance with the express terms hereof or thereof. (k) ERISA Events. The occurrence of any of the following events: (i) any Credit Party or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Sections 412 or 430 of the Code, any Credit Party or any ERISA Affiliate is required to pay as contributions thereto which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (ii) a Termination Event or (iii) any Credit Party or any ERISA Affiliate makes a complete or partial withdrawal from any Multiemployer Plan and the Multiemployer Plan notifies such Credit Party or ERISA Affiliate that such entity has incurred a withdrawal liability which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (l) Judgment. One or more judgments, orders or decrees for the payment of money that individually or in the aggregate (to the extent not paid or covered by insurance or third party indemnification
116 174504702_2 as to which the relevant insurance company or indemnifying Person has acknowledged the claim and has not disputed coverage or indemnification, as the case may be) are in excess of the Threshold Amount shall be entered against any Credit Party or any Subsidiary thereof by any court and continues without having been discharged, vacated or stayed for a period of thirty (30) consecutive days after the entry thereof. (m) Intercreditor Agreements and Subordination Terms. (i) The Closing Date Intercreditor Agreement shall be invalidated or otherwise cease to constitute the legal, valid and binding obligations of the ABL Administrative Agent, enforceable in accordance with its terms (to the extent that any Indebtedness held by such party remains outstanding), (ii) any Acceptable Junior Lien Intercreditor Agreement shall be invalidated or otherwise cease to constitute the legal, valid and binding obligations of the parties thereto, enforceable in accordance with its terms (to the extent that any Indebtedness held by such party remains outstanding) or (iii) the Borrower or any other Credit Party shall, directly or indirectly, disavow or contest in any manner the effectiveness, validity or enforceability of any of the provisions of the Closing Date Intercreditor Agreement or any Acceptable Junior Lien Intercreditor Agreement or that such provisions exist for the benefit of the Secured Parties; (iv) any of the Secured Obligations for any reason shall cease to be “senior debt,” “senior indebtedness,” “designated senior debt” or “senior secured financing” (or any comparable term) under, and as defined in, the documentation governing any Subordinated Indebtedness that is subordinated (in terms of payment or lien priority) to the Secured Obligations, (v) the subordination provisions set forth in the documentation for any Subordinated Indebtedness that is subordinated (in terms of payment or lien priority) to the Secured Obligations shall, in whole or in part, cease to be effective or cease to be legally valid, binding and enforceable against the holders of any Subordinated Indebtedness, if applicable, or (vi) any Credit Party or any Subsidiary of any Credit Party, shall assert any of the foregoing in writing. SECTION 8.2 Remedies. Upon the occurrence and during the continuance of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower: (a) Acceleration; Termination of Credit Facility. Terminate the Term Loan Commitments and declare the principal of and interest on the Term Loans at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrower to request borrowings; provided that upon the occurrence of an Event of Default specified in Section 8.1(h) or (i), the Credit Facility shall be automatically terminated and all Obligations shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any other Loan Document to the contrary notwithstanding. (b) General Remedies. Exercise on behalf of the Secured Parties all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Secured Obligations. SECTION 8.3 Rights and Remedies Cumulative; Non-Waiver; Etc. (a) The enumeration of the rights and remedies of the Administrative Agent (including in its capacity as the Australian Security Trustee) and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now
117 174504702_2 or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. (b) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.4 (subject to the terms of Section 3.6), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clauses (b) and (c) of the preceding proviso and subject to Section 3.6, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders. SECTION 8.4 Crediting of Payments and Proceeds. In the event that the Obligations have been accelerated pursuant to Section 8.2 or the Administrative Agent or any Lender has exercised any remedy set forth in this Agreement or any other Loan Document, all payments received on account of the Secured Obligations and all net proceeds from the enforcement of the Secured Obligations shall, subject to the provisions of the Closing Date Intercreditor Agreement and any Acceptable Junior Lien Intercreditor Agreement, be applied by the Administrative Agent as follows: First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such; Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders under the Loan Documents, including attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them; Third, to payment of that portion of the Secured Obligations constituting accrued and unpaid interest on the Term Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them; Fourth, to payment of that portion of the Secured Obligations constituting unpaid principal of the Term Loans and Secured Hedge Obligations and Secured Cash Management Obligations then outstanding, ratably among the holders of such obligations in proportion to the respective amounts described in this clause Fourth payable to them; and Last, the balance, if any, after all of the Secured Obligations have been paid in full, to the Borrower or as otherwise required by Applicable Law.
118 174504702_2 Notwithstanding the foregoing, Secured Cash Management Obligations and Secured Hedge Obligations shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable holders thereof following such acceleration or exercise of remedies and at least three (3) Business Days prior to the application of the proceeds thereof. Each holder of Secured Cash Management Obligations or Secured Hedge Obligations that, in either case, is not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto. SECTION 8.5 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Credit Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 3.3 and 10.3) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 3.3 and 10.3. SECTION 8.6 Credit Bidding. (a) The Administrative Agent, on behalf of itself and the Secured Parties, shall have the right, exercisable at the direction of the Required Lenders, to credit bid and purchase for the benefit of the Administrative Agent and the Secured Parties all or any portion of Collateral at any sale thereof conducted by the Administrative Agent under the provisions of the UCC, including pursuant to Sections 9-610 or 9- 620 of the UCC, at any sale thereof conducted under the provisions of the United States Bankruptcy Code, including Section 363 thereof, or a sale under a plan of reorganization, or at any other sale or foreclosure conducted by the Administrative Agent (whether by judicial action or otherwise) in accordance with Applicable Law. Such credit bid or purchase may be completed through one or more acquisition vehicles formed by the Administrative Agent to make such credit bid or purchase and, in connection therewith, the Administrative Agent is authorized, on behalf of itself and the other Secured Parties, to adopt documents providing for the governance of the acquisition vehicle or vehicles, and assign the applicable Secured Obligations to any such acquisition vehicle in exchange for Equity Interests and/or debt issued by the applicable acquisition vehicle (which shall be deemed to be held for the ratable account of the applicable Secured Parties on the basis of the Secured Obligations so assigned by each Secured Party); provided that
119 174504702_2 any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof, shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 10.2. (b) Each Lender hereby agrees, on behalf of itself and each of its Affiliates that is a Secured Party, that, except as otherwise provided in any Loan Document or with the written consent of the Administrative Agent and the Required Lenders, it will not take any enforcement action, accelerate obligations under any of the Loan Documents, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. SECTION 8.7 Borrower’s Right to Cure. Notwithstanding anything to the contrary contained in Section 8.1, in the event of any Event of Default for failure to comply with Section 7.14 at the end of any fiscal quarter, until the expiration of the tenth (10th) Business Day after the day on which the financial statements and Compliance Certificate are required to be delivered for such fiscal quarter (the “Cure Expiration Date”), the Net Cash Proceeds from any cash equity contribution (which equity shall be either common Equity Interests or other Qualified Equity Interests) made to Holdings and contributed in cash to the common Equity Interests or other Qualified Equity Interests of the Borrower after the end of such fiscal quarter will, at the written request of the Borrower, be included in the calculation of Consolidated EBITDA solely for the purpose of determining compliance with Section 7.14 at the end of such fiscal quarter and applicable subsequent periods that include such fiscal quarter (any such equity contribution so included in the calculation of Consolidated EBITDA, a “Specified Equity Contribution”); provided that (a) in each four consecutive fiscal quarter period there will be a period of at least two fiscal quarters in which no Specified Equity Contribution is made, (b) no more than four (4) Specified Equity Contributions may be made during the term of this Agreement, (c) the amount of any Specified Equity Contribution shall be no more than the amount required to cause Holdings and the Borrower to be in pro forma compliance with the financial covenant set forth in Section 7.14 for such fiscal quarter, (d) Consolidated EBITDA shall be increased by an amount equal to such Specified Equity Contribution solely for the purpose of determining compliance with the financial covenant set forth in Section 7.14 with respect to any Reference Period that includes the fiscal quarter for which such Specified Equity Contribution was made and not for any other purpose under this Agreement (including for purposes of determining the availability or amount of any covenant baskets or carve-outs, pricing or for any other purpose), (e) there shall be no pro forma reduction in Indebtedness with the proceeds of any Specified Equity Contribution for determining compliance with Section 7.14 for the Reference Period ended as of the end of the fiscal quarter for which the Specified Equity Contribution was made (but any such reduction shall be given effect in calculations of Section 7.14 in subsequent Reference Periods that include such fiscal quarter). Holdings shall, on or prior to the making of any Specified Equity Contribution, give the Administrative Agent a written notice identifying the aggregate amount of such Specified Equity Contribution to be used to test compliance with Section 7.14 for such fiscal quarter. Upon the making of a Specified Equity Contribution, the financial covenant set forth in Section 7.14 shall be recalculated giving effect to the increase in Consolidated EBITDA; provided that nothing in this Section 8.7 shall waive any Default or Event of Default that exists pursuant to Section 7.14 until such recalculation. If, after giving effect to such recalculation, Holdings and the Borrower are in compliance with the financial covenant set forth in Section 7.14 as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, then the applicable Default or Event of Default that had occurred shall be deemed cured and not to have occurred for all purposes of this Agreement and the other Loan Documents. Notwithstanding anything to the contrary contained in Article VIII, neither the Administrative Agent nor or any Lender may exercise any rights or remedies under Section 8.2 (or under any other Loan Document) on the basis of any actual or purported Event of Default for failure to comply with Section 7.14 until and unless the Cure Expiration Date has occurred without a Specified Equity Contribution having been contributed and designated; provided that
120 174504702_2 during the period set forth in this sentence, an Event of Default shall nevertheless be deemed to have occurred and be continuing for all other purposes under the Loan Documents. ARTICLE IX THE ADMINISTRATIVE AGENT SECTION 9.1 Appointment and Authority. (a) Each of the Lenders hereby irrevocably appoints, designates and authorizes Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Except as provided in Sections 9.6 and 9.9, the provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and their respective Related Parties, and neither Holdings nor any Subsidiary thereof shall have rights as a third-party beneficiary of any of such provisions. (b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including each holder of Secured Hedge Obligations and Secured Cash Management Obligations) hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Credit Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto (including to enter into additional Loan Documents or supplements to existing Loan Documents on behalf of the Secured Parties). In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to this Article IX for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article and Article X (including Section 10.3, as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto. (c) It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. SECTION 9.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust, financial advisory, underwriting, capital markets or other business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice to or consent of the Lenders with respect thereto. SECTION 9.3 Exculpatory Provisions.
