FIFTH AMENDMENT TO TERM LOAN AND
SECURITY AGREEMENT
This Fifth Amendment to Term Loan and Security Agreement (“Agreement”), dated as of October 15, 2024 and effective as of June 30, 2024 (the “Effective Date”), is entered into by and between Direct Digital Holdings, LLC, a Texas limited liability company (“Borrower”), Direct Digital Holdings, Inc., a Delaware corporation (“DDH Holdings”), Colossus Media, LLC, a Delaware limited liability company (“Colossus”), Huddled Masses LLC, a Delaware limited liability company (“HM”), Orange142, LLC, a Delaware limited liability company (“Orange” and together with DDH Holdings, Colossus, and HM, “Guarantors” and each individually a “Guarantor” and together with Borrower, collectively, the “Credit Parties”, and each a “Credit Party”), Lafayette Square Loan Servicing, LLC, as agent for the Lenders (“Agent”), and the Lenders party hereto.
RECITALS:
WHEREAS, the Borrower, the Guarantors, the Lenders and Agent entered into that certain Term Loan and Security Agreement dated as of December 3, 2021, as amended by the First Amendment to Term Loan and Security Agreement dated as of February 3, 2022, the Second Amendment to Term Loan and Security Agreement dated as of July 28, 2022, the Third Amendment to Term Loan and Security Agreement dated as of January 9, 2023, and the Fourth Amendment to Term Loan and Security Agreement dated as of October 3, 2023 (the “Existing Loan Agreement”; the Existing Loan Agreement as may be further amended, supplemented, or otherwise modified from time to time, including by this Agreement, the “Loan Agreement”);
WHEREAS, effective as of June 30, 2024, the Borrower and Agent have agreed to defer the principal payments of the Closing Date Term Loan required under Section 2.1(a)(i) (Closing Date Term Loan) and the Delayed Draw Term Loan required under Section 2.1(b)(iv) (Delayed Draw Term Loans) of the Loan Agreement through and including December 31, 2025, which was memorialized in email correspondence on July 2, 2024;
WHEREAS, the Borrower, each Guarantor, Agent, and the Lenders desire to amend the Existing Loan Agreement as set forth herein;
WHEREAS, Agent and the Lenders are willing to amend the Existing Loan Agreement under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Credit Parties, Agent, and the Lenders party hereto hereby agree as follows:
1.Same Terms. The capitalized terms used in this Agreement and not defined herein shall have the same meanings as provided therefor in the Loan Agreement, unless the context hereof otherwise requires or provides.
2.Fees and Expenses. The Credit Parties agree to pay or reimburse Agent for all fees owing to Agent and all fees and expenses (including, without limitation, reasonable attorneys’ fees and legal expenses) incurred by Agent in connection with the preparation, negotiation and execution of this Agreement. In consideration of the agreements set forth herein, the Credit Parties agree to pay to Agent the fees set forth in the Fifth Amendment Fee Letter (as defined below).
3.Amendments to Existing Loan Agreement. The Borrower, each Guarantor, Agent, and the Lenders hereby agree that, upon the satisfaction or waiver of the conditions to effectiveness set forth in Section 7, (a) the Loan Agreement shall be amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text and stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text and double-underlined text) as set forth in the Loan Agreement attached as Annex A hereto and (b) Exhibit A, Exhibit C, and Exhibit D to the Loan Agreement shall be amended and restated in their entirety as set forth in Exhibit A, Exhibit C, and Exhibit D, respectively, attached hereto as Annex B hereto.
4.Ratification. Except as expressly provided herein, each Credit Party hereby (a) ratifies the Obligations and each of the Loan Agreement and the Other Documents to which it is a party, and agrees and acknowledges that the Loan Agreement and each of the Other Documents to which it is a party shall continue in full force and effect after giving effect to this Agreement; (b) ratifies and confirms that the security instruments executed by each Credit Party, as amended hereby, are not released, diminished, impaired, reduced, or otherwise adversely affected by the Loan Agreement and continue to secure the full payment and performance of the Obligations pursuant to their terms; (c) acknowledges the continuing existence and priority of the Liens granted, conveyed, and assigned to Agent for its benefit and for the ratable benefit of each Lender, under the security instruments; and (d) agrees that the Obligations include, without limitation, the Obligations (after giving effect to this Agreement). Except as expressly provided herein, nothing in this Agreement extinguishes, novates or releases any right, claim, Lien, security interest or entitlement of Agent or the Lenders created by or contained in any of such documents nor is any Credit Party released from any covenant, warranty or obligation created by or contained therein.
5.Representations and Warranties. Each Credit Party hereby represents and warrants to Agent that; (a) this Agreement has been duly authorized, executed, and delivered by each Credit Party; (b) no action of, or filing with, any Governmental Body is required to authorize, or is otherwise required in connection with, the execution, delivery, and performance by each Credit Party of this Agreement; (c) the Loan Agreement and the Other Documents, as amended by this Agreement, are valid and binding upon each Credit Party and are enforceable against each such Credit Party, in accordance with their respective terms, except as limited by Debtor Relief Laws; (d) the execution, delivery, and performance by each Credit Party of this Agreement does not require the consent of any other Person, except for any consent that has been duly obtained, and do not and will not constitute a violation of any laws, agreements, or understandings to which each such Credit Party is a party or by which each such Credit Party is bound; (e) after giving effect to this Agreement, all representations and warranties in the Loan Agreement and the Other Documents are true and correct in all material respects except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respect as of such earlier date or (ii) the facts on which any of them were based have been changed by transactions contemplated or permitted by the Loan Agreement; and (f) after giving effect to this Agreement, no Default or Event of Default exists.