121 174504702_2 (a) The Administrative Agent, the Arranger and their respective Related Parties shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder and thereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent, the Arranger and their respective Related Parties: (i) shall not be subject to any agency, trust, fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing; (ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may affect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; (iii) shall not, have any duty to disclose, and shall not be liable for the failure to disclose to any Lender or any other Person, any credit or other information concerning the business, prospects, operations, properties, assets, financial or other condition or creditworthiness of Holdings, the Borrower or any of their respective Subsidiaries or Affiliates that is communicated to, obtained by or otherwise in the possession of the Person serving as the Administrative Agent, the Arranger or their respective Related Parties in any capacity, except for notices, reports and other documents that are required to be furnished by the Administrative Agent to the Lenders pursuant to the express provisions of this Agreement; and (iv) shall not be required to account to any Lender for any sum or profit received by the Administrative Agent for its own account. (b) The Administrative Agent, the Arranger and their respective Related Parties shall not be liable for any action taken or not taken by it under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 10.2 and Section 8.2) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default and indicating that such notice is a “Notice of Default” is given to the Administrative Agent by Holdings, the Borrower or a Lender. (c) The Administrative Agent, the Arranger and their respective Related Parties shall not be responsible for or have any duty or obligations to any Lender or Participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the
122 174504702_2 sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. (d) The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions, Affiliated Lenders (including those with respect to Designated Affiliated Lenders) or Net Short Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution, Affiliated Lender, Designated Affiliated Lender or Net Short Lender or (y) have any liability with respect to or arising out of any assignment or participation of Term Loans, or disclosure of confidential information, to any Disqualified Institution, Affiliated Lender (including any Designed Affiliated Lender) or Net Short Lender. SECTION 9.4 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, shall be fully protected in relying and shall not incur any liability for relying upon, any notice, request, certificate, consent, communication, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person, including any certification pursuant to Section 9.9. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Term Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Term Loan. The Administrative Agent may consult with legal counsel (who may be counsel for Holdings and the 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. Each Lender that has signed this Agreement or a signature page to an Assignment and Assumption or an Affiliated Lender Assignment and Assumption, as applicable, or any other Loan Document pursuant to which it is to become a Lender hereunder shall be deemed to have consented to, approved and accepted and shall deemed satisfied with each document or other matter required thereunder to be consented to, approved or accepted by such Lender or that is to be acceptable or satisfactory to such Lender. SECTION 9.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facility as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub- agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents. SECTION 9.6 Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower and subject to the consent (not to be unreasonably withheld or delayed) of
123 174504702_2 the Borrower (provided no Event of Default under Section 8.1(a), (b), (h) or (i) has occurred and is continuing at the time of such resignation), to appoint a successor, which shall be a bank or financial institution reasonably experienced in serving as administrative agent on syndicated bank facilities with an office in the United States, or an Affiliate of any such bank or financial institution with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender, an Affiliated Lender, a Disqualified Institution or a Net Short Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date. (b) If the Person serving as Administrative Agent is a Defaulting Lender, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person, remove such Person as Administrative Agent and, in consultation with the Borrower and subject to the consent of the Borrower (provided no Event of Default under Section 8.1(a), (b), (h) or (i) has occurred and is continuing at the time of such removal), appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date. (c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.3 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent or relating to its duties as Administrative Agent that are carried out following its retirement or removal, including, without limitation, any actions taken with respect to acting as collateral agent or otherwise holding any Collateral on behalf of any of the Secured Parties or in respect of any actions taken in connection with the transfer of agency to a replacement or successor Administrative Agent. (d) Notwithstanding anything to the contrary herein, no Disqualified Institution may be appointed as a successor Administrative Agent.
124 174504702_2 SECTION 9.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that none of the Administrative Agent, the Arranger or any of their respective Related Parties has made any representations or warranties to it and that no act taken or failure to act by the Administrative Agent, the Arranger or any of their respective Related Parties including any consent to, and acceptance of any assignment or review of the affairs of Holdings, the Borrower and their Subsidiaries or Affiliates shall be deemed to constitute a representation or warranty of the Administrative Agent, the Arranger or any of their respective Related Parties to any Lender or any other Secured Party as to any matter, including whether the Administrative Agent, the Arranger or any of their respective Related Parties has disclosed material information in its (or its Related Parties’) possession. Each Lender expressly acknowledges, represents and warrants to the Administrative Agent and the Arranger that (a) the Loan Documents set forth the terms of a commercial lending facility, (b) it is engaged in making, acquiring, purchasing or holding commercial loans in the ordinary course and is entering into this Agreement and the other Loan Documents to which it is a party as a Lender for the purpose of making, acquiring, purchasing and/or holding the commercial loans set forth herein as may be applicable to it, and not for the purpose of making, acquiring, purchasing or holding any other type of financial instrument, (c) it is sophisticated with respect to decisions to make, acquire, purchase or hold the commercial loans applicable to it and either it or the Person exercising discretion in making its decisions to make, acquire, purchase or hold such commercial loans is experienced in making, acquiring, purchasing or holding commercial loans, (d) it has, independently and without reliance upon the Administrative Agent, the Arranger, any other Lender or any of their respective Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and appraisal of, and investigations into, the business, prospects, operations, property, assets, liabilities, financial and other condition and creditworthiness of Holdings, the Borrower and their Subsidiaries, all applicable bank or other regulatory Applicable Laws relating to the Transactions and the transactions contemplated by this Agreement and the other Loan Documents and (e) it has made its own independent decision to enter into this Agreement and the other Loan Documents to which it is a party and to extend credit hereunder and thereunder. Each Lender also acknowledges that (i) it will, independently and without reliance upon the Administrative Agent, the Arranger or any other Lender or any of their respective Related Parties (A) continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder based on such documents and information as it shall from time to time deem appropriate and its own independent investigations and (B) continue to make such investigations and inquiries as it deems necessary to inform itself as to Holdings, the Borrower and their Subsidiaries and (ii) it will not assert any claim in contravention of this Section 9.7. SECTION 9.8 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, arrangers or bookrunners listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder, but each such Person shall have the benefit of the indemnities and exculpatory provisions hereof. SECTION 9.9 Collateral and Guaranty Matters. (a) Each of the Lenders (including in its or any of its Affiliate’s capacities as a holder of Secured Hedge Obligations and Secured Cash Management Obligations) irrevocably authorize the Administrative Agent, at its option and in its discretion: (i) to release any Lien on any Collateral granted to or held by the Administrative Agent, for the ratable benefit of the Secured Parties, under any Loan Document (A) upon the payment in full of all Secured Obligations (other than (1) contingent indemnification obligations and (2) Secured Cash Management Obligations or Secured Hedge Obligations as to which arrangements satisfactory to the applicable holders thereof shall have been made), (B) that is sold
125 174504702_2 or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition to a Person other than a Credit Party permitted under the Loan Documents, as certified by the Borrower or (C) if approved, authorized or ratified in writing by the Required Lenders in accordance with Section 10.2; provided that any release of all or substantially all of the Collateral shall be subject to Section 10.2(i); (ii) to subordinate any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien permitted pursuant to Section 7.2(i); provided that the subordination of all or substantially all of the Collateral shall be subject to Section 10.2(i); and (iii) to release any Subsidiary Guarantor from its obligations under any Loan Documents if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents, as certified by the Borrower; provided that the release of Subsidiary Guarantors comprising all or substantially all of the credit support for the Secured Obligations shall be subject to Section 10.2(h). In the case of any sale, transfer or disposal of any property constituting Collateral in a transaction constituting an Asset Disposition permitted pursuant to Section 7.5 or sale and lease back transaction pursuant to Section 7.13 (in each case, other than to a Credit Party), the Liens created by any of the Security Documents on such property shall be automatically released without need for further action by any Person. In addition, in each case as specified in this Section 9.9, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Credit Party such documents as such Credit Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty Agreement and each applicable Security Document, in each case, in accordance with the terms of the Loan Documents and this Section 9.9 as certified by the Borrower; provided, that, in connection with, and as a condition to the execution and delivery of, any such documents so requested by any Credit Party, upon the request of the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer certifying that the relevant transaction has been consummated in compliance with the terms of this Agreement, which certificate may be relied upon by the Administrative Agent without further investigation or action. (b) The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral. SECTION 9.10 Secured Hedge Obligations and Secured Cash Management Obligations. No holder of any Secured Hedge Obligations or Secured Cash Management Obligations that obtains the benefits of Section 8.4 or any Collateral by virtue of the provisions hereof or of any Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral), or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty Agreement or any Security Document, other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Cash Management Obligations and Secured Hedge Obligations unless the Administrative Agent has received written notice of such Secured Cash Management Obligations and Secured Hedge Obligations, together
126 174504702_2 with such supporting documentation as the Administrative Agent may request, from the applicable holders thereof. The Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Hedge Obligations and Secured Cash Management Obligations in the case of the Term Loan Maturity Date. SECTION 9.11 Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true: (i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Term Loans, the Term Loan Commitments or this Agreement; (ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Term Loans, the Term Loan Commitments and this Agreement; (iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Term Loans, the Term Loan Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Term Loans, the Term Loan Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Term Loans, the Term Loan Commitments and this Agreement; or (iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender. (b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that none of the Administrative Agent and its Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Term Loans, the Term Loan Commitments and this Agreement
127 174504702_2 (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto). SECTION 9.12 Australian Security Trust Deed. (a) Upon the execution of the Australian Security Trust Deed, the Secured Parties appoint the Australian Security Trustee under the terms of the Australian Security Trust Deed to act as their trustee under and in relation to the Australian Security Documents and to hold the assets subject to the security thereby created as trustee for the Secured Parties on trust and on the terms contained in the Australian Security Documents and each Secured Party authorizes the Australian Security Trustee under the terms of the Australian Security Trust Deed to exercise such rights, remedies, powers and discretions as are specifically delegated to the Australian Security Trustee by the terms of the Australian Security Documents, together with all such rights, remedies, powers and discretions as are incidental thereto and the Australian Security Trustee hereby accepts that appointment. (b) Upon the execution of the Australian Security Trust Deed, each Secured Party: (i) acknowledges that it is aware of, and consent to, the terms of the Australian Security Trust Deed; (ii) agrees to comply with and be bound by the Australian Security Trust Deed as a Beneficiary (to be defined in the Australian Security Trust Deed); (iii) acknowledges that it has received a copy of the Australian Security Trust Deed together with the other information which it has required in connection with the Australian Security Trust Deed and this Agreement; (iv) without limiting the general application of paragraph (i) above, acknowledges and agrees: (A) to the limitations and releases of the Australian Security Trustee’s liabilities; (B) that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with the Australian Security Trust Deed and Australian Security Documents; (C) that it, its assigns and successors, is bound by each consent, approval, waiver, amendment or other decision by the Administrative Agent or any instruction to the Australian Security Trustee by the Administrative Agent unless revoked in accordance with terms of the Australian Security Trust Deed; (D) to provide the indemnities contained in the Australian Security Trust Deed; and (v) without limiting the general application of paragraph (i) above, for consideration received, irrevocably appoints as its attorney each person who under the terms of the Australian Security Trust Deed is appointed an attorney of a Beneficiary (to be defined in the Australian Security Trust Deed) on the same terms and for the same purposes as contained in the Australian Security Trust Deed.
128 174504702_2 (c) The Administrative Agent shall provide a copy of the execution form of the Australian Security Trust Deed to each Secured Party prior to execution of that document by the parties to it. (d) The Administrative Agent may resign from its capacity as Australian Security Trustee at any time in accordance with the Australian Security Trust Deed. (e) This Section is executed as a deed poll in favor of the Australian Security Trustee and each Beneficiary (to be defined in the Australian Security Trust Deed) from time to time. The law of New South Wales governs this Section 9.12 and the parties submit to the non-exclusive jurisdiction of the courts of New South Wales and of the Commonwealth of Australia in relation to this Section 9.12. ARTICLE X MISCELLANEOUS SECTION 10.1 Notices. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows: If to the Borrower: c/o Thryv, Inc. 2200 West Airfield Drive P.O. Box 619810 DFW Airport, Texas 75261 Attn: KJ Christopher E-mail: Kj.Christopher@thryv.com With copies to: Weil, Gotshal & Manges LLP 767 Fifth Ave. New York, New York 10153 Attention of: Andrew Colao Telephone No.: (212) 310 - 8830 Facsimile No.: (212) 310 - 8007 E-mail: andrew.colao@weil.com If to Wells Fargo, as Administrative Agent: Wells Fargo Bank, National Association MAC D1109-019 1525 West W.T. Harris Blvd. Charlotte, NC 28262 Attention of: Syndication Agency Services Telephone No.: (704) 590-2706 Facsimile No.: (844) 879-5899
129 174504702_2 With copies to: Wells Fargo Bank, National Association MAC D1086-074 550 South Tryon Street, 7th Floor Charlotte, NC 28202-4200 Attention of: Monica Trautwein Telephone No.: (704) 715-6877 E-mail: Monica.Trautwein@wellsfargo.com And solely in the case of any DQ List supplements or updates or Section 10.9(h)(vi) notices: Wells Fargo Bank, National Association 550 South Tryon Street, 4th Floor Charlotte, North Carolina 28202-4200 MAC D1086-041 Attention of: Phil Waldier Email: phillip.waldier@wellsfargo.com If to any Lender: To the address of such Lender set forth on the Register with respect to deliveries of notices and other documentation that may contain material non-public information. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b). (b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or other communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
130 174504702_2 (c) Administrative Agent’s Office. The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrower and the Lenders, as the Administrative Agent’s Office referred to herein, to which payments due are to be made and at which Term Loans will be disbursed. (d) Change of Address, Etc. Each of Holdings, the Borrower or the Administrative Agent may change its address or other contact information for notices and other communications hereunder by notice to the other parties hereto. Any Lender may change its address or facsimile number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. (e) Platform. (i) Each Credit Party and each Lender agrees that the Administrative Agent may, but shall not be obligated to, make the Borrower Materials available to the Lenders by posting the Borrower Materials on the Platform. The Administrative Agent may make the DQ List available on a confidential basis in accordance with Section 10.10 to any Lender who specifically requests a copy thereof, and such Lender may provide such DQ List to any potential assignee or participant who agrees to keep such list confidential in accordance with Section 10.10 solely for the purpose of permitting such Person to verify whether such Person (or any Affiliate thereof) is a Disqualified Institution. (ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the accuracy or completeness of the Borrower Materials or the adequacy of the Platform, and expressly disclaim liability for errors or omissions in the Borrower Materials. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Borrower Materials or the Platform. Although the Platform is secured pursuant to generally-applicable security procedures and policies implemented or modified by the Administrative Agent and its Related Parties, each of the Lenders and the Borrower acknowledges and agrees that distribution of information through an electronic means is not necessarily secure in all respects, the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) are not responsible for approving or vetting the representatives, designees or contacts of any Lender that are provided access to the Platform and that there may be confidentiality and other risks associated with such form of distribution. Each of the Borrower and each Lender party hereto understands and accepts such risks. In no event shall the Agent Parties have any liability to any Credit Party, any Lender or any other Person or entity for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Credit Party’s or the Administrative Agent’s transmission of communications through the Internet (including the Platform), except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided that in no event shall any Agent Party have any liability to any Credit Party, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages, losses or expenses (as opposed to actual damages, losses or expenses). (f) Private Side Designation. Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States Federal and state securities Applicable Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain
131 174504702_2 material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities Applicable Laws. SECTION 10.2 Amendments, Waivers and Consents. Except as set forth below or as specifically provided in any Loan Document (including Section 3.8(c)), any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing and approved by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrower; provided, that no amendment, waiver or consent shall: (a) increase or extend the Term Loan Commitment of any Lender (or reinstate any Term Loan Commitment terminated pursuant to Section 8.2) or increase the amount of Term Loans of any Lender, in any case, without the written consent of such Lender, it being understood that no amendment, modification or waiver of, or consent to departure from, any condition precedent, representation, warranty, covenant, Default or Event of Default, mandatory prepayment or mandatory reduction of the Term Loan Commitments shall, in and of itself, constitute an increase in the Term Loan Commitment of any Lender; (b) waive, extend or postpone any date fixed by this Agreement or any other Loan Document for any payment of principal (it being understood that a waiver of a mandatory prepayment under Section 2.4(b) shall only require the consent of the Required Lenders), interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby; (c) reduce the principal of, or the rate of interest specified herein on, any Term Loan or (subject to clauses (ii) and (viii) of the proviso set forth in the paragraph below) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby; provided that only the consent of the Required Lenders shall be necessary (i) to waive any obligation of the Borrower to pay interest at the rate set forth in Section 3.1(b) during the continuance of an Event of Default or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Term Loan or to reduce any fee payable hereunder; (d) change Section 3.6 or Section 8.4 (or amend any other term of the Loan Documents that would have the effect of changing Section 3.6 or Section 8.4) in a manner that would alter the pro rata sharing of payments or order of application required thereby without the written consent of each Lender directly and adversely affected thereby; (e) change Section 2.4(b)(viii) (or amend any other term of the Loan Documents that would have the effect of changing Section 2.4(b)(viii)) in a manner that would alter the order of application of amounts prepaid pursuant thereto without the written consent of each Lender directly and adversely affected thereby; (f) except as otherwise permitted by this Section 10.2 change any provision of this Section or reduce the percentages specified in the definition of “Required Lenders,” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender directly and adversely affected thereby;
132 174504702_2 (g) consent to the assignment or transfer by any Credit Party of such Credit Party’s rights and obligations under any Loan Document to which it is a party (except as permitted pursuant to Section 7.4), in each case, without the written consent of each Lender; (h) release (i) Holdings, (ii) all of the Subsidiary Guarantors or (iii) Subsidiary Guarantors comprising all or substantially all of the credit support for the Secured Obligations, in any case, from the Guaranty Agreement (other than as expressly authorized in Section 9.9), or release the Borrower from its rights and obligations under any Loan Document to which it is a party, in each case, without the written consent of each Lender; or (i) release or subordinate, or amend any other term of the Loan Documents that would have the effect of releasing or subordinating, the Liens on all or any material portion of the Collateral granted to or held by the Administrative Agent under any Loan Document (other than as expressly authorized in the Closing Date Intercreditor Agreement with respect to ABL Priority Collateral) or subordinate or otherwise adversely affect the priority of payment of the Obligations (in each case, other than in connection with a debtor-in-possession financing that is permitted under the terms of the Closing Date Intercreditor Agreement), without the written consent of each Lender; provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document or modify Section 10.1(e), Section 10.20 or Article IX hereof; (ii) the Engagement Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, (iii) notwithstanding the foregoing, any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Term Loans of a particular Class (but not the Lenders holding Term Loans of any other Class) may be effected by an agreement or agreements in writing entered into by Holdings, the Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time, (iv) the Administrative Agent and the Borrower shall be permitted to (A) amend any provision of the Loan Documents (and such amendment shall become effective without any further action or consent of any other party to any Loan Document) if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error, ambiguity, defect or inconsistency or omission of a technical or immaterial nature in any such provision, (B) amend, supplement and/or waive the provisions of this Agreement or any of the other Loan Documents solely to the extent necessary to comply with any Applicable Law or to cause such Loan Document to be consistent with this Agreement and/or the other relevant Loan Documents and (C) amend this Agreement to add in terms that are more restrictive on Holdings and its Subsidiaries than the terms and conditions of this Agreement and/or add any financial maintenance covenant for the benefit of the Lenders hereunder, in each case, in connection with the incurrence of any Indebtedness permitted under this Agreement, (v) any waiver, amendment or modification of the Closing Date Intercreditor Agreement (and any related definitions) may be effected on the terms set forth therein, (vi) any waiver, amendment or modification of any Acceptable Junior Lien Intercreditor Agreement (and any related definitions) may be effected on the terms set forth therein and (vii) the Administrative Agent may, without the consent of any Lender, enter into amendments or modifications to this Agreement or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of Section 3.8(c) in accordance with the terms of Section 3.8(c). Notwithstanding anything to the contrary herein, (x) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that any amendment, waiver, or consent hereunder which requires the consent of all Lenders or each affected Lender that by its terms disproportionately and adversely affects any such Defaulting Lender relative to other affected Lenders shall require the consent of such Defaulting
133 174504702_2 Lender and (y) no Net Short Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder or under any of the Loan Documents and instead shall be deemed to have voted its interest as a Lender as provided in the penultimate paragraph of this Section 10.2. Notwithstanding anything in this Agreement to the contrary, each Lender hereby irrevocably authorizes the Administrative Agent on its behalf, and without further consent of any Lender (but with the consent of the Borrower and the Administrative Agent), to (x) amend and restate this Agreement and the other Loan Documents if, upon giving effect to such amendment and restatement, such Lender shall no longer be a party to this Agreement (as so amended and restated), the Term Loan Commitments of such Lender shall have terminated, such Lender shall have no other commitment or other obligation hereunder and shall have been paid in full all principal, interest and other amounts owing to it or accrued for its account under this Agreement and the other Loan Documents, (y) enter into amendments or modifications to this Agreement (including amendments to this Section 10.2) or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to effectuate the terms of Sections 3.13, 3.14 and 3.15 (including without limitation, as applicable, (A) to provide that additional Classes of Term Loans and/or Term Loan Commitments shall share ratably in the benefits of this Agreement and the other Loan Documents with the Obligations, (B) to appropriately include the Lenders of such Classes in any determination of (1) Required Lenders or (2) similar required lender terms applicable thereto and (C) to permit any such additional credit facilities to share ratably with the Term Loans in the application of prepayments; provided that no amendment or modification shall result in any increase in the amount of any Lender’s Term Loan Commitment or any increase in any Lender’s Term Loan Percentage, in each case, without the written consent of such affected Lender and (z) to make amendments to any outstanding tranche of Term Loans to permit any Term Loan Commitment with respect to an Incremental Term Loan and Incremental Term Loans to be “fungible” (including for purposes of the Code) with such tranche of Term Loans, including increases in the Applicable Margin or any fees payable to such outstanding tranche of Term Loans or providing such outstanding tranche of Term Loans with the benefit of any call protection or covenants that are applicable to the proposed Term Loan Commitment with respect to such Incremental Term Loans; provided that any such amendments or modifications to such outstanding tranche of Term Loans shall not directly adversely affect the Lenders holding such tranche of Term Loans without their consent. Notwithstanding anything to the contrary herein, in connection with any determination as to whether the requisite Lenders have (i) consented (or not consented) to any amendment, modification or waiver of any provision of this Agreement or any other Loan Document or any departure by any Credit Party therefrom, (ii) otherwise acted on any matter related to any Loan Document, or (iii) directed or required the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, any Lender (other than any Lender that is a Regulated Bank) that, as a result of its interest in any total return swap, total rate of return swap, credit default swap or other derivative contract (other than any such total return swap, total rate of return swap, credit default swap or other derivative contract entered into pursuant to bona fide market making activities), has a net short position with respect to the Term Loans and/or Term Loan Commitments (each, a “Net Short Lender”) shall, unless the Borrower otherwise elects (in its sole discretion), have no right to vote any of its Term Loans and Term Loan Commitments and shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Net Short Lenders. For purposes of determining whether a Lender has a “net short position” on any date of determination: (i) derivative contracts with respect to the Term Loans and Term Loan Commitments and such contracts that are the functional equivalent thereof shall be counted at the notional amount thereof in Dollars, (ii) notional amounts in other currencies shall be converted to the Dollar equivalent thereof by such Lender in a commercially reasonable manner consistent with generally accepted financial practices and