6.Release. In consideration of Agent and Lenders’ agreements herein, each Credit Party hereby (a) releases, acquits and forever discharges Agent, each Lender and each of their respective agents, employees, officers, directors, partners, servants, representatives, attorneys, affiliates, successors and assigns (collectively, the “Released Parties”) from any and all liabilities, claims, suits, debts, liens, losses, causes of action, demands, rights, damages, costs and expenses of any kind, character or nature whatsoever, known or unknown, fixed or contingent, that such Credit Party may have or claim to have now against any Released Party or which might arise out of or be connected with any act of commission or omission of any Released Party existing or occurring on or prior to the date of this Agreement, including, without limitation, any claims, liabilities or obligations relating to or arising out of or in
connection with the Advances, the Loan Agreement or the Other Documents (including, without limitation, arising out of or in connection with the initiation, negotiation, closing or administration of the transactions contemplated thereby or related thereto), from the beginning of time until the execution and delivery of this release and the effectiveness of this Agreement (the “Released Claims”) and (b) agrees forever to refrain from commencing, instituting or prosecuting any lawsuit, action or other proceeding against the Released Parties with respect to any and all Released Claims.
7.Conditions to Effectiveness. The transactions contemplated by this Agreement shall be deemed to be effective as of the Effective Date, when the following have been satisfied in a manner satisfactory to Agent:
(a)Agreement. Agent receives a fully executed copy of this Agreement;
(b)Fifth Amendment Fee Letter. Agent receives a fully executed fee letter (the “Fifth Amendment Fee Letter”) by Borrower in form and substance satisfactory to Agent;
(c)2024 ABL Amendment. Agent receives a fully executed copy of the 2024 ABL Amendment (as defined below);
(d)Fees and Expenses. Agent receives all fees payable to Agent and Lenders on or prior to the Effective Date, including under Section 2 hereof;
(e)Representations and Warranties. All representations and warranties set forth in this Agreement are true and correct in all material respects as set forth in Section 5 above; and
(f)Certificates of each Credit Party. Agent receives certificate from the Secretary or Assistant Secretary of each Credit Party, in form and substance reasonably satisfactory to Agent: (i) attesting to the resolutions of such Credit Party’s Board of Directors or similar governing body authorizing its execution, delivery, and performance of this Agreement and the transactions contemplated hereby, and such other items and documents as Agent shall reasonably request, (ii) authorizing specific officers of such Credit Party to execute the same and (iii) attesting to the incumbency and signatures of such specific officers of such Credit Party.
8.Consent to the 2024 ABL Amendment. Pursuant to Section 6.1 of the Intercreditor Agreement, Agent consents to the entry by the Credit Parties into that certain Third Amendment to Credit Agreement (the “2024 ABL Amendment”) dated the date hereof by and among the Credit Parties and East West Bank pursuant to which, among other things, the Credit Parties and East West Bank agree (1) that the Credit Parties shall make mandatory prepayments on the notes under the ABL Credit Agreement equal to (A) $1,000,000 on or before January 15, 2025 and (B) $2,000,000 on or before April 15, 2024 pursuant to Section 3.02(b) of the ABL Credit Agreement and (2) to amend certain financial covenants set forth in Article IX of the ABL Credit Agreement.
9.Counterparts. For the convenience of the parties, this Agreement may be executed in multiple counterparts, each of which for all purposes shall be deemed to be an original, and all such counterparts shall together constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, e-mail, facsimile transmission, electronic mail in “portable document format” (“.pdf”) form or other electronic means intended to preserve the original graphic and pictorial appearance of the item being sent shall be effective as a delivery of a manually executed counterpart of this Agreement.
10.References to the Loan Agreement. Upon the effectiveness of this Agreement, (a) each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import shall mean and be a reference to the Loan Agreement after giving effect to the Agreement set forth herein, and (b) each reference to the Loan Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Loan Agreement shall mean and be a reference to the Loan Agreement after giving effect to the Agreement set forth herein.
11.Effect. The Agreement is one of the Other Documents. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Loan Agreement, or (b) to prejudice any right or rights which Agent or any Lender now has or may have in the future under or in connection with the Loan Agreement, as amended hereby, or any of the other documents referred to herein or therein.
12.ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT, THE LOAN AGREEMENT AND THE OTHER DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
13.Governing Law. This Agreement, and all matters relating hereto or arising herefrom (whether arising under contract law, tort law or otherwise) shall, in accordance with Section 5-1401 of the General Obligations Law of the State of New York, be governed by and construed in accordance with the laws of the State of New York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement is deemed executed effective as of the Effective Date.
BORROWER:
DIRECT DIGITAL HOLDINGS, LLC
By: /s/ Keith W. Smith
Name: Keith W. Smith
Title: President
GUARANTORS:
DIRECT DIGITAL HOLDINGS, INC.
By: /s/ Keith W. Smith
Name: Keith W. Smith
Title: President
COLOSSUS MEDIA, LLC
By:
Name: Keith Smith
Title: President
HUDDLED MASSES LLC
By: /s/ Keith W. Smith
Name: Keith W. Smith
Title: President
ORANGE142, LLC
By: /s/ Keith W. Smith
Name: Keith W. Smith
Title: President
Signature Page to
Fifth Amendment to Term Loan and Security Agreement
AGENT:
LAFAYETTE SQUARE LOAN SERVICING, LLC
By: /s/ Damien Dwin
Name: Damien Dwin
Title: Chief Executive Officer
Signature Page to
Fifth Amendment to Term Loan and Security Agreement
| | | | | |
| LENDERS:
LAFAYETTE SQUARE USA, INC., as a Lender By: /s/ Damien Dwin Name: Damien Dwin Title: Chief Executive Officer
|
|
|
|
|
Signature Page to
Fifth Amendment to Term Loan and Security Agreement
ANNEX A
[SEE ATTACHED]
ANNEX B
[SEE ATTACHED]
Conformed Copy through 4th Amendment
Annex A to Fifth Amendment to Term Loan and Security Agreement
dated as of October 15, 2024
TERM LOAN AND SECURITY AGREEMENT
LAFAYETTE SQUARE LOAN SERVICING, LLC
(AS AGENT)
THE LENDERS PARTY HERETO
(AS LENDERS)
WITH
DIRECT DIGITAL HOLDINGS, LLC
(AS A BORROWER),
ANY PERSON JOINED HERETO AS A BORROWER FROM TIME TO TIME
AND
CERTAIN SUBSIDIARIES OF BORROWERS PARTY HERETO
(AS GUARANTORS)
December 3, 2021
2
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
Page
Page
I. DEFINITIONS. 1
1.1 Accounting Terms 1
1.2 Defined Terms 2
1.3 Uniform Commercial Code Terms 4247
1.4 Certain Matters of Construction 4247
1.5 Early Opt-In Election. Agent notified Borrower on June 1, 2023 that pursuant to Section 3.8 hereof, Agent and the Credit Parties have jointly elected to trigger a fallback from USD LIBOR to Term SOFR. Pursuant thereto, effective May 31, 2023 (the “Replacement Date”), Term SOFR replaced LIBOR for all purposes under this Agreement and the Other Documents in respect of such Benchmark setting without any amendment to, or further action or consent of any other party to, the Loan Agreement or any Other Document. On the Replacement Date, the Benchmark Replacement shall mean the sum of (x) Term SOFR and (y) 0.15% (15 basis points) for an Available Tenor of three-months’ duration. In connection with the implementation and administration of Term SOFR, Agent reserves the right to make Benchmark Replacement Conforming Changes from time to time in accordance with this Agreement. 43 48
II. ADVANCES, PAYMENTS. 4349
2.1 Term Loans 4349
2.2 Repayment of Advances 4551
2.3 [Reserved] 4651
2.4 Statement of Account 4652
2.5 Additional Payments 4652
2.6 Manner of Borrowing and Payment 4652
2.7 Mandatory Prepayments 4753
2.8 Use of Proceeds 4954
2.9 Defaulting Lender 4955
2.10 Joint and Several Liability, Waivers, etc 5056
III. INTEREST AND FEES. 5358
3.1 Interest 5358
3.2 [Reserved] 5359
i
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
3.3 [Reserved] 5359
3.4 Fee Letter 5359
3.5 Computation of Interest and Fees 5359
3.6 Maximum Charges 5359
3.7 Increased Costs 5359
3.8 Benchmark Replacement Setting 5460
3.9 Capital Adequacy 5861
3.10 Taxes 5962
3.11 Replacement of Lenders 6366
IV. COLLATERAL: GENERAL TERMS. 6467
4.1 Security Interest in the Collateral 6467
4.2 Creation and Perfection of Security Interest 6467
4.3 [Reserved] 6568
4.4 Preservation of Collateral 6568
4.5 Ownership of Collateral 6569
4.6 Defense of Agent’s and Lenders’ Interests 6669
4.7 Books and Records 6770
4.8 Financial Disclosure 6770
4.9 Compliance with Laws 6770
4.10 Inspection of Premises 6770
4.11 Insurance 6771
4.12 Failure to Pay Insurance 6872
4.13 Payment of Taxes 6872
4.14 Payment of Leasehold Obligations 6972
4.15 Receivables 6972
4.16 Pledge of Personal Property Assets 7275
4.17 Maintenance of Equipment 7275
4.18 Exculpation of Liability 7276
4.19 Environmental Matters 7376
4.20 Financing Statements 7477
4.21 Key Executive Policy 7477
V. REPRESENTATIONS AND WARRANTIES. 7477
5.1 Organization; Requisite Power and Authority; Qualification 7478
5.2 Equity Interests and Ownership. 7578
5.3 Due Authorization 7578
5.4 No Conflict 7578
5.5 Governmental Consents 7579
5.6 Binding Obligations 7679
5.7 No Material Adverse Effect; No Default 7679
ii
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
5.8 Tax Returns 7679
5.9 Financial Statements 7679
5.10 Information Regarding the Credit Parties and their Subsidiaries 7780
5.11 Environmental Matters; O.S.H.A. 7780
5.12 Solvency; No Litigation, Violation, Indebtedness or Default 7881
5.13 Patents, Trademarks, Copyrights and Licenses 7982
5.14 Licenses, Permits and Other Approvals 7982
5.15 Default of Indebtedness 7983
5.16 No Default 7983
5.17 No Burdensome Restrictions 8083
5.18 No Labor Disputes 8083
5.19 Margin Regulations 8083
5.20 Investment Company Act 8084
5.21 Disclosure 8084
5.22 Delivery of Certain Documents 8184
5.23 Swaps 8184
5.24 Immaterial Subsidiaries 8184
5.25 [Reserved] 8184
5.26 Business and Property of Credit Parties 8184
5.27 Insurance 8285
5.28 [Reserved] 8285
5.29 Anti-Terrorism Laws; Anti-Corruption Laws. 8285
5.30 Trading with the Enemy 8386
5.31 [Reserved] 8386
5.32 [Reserved]. 8386
5.33 Eligible Impact Service 83Worker Solutions 86
5.34 Data Privacy and Security 8386
5.35 Small Business Administration Documents 8487
5.36 Small Business Concern 8487
5.37 Canadian Subsidiary 8487
5.38 Survival of Representations and Warranties 8487
VI. AFFIRMATIVE COVENANTS. 8488
6.1 Lender Meetings 8488
6.2 Conduct of Business and Maintenance of Existence and Assets 8588
6.3 Violations 8588
6.4 Government Receivables 8588
6.5 Financial Covenants. 8588
6.6 Execution of Supplemental Instruments 8689
6.7 Payment of Indebtedness 8689
iii
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
6.8 Real Property Collateral 8690
6.9 Federal Securities Laws 8791