134 174504702_2 based on the prevailing conversion rate (determined on a mid-market basis) on the date of determination, (iii) derivative contracts in respect of an index that includes any of the Borrower or other Credit Parties or any instrument issued or guaranteed by any of the Borrower or other Credit Parties shall not be deemed to create a short position with respect to the Term Loans and/or Term Loan Commitments, so long as (x) such index is not created, designed, administered or requested by such Lender and (y) the Borrower and other Credit Parties and any instrument issued or guaranteed by any of the Borrower or other Credit Parties, collectively, shall represent less than 5% of the components of such index, (iv) derivative transactions that are documented using either the 2014 ISDA Credit Derivatives Definitions or the 2003 ISDA Credit Derivatives Definitions (collectively, the “ISDA CDS Definitions”) shall be deemed to create a short position with respect to the Term Loans and/or Term Loan Commitments if such Lender is a protection buyer or the equivalent thereof for such derivative transaction and (x) the Term Loans or the Term Loan Commitments are a “Reference Obligation” under the terms of such derivative transaction (whether specified by name in the related documentation, included as a “Standard Reference Obligation” on the most recent list published by Markit, if “Standard Reference Obligation” is specified as applicable in the relevant documentation or in any other manner), (y) the Term Loans or the Term Loan Commitments would be a “Deliverable Obligation” under the terms of such derivative transaction or (z) any of the Borrower or other Credit Parties (or its successor) is designated as a “Reference Entity” under the terms of such derivative transactions, and (v) credit derivative transactions or other derivatives transactions not documented using the ISDA CDS Definitions shall be deemed to create a short position with respect to the Term Loans and/or Term Loan Commitments if such transactions are functionally equivalent to a transaction that offers the Lender protection in respect of the Term Loans or the Term Loan Commitments, or as to the credit quality of any of the Borrower or other Credit Parties other than, in each case, as part of an index so long as (x) such index is not created, designed, administered or requested by such Lender and (y) the Borrower and other Credit Parties and any instrument issued or guaranteed by any of the Borrower or other Credit Parties, collectively, shall represent less than 5% of the components of such index. In connection with any such determination, each Lender (other than any Lender that is a Regulated Bank) shall promptly notify the Administrative Agent in writing that it is a Net Short Lender, or shall otherwise be deemed to have represented and warranted to the Borrower and the Administrative Agent that it is not a Net Short Lender (it being understood and agreed that the Borrower and the Administrative Agent shall be entitled to rely on each such representation and deemed representation). In no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any Lender is a Net Short Lender. SECTION 10.3 Expenses; Indemnity. (a) Costs and Expenses. The Borrower and any other Credit Party, jointly and severally, shall pay (i) all reasonable and documented out of pocket expenses incurred by the Administrative Agent, the Arranger and their respective Affiliates (including the reasonable and documented out-of-pocket fees, charges and disbursements of one counsel to the Administrative Agent, the Arranger and their respective Affiliates and, if reasonably necessary, a single local counsel and/or specialty counsel in each relevant and material jurisdiction and a single special counsel with respect to each relevant and material specialty) in connection with the syndication of the Credit Facility, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable and documented out of pocket expenses incurred by the Administrative Agent or any Lender (including the reasonable and documented fees, charges and disbursements of one counsel for the Administrative Agent and the Lenders taken as a whole, and, if reasonably necessary, a single local counsel in each relevant and material jurisdiction and a single special counsel with respect to each relevant and material specialty for the Administrative Agent and the Lenders (taken as a whole) in each relevant and material jurisdiction or specialty, and in the case of an actual or perceived conflict of interest of any of the foregoing counsel, one additional such counsel in each relevant and material jurisdiction or specialty to the affected persons similarly situated and taken as a whole)), in
135 174504702_2 connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Term Loans, including all such reasonable and documented out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Term Loans. (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, and shall pay or reimburse any such Indemnitee for, any and all losses, claims (including any Environmental Claims), penalties, damages, liabilities and related reasonable and documented expenses (limited, in the case of legal fees and expenses pursuant to this Section 10.3(b), to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to all Indemnitees (taken as a whole) and, if reasonably necessary, a single local counsel and/or specialty counsel for all Indemnitees (taken as a whole) in each relevant and material jurisdiction or specialty, and in the case of an actual or perceived conflict of interest of any of the foregoing counsel, one additional such counsel in each relevant and material jurisdiction or specialty to the affected persons similarly situated and taken as a whole)), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Credit Party), arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (including the Transactions), (ii) any Term Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Credit Party or any Subsidiary thereof, or any Environmental Claim related in any way to any Credit Party or any Subsidiary, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party or any Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Term Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including reasonable attorneys and consultant’s fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee, (B) result from a claim brought by any Credit Party or any Subsidiary thereof against an Indemnitee for a material breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Credit Party or such Subsidiary has obtained a final and non- appealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (C) any dispute solely among the Indemnitees (other than any claims (1) against an Indemnitee in its capacity as or in fulfilling its role as an agent or arranger or any similar role under this Agreement or any other Loan Document or (2) arising out of any act or omission of Holdings, the Borrower or any of its Subsidiaries or Affiliates). This Section 10.3(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the outstanding Term Loans at such time, or if the outstanding Term Loans have been reduced to zero, then based on such Lender’s share
136 174504702_2 of the outstanding Term Loans immediately prior to such reduction) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender). The obligations of the Lenders under this clause (c) are subject to the provisions of Section 3.7. (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, each of the parties hereto agree that they shall not assert, and hereby waives, any claim against any other party hereto or any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Term Loan or the use of the proceeds thereof; provided that nothing in this clause (d) shall limit the indemnity or reimbursement obligations of the Borrower to the extent such indirect, special, consequential or punitive damages are included in any third party claim in connection with which any Indemnitee is entitled to indemnification or reimbursement hereunder. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby. (e) Payments. All amounts due under this Section shall be payable promptly after demand therefor. (f) Survival. Each party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations hereunder. SECTION 10.4 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Credit Party against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or any of its Affiliates, irrespective of whether or not such Lender or any such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender or such Affiliate different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application. SECTION 10.5 Governing Law; Jurisdiction, Etc. (a) Governing Law. Except as provided in Section 9.12 solely with respect to the matters set forth in Section 9.12 and in the case of the Australian Security Documents, this Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract, in tort, in equity or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.
137 174504702_2 (b) Submission to Jurisdiction. The Borrower and each other Credit Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and, except as provided in Section 9.12 solely with respect to the matters set forth in Section 9.12, each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by Applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Credit Party or its properties in the courts of any jurisdiction. (c) Waiver of Venue. The Borrower and each other Credit Party irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 10.1. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law. SECTION 10.6 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 10.7 Reversal of Payments. To the extent any Credit Party makes a payment or payments to the Administrative Agent for the ratable benefit of any of the Secured Parties or to any Secured Party directly or the Administrative Agent or any Secured Party receives any payment or proceeds of the Collateral or any Secured Party exercises its right of setoff, which payments or proceeds (including any proceeds of such setoff) or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any Debtor Relief Law, other Applicable Law or equitable cause, then, to the extent of such payment or proceeds repaid, the Secured Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent, and each Lender severally agrees to pay to the Administrative Agent upon demand its (or its applicable Affiliate’s)
138 174504702_2 applicable ratable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent plus interest thereon at a per annum rate equal to the Federal Funds Rate from the date of such demand to the date such payment is made to the Administrative Agent. SECTION 10.8 Injunctive Relief. The Borrower recognizes that, in the event the Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, the Borrower agrees that the Lenders, at the Lenders’ option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. SECTION 10.9 Successors and Assigns; Participations. (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder, except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Term Loans at the time owing to it); provided that, in each case with respect to any Credit Facility, any such assignment shall be subject to the following conditions: (i) Minimum Amounts. (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Term Loans at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the principal outstanding balance of the Term Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption or Affiliated Lender Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption or Affiliated Lender Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000, unless each of the Administrative Agent and, so long as no Event of Default under any of Sections 8.1(a), (b), (h) or (i) has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have given its consent ten (10) Business Days after the date written notice thereof has been delivered by the
139 174504702_2 assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such tenth (10th) Business Day; (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the assigned Term Loans, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Classes on a non-pro rata basis; (iii) Required Consents. No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition: (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default under any of Sections 8.1(a), (b), (h) or (i) has occurred and is continuing at the time of such assignment, (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund or (z) the assignment is made to certain institutions identified by the Administrative Agent or the Arranger to the Borrower prior to the Closing Date and mutually agreed to by the Borrower in connection with the primary syndication of the Credit Facility and during the period commencing on the Closing Date and ending on the date that is sixty (60) days following the Closing Date; provided, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 10 Business Days after having received notice thereof; provided further that the Borrower may withhold its consent (in its sole discretion) to any assignment to any Person that is not a Disqualified Institution but is known by the Borrower to be an Affiliate of a Disqualified Institution, regardless of whether any such Person is reasonably identifiable as an Affiliate of a Disqualified Institution on the basis of such Person’s name (it being understood and agreed that to the extent the Borrower withholds its consent in reliance on this proviso, the Borrower will promptly update the DQ List thereafter to list such Affiliate as a Disqualified Institution); and (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of the Term Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved Fund. (iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption or an Affiliated Lender Assignment and Assumption, together with a processing and recordation fee of $3,500 for each assignment; provided that (A) only one such fee will be payable in connection with simultaneous assignments to two or more related Approved Funds by a Lender and (B) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. (v) No Assignment to Certain Persons. No such assignment shall be made to (A) a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person), (B) Holdings, the Borrower or any of its Subsidiaries or Affiliates (other than as set forth in clauses (g) and (h) below), (C) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (v) or (D) any Disqualified Institution.