6.10 Exercise of Rights 8791
6.11 [Reserved]. 8891
6.12 Additional Subsidiaries 8891
6.13 [Reserved] 8992
6.14 Sanctions and Anti-Corruption Matters 8992
6.15 Impact Subscription to or Impact Services. 89
6.16 Post-Closing Deliveries. 8993
VII. NEGATIVE COVENANTS. 9194
7.1 Merger, Consolidation, Acquisition and Sale of Assets 9194
7.2 Creation of Liens 9195
7.3 No Further Negative Pledges 9397
7.4 Investments 9397
7.5 Sale and Lease-Backs 9498
7.6 [Reserved] 9498
7.7 Restricted Payments 9498
7.8 Indebtedness 9599
7.9 Nature of Business 9699
7.10 Transactions with Affiliates 9699
7.11 Burdensome Agreements 96100
7.12 [Reserved] 97100
7.13 Fiscal Year and Accounting Changes 97100
7.14 [Reserved] 97100
7.15 Amendment of Governing Documents 97100
7.16 Compliance with ERISA 97101
7.17 Prepayment of Indebtedness 97101
7.18 Anti-Terrorism Laws. 97101
7.19 Membership/Partnership Interests 98102
7.20 Trading with the Enemy Act 98102
7.21 Management Agreement; Management Fees 98102
7.22 Other Agreements 99102
7.23 Canadian Subsidiary 99102
7.24 ABL Obligations 99[Reserved 103
VIII. CONDITIONS PRECEDENT. 99103
8.1 Conditions to Initial Advances 99103
8.2 Conditions to Delayed Draw Term Loans 102106
iv
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
IX. INFORMATION AS TO CREDIT PARTIES. 103107
9.1 Information Regarding Credit Parties 103107
9.2 [Reserved] 104107
9.3 [Reserved] 104107
9.4 Litigation, etc 104107
9.5 Material Occurrences 104107
9.6 Management Discussion and Analysis 104108
9.7 Annual Financial Statements 104108
9.8 Quarterly Financial Statements 105108
9.9 Monthly Financial Statements 105109
9.10 Acquired Intellectual Property 106109
9.11 Additional Information 106109
9.12 Projections 106110
9.13 Small Business Administration 106110
9.14 Notice of Suits, Adverse Events 106110
9.15 ERISA Notices and Requests 107110
9.16 [Reserved]. 107111
9.17 Board Observation Rights 107111
X. EVENTS OF DEFAULT. 108111
10.1 Nonpayment 108111
10.2 Breach of Representation 108111
10.3 Noncompliance 108112
10.4 Reserved. 108112
10.5 Judgments and Attachments 108112
10.6 Criminal Proceeding 109112
10.7 Bankruptcy 109112
10.8 Inability to Pay 109113
10.9 Government Settlement 109113
10.10 Material Adverse Change 109113
10.11 Cross Default to other Indebtedness 110113
10.12 Breach of Guarantee 110114
10.13 Change of Control 110114
10.14 Invalidity 110114
10.15 Seizures 110114
10.16 Operations 110114
10.17 Pension Benefit Plans 111114
10.18 Anti-Terrorism Laws 111114
10.19 Invalidity of Intercreditor Agreement or Subordination Provisions 111115
XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT, ETC. 111116
v
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
11.1 Rights and Remedies 111116
11.2 Agent’s Discretion 114118
11.3 Setoff 114118
11.4 Rights and Remedies not Exclusive 114119
11.5 Allocation of Payments After Event of Default 114119
XII. WAIVERS AND JUDICIAL PROCEEDINGS. 115120
12.1 Waiver of Notice 115120
12.2 Delay 115120
12.3 Jury Waiver 115120
XIII. EFFECTIVE DATE AND TERMINATION. 116120
13.1 Term 116120
13.2 Termination 116120
13.3 Revival and Reinstatement of Obligations 116121
XIV. REGARDING AGENT. 117121
14.1 Appointment 117121
14.2 Nature of Duties 117122
14.3 Lack of Reliance on Agent and Resignation 118122
14.4 Certain Rights of Agent 119123
14.5 Reliance 119123
14.6 Notice of Default 119124
14.7 Indemnification 119124
14.8 Agent in its Individual Capacity 119124
14.9 Delivery of Documents 120124
14.10 Borrowers’ Undertaking to Agent 120124
14.11 No Reliance on Agent’s Customer Identification Program 120125
14.12 Other Agreements 120125
14.13 Erroneous Payment 120125
XV. MISCELLANEOUS. 122126
15.1 Governing Law 122126
15.2 Entire Understanding 122127
15.3 Successors and Assigns; Participations; New Lenders 124128
15.4 Application of Payments 126131
15.5 Indemnity 127131
15.6 Notice 128132
15.7 Survival 129134
15.8 Severability 130134
vi
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
15.9 Expenses 130134
15.10 Injunctive Relief 130135
15.11 Damages 130135
15.12 Captions 130135
15.13 Counterparts, etc 130135
15.14 Construction 131135
15.15 Confidentiality; Sharing Information 131135
15.16 PUBLICITY 132137
15.17 Certifications From Banks and Participants; USA PATRIOT Act 133137
15.18 Borrowing Agency Provisions 133138
XVI. GUARANTY AND SURETYSHIP AGREEMENT. 134138
16.1 Guaranty and Suretyship Agreement 134138
16.2 Guaranty of Payment and Not Merely Collection 134139
16.3 Guarantor and Suretyship Waivers 134139
16.4 Repayments or Recovery from Agent or Lenders 135140
16.5 Enforceability of Obligations 136140
16.6 Guaranty Payable upon Event of Default; Remedies 136141
16.7 Waiver of Subrogation 137141
16.8 Continuing Guaranty and Suretyship Agreement 137141
16.9 General Limitation on Guarantee Obligations 137142
16.10 Right of Contribution 137142
16.11 Intercreditor Agreement 137142
vii
159823.01008/130146990v.3
159823.01008/150720893v.5
TABLE OF CONTENTS
(continued)
Page
List of Exhibits and Schedules
Exhibits
Exhibit A Eligible Worker Solutions
Exhibit B Form of Transfer Supplement
Exhibit C Form of Compliance Certificate
Exhibit D Worker Solutions Certificate
Exhibit E Key Performance Indicators
Exhibit F-1 Form of Closing Date Term Note
Exhibit F-2 Form of Delayed Draw Term Loan Note
Exhibit G Form of Joinder
Exhibit H Form of Financial Condition Certificate
Schedules
Schedule 1.2(b) Term Loan Commitment Percentages
Schedule 1.2(c) Commercial Tort Claims
Schedule 4.5 Chief Executive Office; Equipment and Inventory Locations
Schedule 4.15(h) Deposit and Investment Accounts
Schedule 5.1 Jurisdictions of Organization and Good Standing