140 174504702_2 Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption or Affiliated Lender Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption or Affiliated Lender Assignment and Assumption, as applicable, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption or Affiliated Lender Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption or an Affiliated Lender Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.8, 3.9, 3.10, 3.11 and 10.3 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section (other than a purported assignment to a natural Person or the Borrower or any of the Borrower’s Subsidiaries or Affiliates (other than in accordance with clauses (g) or (h) below, which shall be null and void and any assignment to a Disqualified Institution which shall be subject to clause (i) below). (c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Term Loan Commitments of, and principal amounts of (and stated interest on) the Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender (but only to the extent of entries in the Register that are applicable to such Lender), at any reasonable time and from time to time upon reasonable prior notice. (d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a Disqualified Institution, a natural Person, (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or the Borrower or any of the Borrower’s Subsidiaries or Affiliates) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Term Loan Commitment and/or the Term Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.3(c) with respect to any payments made by such Lender to its Participant(s). Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 10.2(b), (c), (d) or (e) that directly and adversely affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.9, 3.10 and 3.11 (subject to the requirements and limitations therein, including the requirements under Section 3.11(g) (it being understood that the documentation required under Section 3.11(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest
141 174504702_2 by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 3.12 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 3.10 or 3.11, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 3.12(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 3.6 and Section 10.4 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of (and stated interest on) each Participant’s interest in the Term Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103- 1(c) or Proposed Section 1.163-5(b) of the United States Treasury Regulations (or, in each case, any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. (e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (f) Cashless Settlement. Notwithstanding anything to the contrary contained in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Term Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent and such Lender. (g) Borrower Buybacks. Notwithstanding anything in this Agreement to the contrary, any Lender may, at any time, assign all or a portion of its Term Loans on a non-pro rata basis to the Borrower (x) through open market purchases or (y) in accordance with the procedures set forth on Exhibit I, pursuant to an offer made available to all Lenders on a pro rata basis (a “Dutch Auction”), subject to the following limitations: (i) all such assignments shall be evidenced by an Affiliated Lender Assignment and Assumption containing customary “big boy” disclaimers; (ii) immediately and automatically, without any further action on the part of the Borrower, any Lender, the Administrative Agent or any other Person, upon the effectiveness of such assignment of Term Loans from a Lender to the Borrower, such Term Loans and all rights and obligations as a Lender related thereto shall, for all purposes under this Agreement, the other
142 174504702_2 Loan Documents and otherwise, be deemed to be irrevocably prepaid, terminated, extinguished, cancelled and of no further force and effect and the Borrower shall neither obtain nor have any rights as a Lender hereunder or under the other Loan Documents by virtue of such assignment; provided that upon any such retirement and cancellation, the aggregate outstanding principal amount of the Term Loans shall be deemed reduced by the full par value of the aggregate principal amount of the Term Loans so retired and cancelled and each principal installment owing to the Lenders participating in such open market purchase or Dutch Auction shall, as to such retired or cancelled Term Loans, be reduced on a pro rata basis by the full par value of the aggregate principal amount of such Term Loans so retired or cancelled; (iii) no Default or Event of Default shall have occurred and be continuing before or immediately after giving effect to such assignment; and (iv) in no event shall the aggregate principal amount of Term Loans (determined based on the face amount thereof) assigned via open market purchases to the Borrower pursuant to this Section 10.9(g) in any Fiscal Year exceed 15% of the outstanding principal balance of the Term Loans (as determined at 9:00 am on the first Business Day of such Fiscal Year). (h) Assignments to Affiliated Lenders. Notwithstanding anything in this Agreement to the contrary, any Lender may, at any time, assign all or a portion of its Term Loans on a non-pro rata basis to an Affiliated Lender through (x) open-market purchases or (y) Dutch Auctions, subject to the following limitations: (i) all such assignments shall be evidenced by an Affiliated Lender Assignment and Assumption containing customary “big boy” disclaimers; (ii) Non-Designated Affiliated Lenders will not (A) have the right to receive information, reports or other materials provided solely to Lenders by the Administrative Agent or any other Lender, except to the extent made available to the Credit Party or its representatives (and in any case, other than the right to receive notices of borrowings, notices of prepayments and other administrative notices in respect of its Term Loans required to be delivered to Lenders pursuant to Article II), (B) attend or participate in meetings amongst the Lenders and the Administrative Agent to which the Credit Parties or their respective representatives are not invited, or (C) access any electronic site for which access is limited to the Lenders and their representatives or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders; (iii) (A) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under, this Agreement or any other Loan Document, the Terms Loans held by such Non-Designated Affiliated Lender shall be disregarded in both the numerator and the denominator in the calculation of any Required Lender or other Lender vote; provided that (x) such Non-Designated Affiliated Lender shall have the right to vote (and the Term Loans held by such Non-Designated Affiliated Lender shall not be so disregarded) with respect to any amendment, modification, waiver, consent or other action that requires the vote of all Lenders or all Lenders directly and adversely affected thereby, as the case may be and (y) no amendment, modification, waiver, consent or other action shall (1) disproportionately and adversely affects such Non-Designated Affiliated Lender in its capacity as a Lender as compared to the other Lenders that are not Non-Designated Affiliated Lenders or (2) deprive any Non- Designated Affiliated Lender of its share of any payment in which the Lenders are entitled to share on a pro rata basis hereunder, in each case without the consent of such Non-Designated Affiliated Lender and (B) for purposes of voting on any plan of reorganization or plan of liquidation pursuant
143 174504702_2 to any Debtor Relief Laws (each, a “Plan of Reorganization”) (x) the interest of any Non- Designated Affiliated Lender in any Term Loan will be deemed to be voted in the same proportion as the vote of the Lender that are not Non-Designated Affiliated Lenders on the relevant matter; provided that each Non-Designated Affiliated Lender will be entitled to vote its interest in any Term Loan to the extent that any Plan of Reorganization or other arrangement with respect to which the relevant vote is sought proposes to treat the interest of such Non-Designated Affiliated Lender (in its capacity as a Lender) in such Term Loan in a manner that is less favorable to such Non- Designated Affiliated Lender than the proposed treatment of the Term Loans held by other Lenders and (y) all Non-Designated Affiliated Lenders shall be treated as a single lender for purposes of any “numerosity” or similar requirement applicable therein; (iv) the aggregate principal amount of Term Loans held at any one time by all Affiliated Lenders may not exceed 25% of the aggregate outstanding principal amount of Term Loans (after giving effect to any substantially simultaneous cancellation thereof, the “Affiliated Lender Cap”); provided that each party hereto acknowledges and agrees that the Administrative Agent shall not be liable for any losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever incurred or suffered by any Person in connection with any compliance or non-compliance with this clause (h)(iv) or any purported assignment exceeding the Affiliated Lender Cap (it being understood and agreed that the Affiliated Lender Cap is intended to apply to any Term Loan made available to Affiliated Lenders by means other than formal assignments (e.g., as a result of an acquisition of another Lender by an Affiliated Lender or the provision of Incremental Term Loans by an Affiliated Lender); provided further that to the extent that any assignment to an Affiliated Lender would result in the aggregate principal amount of Term Loans held by Affiliated Lenders exceeding the Affiliated Lender Cap (after giving effect to any substantially simultaneous cancellations thereof), the assignment of the relevant excess amount shall be null and void (except to the extent such excess amount is subsequently assigned to a Person that is not an Affiliated Lender); (v) no Affiliated Lender will be entitled to make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim or action against the Administrative Agent, in its role as such, or any Lender or receive advice of counsel or other advisors to the Administrative Agent or any other Lenders or challenge the attorney client privilege of their respective counsel; (vi) each Designated Affiliated Lender is either (A) identified on the list provided to the Arranger prior to the Closing Date or (B) is an Affiliate of the Borrower or a Permitted Investor that was formed or acquired after the Closing Date and was identified by name in a written notice by the Borrower to the Administrative Agent after the Closing Date (which such notice shall be specifically labeled as a supplement to the Designated Affiliated Lender list and delivered to each address of the Administrative Agent set forth in Section 10.1(a)); (vii) by its execution of an Affiliated Lender Assignment and Assumption each Designated Affiliated Lender shall be deemed to have represented to the Administrative Agent that it satisfies each of the requirements of a Designated Affiliated Lender and the Administrative Agent shall be entitled to rely on such representation and warranty without further inquiry or action; (viii) the assigning Lender and the Affiliated Lender purchasing such Lender’s Term Loans shall execute and deliver to the Administrative Agent an Affiliated Lender Assignment and Assumption;
144 174504702_2 (ix) immediately and automatically, without any further action on the part of the Borrower, any Lender, the Administrative Agent or any other Person, upon the effectiveness of such assignment of Term Loans from a Lender to the Borrower, such Term Loans and all rights and obligations as a Lender related thereto shall, for all purposes under this Agreement, the other Loan Documents and otherwise, be deemed to be irrevocably prepaid, terminated, extinguished, cancelled and of no further force and effect and the Borrower shall neither obtain nor have any rights as a Lender hereunder or under the other Loan Documents by virtue of such assignment; (x) no Default or Event of Default shall have occurred and be continuing before or immediately after giving effect to such assignment contemplated by this clause (h); and (xi) no Affiliated Lender shall be required to represent or warrant that it is not in possession of material non-public information with respect to Holdings and/or any Subsidiary thereof and/or their respective securities in connection with any assignment permitted by this Section 10.9(h). Each Affiliated Lender that is a Lender hereunder agrees to comply with the terms of this clause (h) (notwithstanding that it may be granted access to the Platform or any other electronic site established for the Lenders by the Administrative Agent). Each Affiliated Lender and the Borrower agrees to notify the Administrative Agent and the Borrower promptly (and in any event within 10 Business Days) if it acquires any Person who is also a Lender or a known Affiliate of a Lender, and each Lender agrees to notify the Administrative Agent and the Borrower promptly (and in any event within 10 Business Days) if it becomes an Affiliated Lender. (i) Disqualified Institutions. (i) No assignment or participation shall be made to any Person that was a Disqualified Institution as of the date (the “Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign or participate all or a portion of its rights and obligations under this Agreement to such Person (unless the Borrower has consented to such assignment or participation in writing in its sole and absolute discretion, in which case such Person will not be considered a Disqualified Institution for the purpose of such assignment or participation). For the avoidance of doubt, with respect to any assignee that becomes a Disqualified Institution after the applicable Trade Date (including as a result of the delivery of a notice pursuant to, and/or the expiration of the notice period referred to in, the definition of “Disqualified Institution”), (x) such assignee shall not retroactively be disqualified from becoming a Lender and (y) the execution by the Borrower of an Assignment and Assumption with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Institution. Any assignment in violation of this clause (i)(i) shall not be void, but the other provisions of this clause (i) shall apply. (ii) If any assignment or participation is made to any Disqualified Institution without the Borrower’s prior written consent in violation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, the Borrower may, at its sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, (A) in the case of outstanding Term Loans held by Disqualified Institutions, purchase or prepay such Term Loan by paying the lesser of (x) the principal amount thereof and (y) the amount that such Disqualified Institution paid to acquire such Term Loans, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder and/or (B) require such Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions contained in this Section 10.9), all of its interest, rights and obligations under this Agreement to one or more Eligible Assignees at the lesser of (x) the principal amount thereof and
145 174504702_2 (y) the amount that such Disqualified Institution paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder. (iii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions (A) will not (x) have the right to receive information, reports or other materials provided to Lenders by Holdings, the Borrower, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter, and (y) for purposes of voting on any Plan of Reorganization, each Disqualified Institution party hereto hereby agrees (1) not to vote on such Plan of Reorganization, (2) if such Disqualified Institution does vote on such Plan of Reorganization notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such Plan of Reorganization in accordance with Section 1126(c) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws) and (3) not to contest any request by any party for a determination by any bankruptcy court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2). (iv) The Administrative Agent may make the list of Disqualified Institutions provided by the Borrower and any updates thereto from time to time (collectively, the “DQ List”) available on a confidential basis in accordance with Section 10.10 to any Lender who specifically requests a copy thereof, and such Lender may provide such DQ List to any potential assignee or participant who agrees to keep such list confidential in accordance with Section 10.10 solely for the purpose of permitting such Person to verify whether such Person (or any Affiliate thereof) is a Disqualified Institution. SECTION 10.10 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective Related Parties (other than Disqualified Institutions) in connection with the Credit Facility, this Agreement, the transactions contemplated hereby or in connection with marketing of services by such Affiliate or Related Party to Holdings or any of its Subsidiaries (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential on the terms set forth in this Section 10.10 (or on terms that are otherwise reasonably acceptable to the Borrower)), (b) to the extent required or requested by, or required to be disclosed to, any regulatory or similar authority having jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners) or in accordance with the Administrative Agent’s or any Lender’s regulatory compliance policy if the Administrative Agent or such Lender, as applicable, deems such disclosure to be necessary for the mitigation of claims by those authorities against the Administrative Agent or such Lender, as applicable, or any of its Related Parties (in which case, the Administrative Agent or such Lender, as applicable, shall use commercially reasonable efforts to, except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority,
146 174504702_2 promptly notify the Borrower, in advance, to the extent practicable and otherwise permitted by Applicable Law), (c) pursuant to the order of any court or administrative agency or in any judicial or administrative proceeding or as otherwise required by Applicable Law or compulsory legal process (in which case the Administrative Agent or such Lender, as applicable, shall use commercially reasonable efforts to promptly notify the Borrower, in advance, to the extent practicable and permitted by Applicable Law), (d) to any other party hereto, (e) in connection with the exercise of any remedies under this Agreement, under any other Loan Document or under any Secured Hedge Agreement or Secured Cash Management Agreement, or any action or proceeding relating to this Agreement, any other Loan Document or any Secured Hedge Agreement or Secured Cash Management Agreement, or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions at least as restrictive as those of this Section 10.10, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights and obligations under this Agreement and, in each case, their respective financing sources, (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder (it being understood that the DQ List may be disclosed to any assignee or Participant, or prospective assignee or Participant, in reliance on this clause (f), but subject to Section 10.9(i)(iv)), and/or (iii) an investor or prospective investor in an Approved Fund for the purpose of evaluating an investment in such Approved Fund, (g) on a confidential basis to (i) any rating agency in connection with rating Holdings or its Subsidiaries or the Credit Facility or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Credit Facility (but in the case of clause (ii), limited to the deal terms and other general information regarding the Credit Facility), (h) with the written consent of the Borrower, (i) deal terms and other general information regarding the Credit Facility customarily reported to Thomson Reuters, other bank market data collectors and similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of the Loan Documents, (j) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 10.10 or (ii) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates from a third party that is not, to such Person’s knowledge, subject to confidentiality obligations to Holdings or the Borrower or their Subsidiaries, (k) to the extent that such information is independently developed by such Person, so long as the Administrative Agent and the Lenders have not otherwise breached their respective confidentiality obligations hereunder and have not developed such information based on information received from a third party that to its knowledge has breached confidentiality obligations owing to the Borrower, or (l) for purposes of establishing a “due diligence” defense. Nothing in this Agreement permits the Secured Parties to disclose any information under Section 275(4) of the Australian PPSA unless Section 275(7) of the Australian PPSA applies. For purposes of this Section 10.10, “Information” means all information received from any Credit Party or any Subsidiary thereof relating to any Credit Party or any Subsidiary thereof or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party or any Subsidiary thereof. Any Person required to maintain the confidentiality of Information as provided in this Section 10.10 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 10.11 Performance of Duties. Each of the Credit Party’s obligations under this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its sole cost and expense. SECTION 10.12 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the
147 174504702_2 Obligations remain unpaid or unsatisfied (other than contingent indemnification obligations not then due), any of the Term Loan Commitments remain in effect or the Credit Facility has not been terminated. SECTION 10.13 Survival. (a) All representations and warranties set forth in Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder. (b) Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article X and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before. SECTION 10.14 Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. SECTION 10.15 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. In the event that any provision is held to be so prohibited or unenforceable in any jurisdiction, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such provision to preserve the original intent thereof in such jurisdiction (subject to the approval of the Required Lenders). SECTION 10.16 Counterparts; Integration; Effectiveness; Electronic Execution. (a) Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent and/or the Arranger, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. (b) Electronic Execution. The words “execute,” “execution,” “signed,” “signature,” “delivery” and words of like import in or related to this Agreement, any other Loan Document or any document, amendment, approval, consent, waiver, modification, information, notice, certificate, report, statement, disclosure, or authorization to be signed or delivered in connection with this Agreement or any
148 174504702_2 other Loan Document or the transactions contemplated hereby shall be deemed to include Electronic Signatures or execution in the form of an Electronic Record, and contract formations on electronic platforms approved by the Administrative Agent, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature 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. Each party hereto agrees that any Electronic Signature or execution in the form of an Electronic Record shall be valid and binding on itself and each of the other parties hereto to the same extent as a manual, original signature. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the parties of a manually signed paper which has been converted into electronic form (such as scanned into PDF format), or an electronically signed paper converted into another format, for transmission, delivery and/or retention. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided that without limiting the foregoing, (a) to the extent the Administrative Agent has agreed to accept such Electronic Signature from any party hereto, the Administrative Agent and the other parties hereto shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of the executing party without further verification and (b) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by an original manually executed counterpart thereof. Without limiting the generality of the foregoing, each party hereto hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and any of the Credit Parties, electronic images of this Agreement or any other Loan Document (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Loan Documents based solely on the lack of paper original copies of any Loan Documents, including with respect to any signature pages thereto. SECTION 10.17 Term of Agreement. This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations (other than contingent indemnification obligations not then due) arising hereunder or under any other Loan Document shall have been paid and satisfied in full in cash. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination. SECTION 10.18 USA PATRIOT Act; Anti-Money Laundering Laws. The Administrative Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act or any other Anti-Money Laundering Laws, each of them is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the PATRIOT Act or such Anti-Money Laundering Laws. SECTION 10.19 Independent Effect of Covenants. The Borrower expressly acknowledges and agrees that each covenant contained in Articles VI or VII hereof shall be given independent effect. Accordingly, the Borrower shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles VI or VII, before or after giving effect to such transaction or act, the Borrower shall or would be in breach of any other covenant contained in Articles VI or VII. SECTION 10.20 No Advisory or Fiduciary Responsibility.
149 174504702_2 (a) In connection with all aspects of each transaction contemplated hereby, each Credit Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s- length commercial transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Arranger and the Lenders, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Administrative Agent, the Arranger and the Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person, (iii) none of the Administrative Agent, the Arranger or the Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the Administrative Agent, the Arranger, such Lender or any of their respective Affiliates has advised or is currently advising the Borrower or any of its Affiliates on other matters) and none of the Administrative Agent, the Arranger or the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the financing transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents, (iv) the Administrative Agent, the Arranger and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Administrative Agent, the Arranger or the Lenders has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship and (v) the Administrative Agent, the Arranger, the Lenders and their respective Affiliates have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate. (b) Each Credit Party acknowledges and agrees that the Administrative Agent, each Lender, the Arranger and any Affiliate thereof may lend money to, invest in, and generally engage in any kind of business with, any of Holdings, the Borrower, any Affiliate thereof or any other person or entity that may do business with or own securities of any of the foregoing, all as if the Administrative Agent, such Lender, Arranger or Affiliate thereof were not the Administrative Agent, a Lender, the Arranger or an Affiliate thereof (or an agent or any other person with any similar role under the Credit Facilities) and without any duty to account therefor to any other Lender, the Administrative Agent, the Arranger, Holdings, the Borrower or any Affiliate of the foregoing. Each Lender, the Administrative Agent, the Arranger and any Affiliate thereof may accept fees and other consideration from Holdings, the Borrower or any Affiliate thereof for services in connection with this Agreement, the Credit Facilities or otherwise without having to account for the same to any other Lender, the Administrative Agent, the Arranger, the Borrower or any Affiliate of the foregoing. SECTION 10.21 Inconsistencies with Other Documents. In the event there is a conflict or inconsistency between this Agreement, the Closing Date Intercreditor Agreement, any Acceptable Junior Lien Intercreditor Agreement and any other Loan Document, the terms of this Agreement shall control; provided that any provision of the Security Documents which imposes additional burdens on Holdings or any of its Subsidiaries or further restricts the rights of Holdings or any of its Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect; provided further that the Closing Date Intercreditor Agreement or any Acceptable Junior Lien Intercreditor Agreement, as applicable, governs and controls in the event of any conflict with any other Loan Document (including this Agreement).