Schedule 5.2(a) Equity Interests and Ownership
Schedule 5.2(b) Subsidiaries
Schedule 5.8(d) Pension Benefit Plan
Schedule 5.10 Information Regarding the Credit Parties and their Subsidiaries
Schedule 5.13 Intellectual Property
Schedule 5.26 Liabilities, Assets and Activities
Schedule 5.27 Insurance
Schedule 7.2 Existing Liens
Schedule 7.4 Existing Investments
Schedule 7.8 Existing Indebtedness
Schedule 7.10 Transactions with Affiliates
viii
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
TERM LOAN AND SECURITY AGREEMENT
Term Loan and Security Agreement dated as of December 3, 2021 among DIRECT DIGITAL HOLDINGS, LLC, a Texas limited liability company (“DDH”, together with any Person joined as a party to this Agreement as a “Borrower” in accordance with Section 6.12 hereof, and all of their respective permitted successors and assigns, the “Borrowers”), the Guarantors party hereto (together with the Borrowers, the “Credit Parties” and each a “Credit Party”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and each individually, a “Lender”) and LAFAYETTE SQUARE LOAN SERVICING, LLC (“Lafayette Square”), as agent for Lenders (Lafayette Square, in such capacity, “Agent”).
IN CONSIDERATION of the mutual covenants and undertakings herein contained, the Credit Parties, Lenders and Agent hereby agree as follows:
I.DEFINITIONS.
I.1Accounting Terms.
.
(a)Except as otherwise expressly provided herein, all accounting terms used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Borrower to Agent and Lenders pursuant to Sections 9.7, 9.8 and 9.9 shall be prepared in accordance with GAAP as in effect at the time of such preparation. If at any time any change in GAAP or in the consistent application thereof would affect the computation of any financial covenant or requirement set forth in this Agreement or any Other Document, and Borrowing Agent shall object in writing to determining compliance based on such change or Agent shall otherwise require, then Agent and Borrowing Agent shall negotiate in good faith to amend such financial covenant, requirement or applicable defined terms to preserve the original intent thereof in light of such change to GAAP, provided that, until so amended such computations shall continue to be made on a basis consistent with the most recent financial statements delivered pursuant to Sections 9.7, 9.8 and 9.9 as to which no such objection has been made and the Credit Parties shall provide additional financial statements or supplements thereto, attachments to Compliance Certificates and/or calculations regarding financial covenants as Agent may reasonably require in order to provide the appropriate financial information required hereunder with respect to the Credit Parties both reflecting any applicable changes in GAAP and as necessary to demonstrate compliance with the financial covenants before giving effect to the applicable changes in GAAP.
(b)Notwithstanding the above, the parties hereto acknowledge and agree that all calculations of the financial covenants in Section 6.5 shall be made on a Pro Forma Basis.
[Different first page setting changed from on in original to off in modified.].
1
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(c)Notwithstanding the above, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries if applicable) 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.
(d)[Reserved].
(e)To the extent a Fiscal Year or Fiscal Quarter of DDH (or DDH Holdings if applicable) ends on a date that is not a calendar year or calendar quarter end, references herein to a Fiscal Year or Fiscal Quarter ending on March 31, June 30, September 30 or December 31 shall be deemed to refer to the Fiscal Year or Fiscal Quarter most recently ending on or about such date.
I.2Defined Terms
. For purposes of this Agreement the following terms shall have the following meanings:
“ABL Amendment” shall have the meaning set forth in Section 6.16(e) hereof.
“ABL Credit Agreement” shall mean (a) that certain Credit Agreement dated as of September 30, 2020July 7, 2023 among DDH, certain Subsidiaries thereof, and ABL Lender, as such agreement has been amended and may hereafter be amended, restated or otherwise modified in accordance with the Intercreditor Agreement, and (b) any Replacement ABL Credit Agreement entered into subsequent to the Fifth Amendment Closing Date.
“ABL Lender” shall mean (a) East West Bank, a California bank, and any successors and assigns to the extent permitted pursuant to the Intercreditor Agreement, or (b) any lender under a Replacement ABL Credit Agreement.
“ABL Loan Documents” shall mean any and all notes, agreements, documents, instruments now or at anytime evidencing, securing, guarantying or otherwise executed and delivered in connection with the ABL Credit Agreement, as the same may be amended, restated, supplemented or modified in accordance with the Intercreditor Agreement, including all “Loan Documents” as defined in the ABL Credit Agreement.
“ABL Obligations” shall mean the liabilities and Indebtedness of the Credit Parties outstanding under the ABL Credit Agreement from time to time, including the “Obligations” under and as defined in the ABL Credit Agreement in effect on the date hereof.
“Accountants” shall have the meaning set forth in Section 9.7 hereof.
“Acquisition” shall mean, with respect to any Person, the acquisition by such Person, in a single transaction or in a series of related transactions, of (a) all or any substantial portion of the property of another Person, or any division, line of business or other business unit of another
[Different first page setting changed from on in original to off in modified.].