150 174504702_2 SECTION 10.22 Intercreditor Agreements. (a) Each Lender (i) irrevocably authorizes Administrative Agent to enter into the Closing Date Intercreditor Agreement or any supplements or joinders thereto with the ABL Administrative Agent and, if applicable, one or more representatives for the holders of any Indebtedness that is, or is intended to be, secured by the Collateral on a pari passu or with the Secured Obligations, (ii) consents to the terms and provisions of the Closing Date Intercreditor Agreement, (iii) agrees that it is and will be bound (as a Lender) by the terms and conditions of the Closing Date Intercreditor Agreement, whether or not such Lender executes the Closing Date Intercreditor Agreement, and (iv) agrees not to take any actions contrary to the provisions of the Closing Date Intercreditor Agreement. (b) Each Lender (i) irrevocably authorizes Administrative Agent to enter into any Acceptable Junior Lien Intercreditor Agreement or any supplements or joinders thereto with the ABL Administrative Agent and one or more representatives for the holders of any Indebtedness that is, or is intended to be, secured by the Collateral on a junior basis with the Secured Obligations, (ii) consents to the terms and provisions of such Acceptable Junior Lien Intercreditor Agreement, (iii) agrees that it is and will be bound (as a Lender) by the terms and conditions of such Acceptable Junior Lien Intercreditor Agreement, whether or not such Lender executes such Acceptable Junior Lien Intercreditor Agreement, and (iv) agrees not to take any actions contrary to the provisions of such Acceptable Junior Lien Intercreditor Agreement. SECTION 10.23 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any parties hereto, each of the parties hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. SECTION 10.24 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and, each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the FDIC under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions
151 174504702_2 below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): (a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. (b) As used in this Section 10.24, the following terms have the following meanings: “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). SECTION 10.25 Australian PPSA Provisions. Where any Secured Party has a security interest (as defined in the Australian PPSA) under any Loan Document, to the extent the law permits: (a) for the purposes of sections 115(1) and 115(7) of the Australian PPSA: (i) each Secured Party with the benefit of the security interest need not comply with sections 95, 118, 121(4), 125, 130, 132(3)(d) or 132(4) of the Australian PPSA;
152 174504702_2 (ii) sections 142 and 143 of the Australian PPSA are excluded; and (iii) for the purposes of section 115(7) of the Australian PPSA, each Secured Party with the benefit of the security interest need not comply with sections 132 and 137(3); (b) each party to this Agreement waives its right to receive from any Secured Party any notice required under the Australian PPSA (including a notice of a verification statement); and (c) if a Secured Party with the benefit of a security interest exercises a right, power or remedy in connection with it, that exercise is taken not to be an exercise of a right, power or remedy under the Australian PPSA unless the Secured Party states otherwise at the time of exercise. However, this clause does not apply to a right, power or remedy which can only be exercised under the Australian PPSA. This clause does not affect any rights a person has or would have other than by reason of the Australian PPSA and applies despite any other clause in any Loan Document. [END OF DOCUMENT]
139817008_7.docx ANNEX B to First Amendment to Term Loan Credit Agreement EXHIBIT B to Term Loan Credit Agreement dated as of March 1, 2021 by and among Thryv Holdings, Inc., as Holdings, Thryv, Inc., as Borrower, the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent FORM OF NOTICE OF BORROWING
Form of Notice of Borrowing 139817008_7.docx NOTICE OF BORROWING Dated as of: _____________ Wells Fargo Bank, National Association, as Administrative Agent MAC D 1109-019 1525 West W.T. Harris Blvd. Charlotte, North Carolina 28262 Attention: Syndication Agency Services Ladies and Gentlemen: This irrevocable Notice of Borrowing is delivered to you pursuant to Section 2.2 of the Term Loan Credit Agreement, dated as of March 1, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Thryv Holdings, Inc., a Delaware corporation, as Holdings, Thryv, Inc., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. 1. The Borrower hereby requests that the Lenders make [the Initial Term Loan][an Incremental Term Loan] to the Borrower in the aggregate principal amount of $___________.1 2. The Borrower hereby requests that such Term Loan(s) be made on the following Business Day: _____________________.2 3. The Borrower hereby requests that such Term Loan(s) bear interest at the following interest rate, plus the Applicable Margin, as set forth below: Component of Term Loan3 Interest Rate Interest Period (Adjusted Term SOFR only)4 [Base Rate or Adjusted Term SOFR]5 1 Complete with an amount in accordance with Section 2.2 or Section 3.13, as applicable, of the Credit Agreement. 2 Complete with a Business Day or U.S. Government Securities Business Day, as applicable, in accordance with Section 2.2 of the Credit Agreement for the Initial Term Loan or Section 3.13 of the Credit Agreement for an Incremental Term Loan). 3 Complete with the Dollar amount of that portion of the overall Term Loan requested that is to bear interest at the selected interest rate and/or Interest Period (e.g., for a $20,000,000 loan, $5,000,000 may be requested at Base Rate, $8,000,000 may be requested at Adjusted Term SOFR with an interest period of three months and $7,000,000 may be requested at Adjusted Term SOFR with an interest period of one month). 4 Select one, three or six months. 5 Select as applicable.
Form of Notice of Borrowing 139817008_7.docx 4. The aggregate principal amount of all Term Loans outstanding as of the date hereof (including the Term Loan(s) requested herein) does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement. 5. All of the conditions applicable to the Term Loan(s) requested herein as set forth in the Credit Agreement have been satisfied as of the date hereof. [Signature Page Follows]
Form of Notice of Borrowing 139817008_7.docx IN WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing as of the day and year first written above. THRYV, INC. By: Name: Title:
139817008_7.docx EXHIBIT C to Term Loan Credit Agreement dated as of March 1, 2021 by and among Thryv Holdings, Inc., as Holdings, Thryv, Inc., as Borrower, the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent FORM OF NOTICE OF PREPAYMENT
Form of Notice of Prepayment 139817008_7.docx NOTICE OF PREPAYMENT Dated as of: _____________ Wells Fargo Bank, National Association, as Administrative Agent MAC D 1109-019 1525 West W.T. Harris Blvd. Charlotte, North Carolina 28262 Attention: Syndication Agency Services Ladies and Gentlemen: This Notice of Prepayment is delivered to you pursuant to Section 2.4(a) of the Term Loan Credit Agreement, dated as of March 1, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Thryv Holdings, Inc., a Delaware corporation, as Holdings, Thryv, Inc., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. 1. The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Loans] and/or [SOFR Loans]: _______________. 1 2. The Term Loan(s) to be prepaid consist of: [check each applicable box] the Initial Term Loan an Incremental Term Loan 3. The Borrower shall repay the above-referenced Term Loans on the following Business Day: _______________. 2 [This Notice of Prepayment is conditioned upon the Borrower’s entry into [ ]]3. [Signature Page Follows] 1 Complete with an amount in accordance with Section 2.4 of the Credit Agreement. (i.e., at least $5,000,000 or any whole multiple of $1,000,000 in excess thereof (or, if less, the remaining outstanding principal amount thereof)). 2 Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Base Rate Loan and (ii) three (3) U.S. Government Securities Business Days subsequent to date of this Notice of Prepayment with respect to any SOFR Loan. 3 Insert if applicable. Per Section 2.4(a) of the Credit Agreement, any Notice of Prepayment delivered in connection with any refinancing of all of the Credit Facility with the proceeds of such refinancing or of any other incurrence of Indebtedness or the occurrence of some other identifiable event or condition, may be, if expressly so stated to be, contingent upon the consummation of such refinancing or incurrence or occurrence of such other identifiable event or condition and may be revoked by the Borrower in the event such contingency is not met; provided that the delay or failure of such contingency shall not relieve the Borrower from its obligations in respect thereof under Section 3.9 of the Credit Agreement.
Form of Notice of Prepayment 139817008_7.docx IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above. THRYV, INC. By: Name: Title:
139817008_7.docx EXHIBIT D to Term Loan Credit Agreement dated as of March 1, 2021 by and among Thryv Holdings, Inc., as Holdings, Thryv, Inc., as Borrower, the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent FORM OF NOTICE OF CONVERSION/CONTINUATION
Form of Notice of Conversion/Continuation 139817008_7.docx NOTICE OF CONVERSION/CONTINUATION Dated as of: _____________1 Wells Fargo Bank, National Association, as Administrative Agent MAC D 1109-019 1525 West W.T. Harris Blvd. Charlotte, North Carolina 28262 Attention: Syndication Agency Services Ladies and Gentlemen: This irrevocable Notice of Conversion/Continuation (this “Notice”) is delivered to you pursuant to Section 3.2 of the Term Loan Credit Agreement, dated as of March 1, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Thryv Holdings, Inc., a Delaware corporation, as Holdings, Thryv, Inc., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. 1. The Term Loan to which this Notice relates is [the Initial Term Loan] [an Incremental Term Loan]. 2 2. This Notice is submitted for the purpose of:3 Converting all or a portion of a Base Rate Loan into a SOFR Loan Outstanding principal balance: $______________ Principal amount to be converted:4 $______________ Requested effective date of conversion: _______________ Requested new Interest Period:5 _______________ Converting all or a portion of a SOFR Loan into a Base Rate Loan 1 Complete with a date in accordance with Section 3.2 of the Credit Agreement (i.e., at least three (3) U.S. Government Securities Business Days before the day on which the proposed conversion or continuation is to be effective). 2 Select as applicable. 3 Check only one option below and complete applicable information in accordance with the Credit Agreement. 4 Insert a principal amount equal to $2,000,000 or any whole multiple of $1,000,000 in excess thereof (or such lesser amount as shall represent all of the Base Rate Loans then outstanding) in accordance with Section 3.2(a) of the Credit Agreement. 5 Select one, three or six months.
Form of Notice of Conversion/Continuation 139817008_7.docx Outstanding principal balance: $______________ Principal amount to be converted:6 $______________ Last day of the current Interest Period: _______________ Requested effective date of conversion: _______________ Continuing all or a portion of a SOFR Loan as a SOFR Loan Outstanding principal balance: $______________ Principal amount to be continued: $______________ Last day of the current Interest Period: _______________ Requested effective date of continuation: _______________ Requested new Interest Period:7 _______________ 3. The aggregate principal amount of all Term Loans outstanding as of the date hereof does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement. [Signature Page Follows] 6 Insert a principal amount equal to $1,000,000 or a whole multiple of $500,000 in excess thereof (or such lesser amount as shall represent all of the SOFR Loans then outstanding) in accordance with Section 3.2(b)(i) of the Credit Agreement. 7 Select one, three or six months.
Form of Notice of Conversion/Continuation 139817008_7.docx IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above. THRYV, INC. By: Name: Title:
Form of Affiliated Lender Assignment and Assumption 139817008_7.docx
EX-21.1
6
exhibit211-202310xk.htm
EX-21.1
Document
SUBSIDIARIES
Thryv Holdings, Inc., a Delaware corporation, had the U.S. and international subsidiaries shown below as of January 1, 2024. Thryv Holdings, Inc. is not a subsidiary of any other entity.
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| Name of Subsidiary |
Jurisdiction |
| Thryv Australia Holdings Pty Ltd |
Australia |
| Thryv Australia Pty Ltd |
Australia |
| Australian Local Search Pty Limited |
Australia |
| Life Events Media Pty Limited |
Australia |
| Thryv Canada Ltd |
Canada (Toronto) |
| Thryv, Inc. |
Delaware |
| Thryv International Holding, LLC |
Delaware |
| Thryv Small Business Foundation |
Delaware |
| Thryv Volcano, LLC |
Delaware |
| Thryv Canada Holdings, LLC |
Delaware |
| Thryv Dominicana SRL |
Dominican Republic |
| Thryv International Treasury Limited |
Malta |
| Thryv Becketts Limited |
Malta |
| Thryv Parabolica Limited |
Malta |
| Thryv New Zealand Limited |
New Zealand |
| Yellow Holdings Limited |
New Zealand |
| Yellow NZ Limited |
New Zealand |
EX-23.1
7
exhibit231-202310xk.htm
EX-23.1
Document
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated February 22, 2024, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of Thryv Holdings, Inc. on Form 10-K for the year ended December 31, 2023. We consent to the incorporation by reference of said reports in the Registration Statements of Thryv Holdings, Inc. on Forms S-3 (File No. 333-266542 and File No. 333-256294) and on Forms S-8 (File No. 333-269980, File No. 333-263626, File No. 333-258875, and File No. 333-249002).