2
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Person or (b) at least a majority of the Voting Stock of another Person, in each case whether or not involving a merger or consolidation with such other Person and whether for cash, property, services, assumption of Indebtedness, securities or otherwise.
“Acquisition Documents” shall mean, with respect to any Acquisition, the purchase agreement and all material other agreements related to such Acquisition, in each case as amended in conformity with the terms of this Agreement.
“Adjusted Term SOFR” shall mean for purposes of any calculation, the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) equal to Term SOFR for such calculation plus the Term SOFR Adjustment; provided, that if Term SOFR is less than one percent (1%) per annum at any time, Adjusted Term SOFR at such time shall be equal to the Floor.
“Advances” shall mean and include each advance of the Term Loans.
“Adverse Proceeding” shall mean any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of any Credit Party or any of its Subsidiaries) at law or in equity, or before or by any Governmental Body, whether pending, threatened in writing against any Credit Party or any of its Subsidiaries or any material property of any Credit Party or any of its Subsidiaries.
“Affiliate” of any Person shall mean any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with such the Person specified.
“Agent” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and permitted assigns.
“Agreement” shall mean this Term Loan and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ALTA” shall mean American Land Title Association.
“Anti-Corruption Laws” shall mean the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq, the UK Bribery Act of 2010 and all other laws, rules, and regulations of any jurisdiction applicable to any Credit Party or any of its Affiliates from time to time concerning or relating to bribery or corruption.
“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery and any regulation, order or directive promulgated, issued or enforced pursuant to such Applicable Laws, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by
[Different first page setting changed from on in original to off in modified.].
3
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
OFAC (as any of the foregoing Applicable Laws may from time to time be amended, modified, supplemented, renewed, extended, or replaced).
“Applicable Impact Discount” shall mean (a) as of the Closing Date and through and including the date immediately prior to the first Applicable Impact Discount Reset Date, a rate per annum equal to 0.00 % and (b) on and after each Applicable Impact Discount Reset Date, (i) a rate per annum as set forth in the table below based upon the Impact Subscription to each of the Eligible Impact Services by Borrowers:
| | | | | |
No Eligible Impact Services | 0.00% |
One or more Eligible Impact Services | 0.05% |
plus (ii) solely to the extent Borrowers received a B Corp Certification by Standards Analysts at the non-profit B Lab (or any successor certification or administrator identified by Agent in its sole discretion), as listed in https://bcorporation.net/directory (or any successor directory identified by Agent in its sole discretion) or such other comparable certification from a nationally recognized and reputable third party assessment and validation of social and environmental performance identified to and approved by Agent in writing, a rate per annum equal to 0.05% so long as Borrowers maintain such certification.
The component of the Applicable Impact Discount set forth in clause (b)(i) above shall (i) remain in effect for the period of the applicable Impact Subscription to any applicable Eligible Impact Service(s) notwithstanding removal of such provider, program or service from Exhibit A (unless Agent has notified Borrowers in writing that such provider, program or service is removed or to be removed from Exhibit A prior to the commencement of the period of any such Impact Subscription) and (ii) be adjusted, to the extent applicable, (x) as of each Applicable Impact Discount Reset Date based upon and to the extent that Borrowers have certified in the applicable Impact Certificate as to the Impact Subscription to any such applicable Eligible Impact Service or (y) otherwise at such time agreed by Agent and Borrowers as a result of a mutual determination to (1) cease or otherwise terminate any applicable Eligible Impact Service (thereby reducing the Applicable Impact Discount) or (2) Impact Subscribe to an Eligible Impact Service which had not been the subject of an Impact Subscription immediately prior to such determination (thereby increasing the Applicable Impact Discount to the extent applicable).
If Agent determines that Borrowers did not successfully make an Impact Subscription to any such Eligible Impact Service during an earlier period in which the Applicable Impact Discount applied (or were otherwise not certified as a B Corporation under clause (b)(ii) above during any such earlier period), without limiting any other rights or remedies arising as a result of any certification in an Impact Certificate which may prove to have been false or misleading,
[Different first page setting changed from on in original to off in modified.].
4
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Borrowers shall automatically and retroactively be obligated to pay to Agent, for the benefit of the applicable Lenders, promptly on demand by Agent, an amount equal to the excess of the amount of interest that should have been paid for such period without the Applicable Impact Discount over the amount of interest actually paid for such period.
“Applicable Impact Discount Reset Date” shall mean the first day of the month following the date on which financial statements, Compliance Certificate and Impact Certificate are required to be delivered pursuant to Section 9.8 after the end of each related Fiscal Quarter.
“Applicable Laws” shall mean all applicable laws, including all applicable provisions of constitutions, statutes, rules, ordinances, regulations and orders of all Governmental Bodies and all orders, rulings, writs and decrees of all courts, tribunals and arbitrators.
“Applicable Margin” shall mean (a) as of the Second Amendment Date and through and including the date on which the quarterly financial statements of the Credit Parties on a Consolidated Basis required under Section 9.8 hereof for the fiscal quarter ending June 30, 2022 are delivered, the margin corresponding to Level V below (the date of such delivery, the “Initial Adjustment Date”), and (b) effective on the first day of the month following receipt by Agent of the quarterly financial statements of the Credit Parties on a Consolidated Basis and related Compliance Certificate required under Section 9.8 hereof for the fiscal quarter ending subsequent to the Initial Adjustment Date (such first day of the applicable month, an “Adjustment Date”), the Applicable Margin for the Term Loans shall be adjusted, if necessary, to the applicable percent per annum set forth in the pricing table below corresponding to the Consolidated Total Net Leverage Ratio for the trailing four quarter period ending on the last day of the most recently completed fiscal quarter prior to the applicable Adjustment Date:
[Different first page setting changed from on in original to off in modified.].
5
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
| | | | | | | | |
| Level | Consolidated Total Net Leverage Ratio | Applicable Margin |
| I | Less than or equal to 1.00 to 1.00 | 7.00% |
| II | Greater than 1.00 to 1.00 and less than or equal to 1.50 to 1.00 | 7.50% |
| III | Greater than 1.50 to 1.00 and less than or equal to 2.00 to 1.00 | 8.00% |
| IV | Greater than 2.00 to 1.00 and less than or equal to 2.50 to 1.00 | 8.50% |
| V | Greater than 2.50 to 1.00 and less than or equal to 3.00 to 1.00 | 9.00% |
| VI | Greater than 3.00 to 1.00 and less than or equal to 3.50 to 1.00 | 9.50% |
| VII | Greater than 3.50 to 1.00 | 10.00% |
If the Credit Parties shall fail to deliver the financial statements, certificates and/or other information required under Sections 9.7 or 9.8 hereof by the dates required pursuant to such sections, each Applicable Margin shall be conclusively presumed to equal the highest Applicable Margin specified in the pricing table set forth above until the date of delivery of such financial statements, certificates and/or other information, at which time the rate will be adjusted based upon the Consolidated Total Net Leverage Ratio reflected in such statements. Notwithstanding anything to the contrary set forth herein, immediately and automatically upon the occurrence and continuation of any Event of Default, each Applicable Margin shall increase to and equal the highest Applicable Margin specified in the pricing table set forth above and shall continue at such highest Applicable Margin until the date (if any) on which such Event of Default shall be waived in accordance with the provisions of this Agreement, at which time the rate will be adjusted based upon the Consolidated Total Net Leverage Ratio reflected on the most recently delivered financial statements and Compliance Certificate delivered by the Credit Parties to Agent pursuant to Section 9.7 or 9.8 hereof (as applicable). Any increase in interest rates payable
[Different first page setting changed from on in original to off in modified.].
6
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
by the Credit Parties under this Agreement and the Other Documents pursuant to the provisions of the foregoing sentence shall be in addition to and independent of any increase in such interest rates resulting from the occurrence of any Event of Default (including, if applicable, any Event of Default arising from a breach of Sections 9.7 or 9.8 hereof) and/or the effectiveness of the Default Rate provisions of Section 3.1 hereof.
If, as a result of any restatement of, or other adjustment to, the financial statements of the Credit Parties or for any other reason, Agent determines in its Permitted Discretion that (a) the Consolidated Total Net Leverage Ratio as previously calculated as of any applicable date for any applicable period was inaccurate, and (b) a proper calculation of the Consolidated Total Net Leverage Ratio for any such period would have resulted in different pricing for such period, then (i) if the proper calculation of the Consolidated Total Net Leverage Ratio would have resulted in a higher interest rate for such period, automatically and immediately without the necessity of any demand or notice by Agent or any other affirmative act of any party, the interest accrued on the applicable outstanding Advances for such period under the provisions of this Agreement and the Other Documents shall be deemed to be retroactively increased by, and the Credit Parties shall be obligated to immediately pay to Agent for the ratable benefit of Lenders an amount equal to the excess of the amount of interest that should have been paid for such period over the amount of interest actually paid for such period; and (ii) if the proper calculation of the Consolidated Total Net Leverage Ratio would have resulted in a lower interest rate for such period, then Agent shall, upon such determination, notify DDH of the amount of interest over-paid and the Borrowers shall be entitled to a credit (which shall be applied to future accrued interest) from the Lenders who were Lenders that held the Loans during the relevant period and continue to hold Loans on the date Agent made such determination in an amount equal to any such excess interest paid to such Lender; provided, that, if as a result of any restatement or other event or other determination by Agent a proper calculation of the Consolidated Total Net Leverage Ratio would have resulted in a higher interest rate for one or more periods and a lower interest rate for one or more other periods (due to the shifting of income or expenses from one period to another period or any other reason), then the amount payable by the Credit Parties pursuant to clause (i) above shall be based upon the excess, if any, of the amount of interest that should have been paid for all applicable periods over the amounts of interest actually paid for such periods.
“Asset Sale” shall mean a sale, lease, Sale and Leaseback Transaction, assignment, conveyance, exclusive license (as licensor), Securitization Transaction, transfer or other disposition to, or any exchange of property with, any non-Credit Party Person, in one transaction or a series of transactions, of all or any part of any Credit Party or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, created, leased or licensed, including the Equity Interests of DDH or any Subsidiary of DDH, provided that “Asset Sales” shall not include any (a) dispositions of surplus, obsolete or worn out property or property in the ordinary course of business; (b) dispositions of inventory sold, and Intellectual Property licensed, in the ordinary course of business; (c) dispositions of accounts or payment intangibles (each as defined in the UCC) resulting from the compromise or settlement thereof in the ordinary course of business for less than the full amount thereof; (d) dispositions of Cash Equivalents in the
[Different first page setting changed from on in original to off in modified.].
7
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
ordinary course of business; (e) licenses, sublicenses, leases or subleases granted to any third parties in the ordinary course of business that do not interfere in any material respect with the business of Borrower or any of its Subsidiaries; (f) any Redemption/Exchange Transactions; and (g) any transactions consummated pursuant to the Warrant Tender Offer.
“Attributable Principal Amount” shall mean (a) in the case of Capital Leases, the amount of Capital Lease obligations determined in accordance with GAAP, (b) in the case of Synthetic Leases, an amount determined by capitalization of the remaining lease payments thereunder as if it were a Capital Lease determined in accordance with GAAP, (c) in the case of Securitization Transactions, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by Agent in its reasonable judgment and (d) in the case of Sale and Leaseback Transactions, the present value (discounted in accordance with GAAP at the debt rate implied in the applicable lease) of the obligations of the lessee for rental payments during the term of such lease.