/s/ GRANT THORNTON LLP
Dallas, Texas
February 22, 2024
EX-23.2
8
exhibit232-202310xk.htm
EX-23.2
Document
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-3 No. 333-266542) of Thryv Holdings, Inc. and in the related Prospectus;
(2) Registration Statement (Form S-3 No. 333-256294) Post-Effective Amendment No.1 to Form S-1 on Form S-3 of Thryv Holdings, Inc. and in the related Prospectus;
(3) Registration Statement (Form S-8 No. 333-269980) pertaining to the Thryv Holdings, Inc. 2020 Incentive Award Plan;
(4) Registration Statement (Form S-8 No. 333-263626) pertaining to the Thryv Holdings, Inc. 2020 Incentive Award Plan;
(5) Registration Statement (Form S-8 No. 333-258875) pertaining to the Thryv Holdings, Inc. 2020 Incentive Award Plan;
(6) Registration Statement (Form S-8 No. 333-249002) pertaining to the 2016 Stock Incentive Plan, as amended, 2020 Incentive Award Plan, and 2021 Employee Stock Purchase Plan of Thryv Holdings, Inc;
of our report dated March 15, 2022 (except Note 17, as to which the date is February 23, 2023) with respect to the consolidated financial statements of Thryv Holdings, Inc. and Subsidiaries included in this Annual Report (Form 10-K) of Thryv Holdings, Inc. for the year ended December 31, 2023.
/s/ Ernst & Young LLP
Dallas, Texas
February 22, 2024
EX-31.1
9
exhibit311-202310xk.htm
EX-31.1
Document
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, Joseph A. Walsh, certify that:
1. I have reviewed this Annual Report on Form 10-K of Thryv Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 22, 2024 |
By: /s/ Joseph A. Walsh
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Joseph A. Walsh |
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Chairman of the Board and Chief Executive Officer |
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(Principal Executive Officer) |
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EX-31.2
10
exhibit312-202310xk.htm
EX-31.2
Document
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
I, Paul D. Rouse, certify that:
1. I have reviewed this Annual Report on Form 10-K of Thryv Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 22, 2024 |
By: /s/ Paul D. Rouse |
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Paul D. Rouse |
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Chief Financial Officer |
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(Principal Financial Officer) |
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EX-32.1
11
exhibit321-202310xk.htm
EX-32.1
Document
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Thryv Holdings, Inc. (the “Company”) for the period ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph A. Walsh, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 22, 2024 |
By: /s/ Joseph A. Walsh
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Joseph A. Walsh |
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Chairman of the Board and Chief Executive Officer |
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(Principal Executive Officer) |
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EX-32.2
12
exhibit322-202310xk.htm
EX-32.2
Document
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Thryv Holdings, Inc. (the “Company”) for the period ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul D. Rouse, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 22, 2024 |
By: /s/ Paul D. Rouse |
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Paul D. Rouse |
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Chief Financial Officer |
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(Principal Financial Officer) |
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EX-97
13
exhibit97-202310xk.htm
EX-97
exhibit97-202310xk
Exhibit 97 THRYV HOLDINGS, INC. Clawback Policy Effective as of November 29, 2023 Section 1. Purpose This Clawback Policy (this “Policy”) has been adopted by the Board of Directors (the “Board”) of Thryv Holdings, Inc. (the “Company”) effective as of November 29, 2023. This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Exchange Act Rule 10D-1 (“Rule 10D-1”) and with Nasdaq Stock Market LLC (“Nasdaq”) Rule 5608, and provides for the recoupment of certain Covered Compensation (as defined below). Section 2. Administration This Policy shall be administered by the Board or, if so designated by the Board, the Compensation Committee of the Board (the “Committee”), in which case references herein to the Board shall be deemed references to the Committee. Subject to the provisions of this Policy, the Board shall make such determinations and interpretations and take such actions in connection with this Policy as it deems necessary or advisable. All determinations and interpretations made by the Board shall be final, binding and conclusive. Section 3. Definitions i. “Accounting Restatement” means a restatement of the Company’s financial statements due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws, including, a required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statement, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. ii. “Cause” shall, as of any applicable date of determination, have the meaning ascribed to such term in the agreement and/or plan governing the most recent equity (or other long- term incentive) award granted to the applicable Covered Employee. iii. “Covered Compensation” means any sign-on bonus, discretionary bonus, annual or long- term cash or equity incentive compensation. iv. “Covered Employee” means any current and former Executive Officers, and such other senior managers and above who may from time to time be deemed subject to the Policy by the Board or Committee.
v. “Detrimental Conduct” means a Covered Employee’s (i) commission of an act of fraud, misappropriation or embezzlement in the course of employment; (ii) commission of a criminal act, whether or not in the course of employment or in the workplace, that constitutes a felony (or substantial equivalent thereof in a non-U.S. jurisdiction) or any other serious crime involving moral turpitude, dishonesty, or fraud; (iii) material violation of a non-compete, non-solicitation, non-disparagement, or confidentiality agreement entered into with the Company or any of its subsidiaries or affiliates; (iv) material breach of the Company’s code of business conduct and ethics (the “Code”) that could give rise to dismissal under the Code; or (v) act or omission that could result in such Covered Employee’s termination for Cause. vi. “Excess Incentive Compensation” means the amount of Incentive Compensation received by the Covered Employee that exceeds the amount of Incentive Compensation that would have otherwise been received by the Covered Employee had it been determined based on the results of the Accounting Restatement, computed without regard to any taxes paid. vii. “Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice- president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Executive officers of the Company’s parent(s) or subsidiaries shall be deemed to be an Executive Officer if they perform such policy making functions for the Company. viii. “Financial Reporting Measures” are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, whether presented in or outside of the Company’s financial statements, any measure derived wholly or in part from such measures (including non-GAAP measures and other measures, metrics, and ratios that are non-GAAP measures). Stock price and total shareholder return are also Financial Reporting Measures for purposes of this Policy. A Financial Reporting Measure need not be presented within the financial statements or included in a filing with the Securities and Exchange Commission. ix. “Incentive Compensation” means any Covered Compensation that is granted, earned, or vested based wholly or in part on the attainment of any Financial Reporting Measure. x. “Recovery Period” means the three (3) completed fiscal years immediately preceding the Required Accounting Restatement Date or, in the case of a recoupment due to Detrimental Conduct, the three (3) year period immediately preceding the later of the date on which a Covered Employee engaged in such Detrimental Conduct or the date on which the Committee discovers that such Covered Employee engaged in such Detrimental Conduct. In addition, the Recovery Period with respect to an Accounting Restatement shall include any transition period (that results from a change in the Company’s fiscal year) within or immediately following the aforementioned three (3) completed fiscal years; provided, however, that a transition period between the last day of the Company’s previous fiscal year end and the first of its new fiscal year that comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year.
xi. “Required Accounting Restatement Date” means the earlier to occur of: (i) the date the Board, a committee of the Board, or the officers of the Company authorized to take such action if the Board is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement or (ii) the date a court, regulatory agency, or other legally authorized body directs to the Company to prepare an Accounting Restatement. Section 4. Mandatory Recovery of Erroneously Award Incentive Compensation In the event the Company is required to prepare an Accounting Restatement, the amount to be recovered from the Covered Employee shall be the Excess Incentive Compensation paid or awarded to a Covered Employee during the Recovery Period. For purposes of calculating the Excess Incentive Compensation amount, Incentive Compensation will be deemed received by the Covered Employee during the Company’s fiscal period during which the Financial Reporting Measure specified in such Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period. For any Incentive Compensation based on stock price or total shareholder return, where the amount of Excess Incentive Compensation is not subject to mathematical recalculations directly from the information in an Accounting Restatement, the Committee will make a determination as to the amount of Excess Incentive Compensation based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive Compensation was received. Notwithstanding anything herein to the contrary, recovery pursuant to this Section 4 shall apply only to Incentive Compensation received by an Executive Officer: (i) after beginning service as an Executive Officer; (ii) who served as an Executive Officer at any time during the performance period for that Incentive Compensation; (iii) while the Company has a class of securities listed on a national securities exchange or a national securities association and (iv) during the Recovery Period. Section 5. Recovery of Covered Compensation due to Detrimental Conduct In the event that the Committee determines that a Covered Employee has engaged in Detrimental Conduct that has caused material financial or reputational harm to the Company, regardless of whether such Detrimental Conduct results in an Accounting Restatement, the Committee may, in its discretion, seek to recover from such Covered Employee any Covered Compensation (including, for the avoidance of doubt, any Covered Compensation that is (A) subject to only time-based vesting conditions, (B) awarded solely at the discretion of the Board or the Committee or (C) earned based on subjective standards, key performance indicators or other strategic or operational measures) received by such Covered Employee during the Recovery Period. Section 6. Method of Recoupment The Board shall determine, in its sole discretion, the method of recovering or cancelling, as the case may be, Excess Incentive Compensation in the case of recoupment due to an Accounting Restatement pursuant to Section 4 or any Covered Compensation received by a
Covered Employee in the case of recoupment due to Detrimental Conduct pursuant to Section 5, which may include, without limitation, any one or more of the following: i. requiring reimbursement in cash of previously paid Excess Incentive Compensation in the case of recoupment due to an Accounting Restatement or any previously paid Covered Compensation in the case of recoupment due to Detrimental Conduct, as the case may be; ii. seeking the recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity or equity-based awards; iii. offsetting the Excess Incentive Compensation in the case of recoupment due to an Accounting Restatement or the amount of Covered Compensation subject to recovery in the case of recoupment due to Detrimental Conduct, as applicable, from any compensation otherwise owed by the Company to the Covered Employee; iv. cancelling outstanding vested or unvested equity awards; and/or v. taking any other remedial recovery action permitted by law, as determined by the Board. Section 7. Impracticability The Committee shall recover any Excess Incentive Compensation in accordance with this Policy unless the Committee, or in the absence of the Committee, a majority of the independent directors serving on the Board, concludes such recovery would be impracticable pursuant to and in accordance with Rule 10D-1 and Nasdaq Rule 5608. Section 8. Indemnification The Company shall not indemnify any Covered Employee, directly or indirectly, for any losses that such Covered Employee may incur in connection with the recovery of any compensation set forth in this Policy. Section 9. Other Recoupment Rights Any applicable employment agreement, award agreement or other document setting forth the terms and conditions of any compensation covered by this Policy shall be deemed to include the restrictions imposed herein and incorporate this Policy by reference and, in the event of any inconsistency, the terms of this Policy will govern. To the extent that any applicable law or stock market or exchange rules or regulations permit or require recovery of compensation in circumstances in addition to those specified herein, nothing in this Policy will be deemed to limit or restrict the right or obligation of the Company to recover such compensation to the fullest extent permitted or required by such law, rules or regulations. Section 10. Interpretation; Amendment; Termination The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to comply with the regulations adopted by the Securities and
Exchange Commission under Section 10D of the Exchange Act and with Nasdaq Rule 5608, or any successor regulations or rules. The Board may terminate this Policy at any time. Section 11. Enforceability If any provision of this Policy is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Section 12. Successors This Policy shall be binding and enforceable against all Covered Employees and their beneficiaries, heirs, executors, administrators or other legal representatives.
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