“Authority” shall have the meaning set forth in Section 4.19(c).
“Authorized Officer” shall mean, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), chief financial officer or treasurer and, solely for purposes of making the certifications required under Sections 8.1(c) and (d), any secretary or assistant secretary.
“Available Tenor” shall mean, 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 pursuant to Section 3.8 hereof from the Interest Period options available to the Borrowers.
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
“Benchmark” shall mean, 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” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.8(a) hereof.
“Benchmark Replacement” shall mean with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by Agent for the applicable Benchmark Replacement Date:
(a) Daily Simple SOFR; or
[Different first page setting changed from on in original to off in modified.].
8
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(b) the sum of: (i) the alternate benchmark rate that has been selected by Agent and the Borrowing Agent 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 to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for all the purposes of this Agreement and the Other Documents.
“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Agent and the Borrowing Agent giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.
“Benchmark Replacement Date” shall mean 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); or
(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 or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative or non-compliant with or non-aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks; provided that such non-representativeness, non-compliance or non-alignment will be determined by reference to the most recent statement or publication referenced in such 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, 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
[Different first page setting changed from on in original to off in modified.].
9
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” shall mean 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 Federal Reserve Board, 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 or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component 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 or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks.
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” shall mean, 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 Other Document in accordance with Section 3.8 hereof and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Other Document in accordance with Section 3.8 hereof.
[Different first page setting changed from on in original to off in modified.].
10
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Borrower” and “Borrowers” shall mean DDH and each other Person joined as a party to this Agreement as a “Borrower” in accordance with Sections 6.12 hereof, and all of their respective permitted successors and assigns.
“Borrowers’ Account” shall have the meaning set forth in Section 2.4.
“Borrowing Agent” shall mean DDH.
“Business Day” shall mean any day other than Saturday or Sunday, a legal holiday on which commercial banks are authorized or required by law to be closed for business in New York, New York or legal holiday on which Agent is not open for business in its main office in New York.
“Capital Expenditures” shall mean, for any period of determination, expenditures made or liabilities incurred during such period for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year (including, for the purpose of clarity, the total principal portion of Capitalized Lease Obligations paid in such period), which, in accordance with GAAP, would be classified as capital expenditures, but excluding (a) any such expenditures made with proceeds of any Involuntary Disposition to the extent such expenditures are used to purchase property that is the same as or similar to the property subject to such Involuntary Disposition or (b) Permitted Acquisitions; provided that, for purposes hereof, Capital Expenditures shall be calculated net of the value of any property traded-in or exchanged in connection with any such expenditure.
“Capital Lease” shall mean, with respect to any Person, any lease of (or other agreement conveying the right to use) any property by such Person as a lessee that, in conformity with GAAP (subject to Section 1.1), is or should be accounted for as a capital lease on the balance sheet of such Person.
“Capitalized Lease Obligation” shall mean any obligation under a Capital Lease.
“Cash Equivalents” shall mean, as of any date of determination, any of the following: (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one (1) year after such date; (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one (1) year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (c) commercial paper maturing no more than one (1) year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (d) certificates of deposit or bankers’ acceptances maturing within one (1) year after such date and issued or accepted by any commercial bank that is organized under the laws of the United States or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal banking regulator), and (ii) has
[Different first page setting changed from on in original to off in modified.].
11
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (e) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
“Change of Control” shall mean:
(a) with respect to DDH Holdings, (x) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Direct Digital Management, LLC or its Control Affiliates shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of forty percent (40%) or more of the ordinary voting power for the election of directors, partners, managers and members, as applicable, of DDH Holdings (determined on a fully diluted basis) other than (i) by the sale of the Borrower’s equity securities in a public offering, a private placement or to venture capital or private equity investors so long as the Borrower identifies to Agent the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Agent a description of the material terms of the transaction and (ii) by increases or decreases in the beneficial ownership of DDH Holdings securities by Direct Digital Management, LLC or its Control Affiliates; or (y) during any period of 12 consecutive months, a majority of the members of the board of directors of DDH Holdings cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first (1st) day of such period, (ii) whose election or nomination for election to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination for election at least a majority of that board or equivalent governing body or (iii) whose election or nomination for election to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body;
(b) with respect to the Borrower, (x) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than DDH Holdings, Direct Digital Management, LLC or its Control Affiliates shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of forty percent (40%) or more of the ordinary voting power for the election of directors, partners, managers and members, as applicable, of the Borrower (determined on a fully diluted basis); or (y) except as permitted by Section 7.1, at any time, DDH Holdings and Direct Digital Management, LLC or its Control Affiliates shall collectively cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100%) of each class of outstanding stock, partnership,
[Different first page setting changed from on in original to off in modified.].
12
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
membership, or other ownership interest or other equity securities of the Borrower free and clear of all Liens (except Permitted Encumbrances); or
(c) with respect to each Subsidiary of the Borrower, (x) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than DDH Holdings, the Borrower and/or Direct Digital Management, LLC or its Control Affiliates shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of forty percent (40%) or more of the ordinary voting power for the election of directors, partners, managers and members, as applicable, of such Subsidiary (determined on a fully diluted basis); or (y) except as permitted by Section 7.1, at any time, DDH Holdings, the Borrower and/or Direct Digital Management, LLC or its Control Affiliates shall together cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100%) of each class of outstanding stock, partnership, membership, or other ownership interest or other equity securities of such Subsidiary free and clear of all Liens (except Permitted Encumbrances).
“Closing Date” shall mean December 3, 2021.
“Closing Date Term Loan” shall mean the Advances made pursuant to Section 2.1(a) hereof.
“Closing Date Term Loan Amount” shall mean $22,000,000.
“Closing Date Term Note” shall mean, collectively, the promissory notes described in Section 2.1(a) hereof.
“Closing Date Transactions” shall mean, collectively, (a) the consummation of the transactions contemplated by and this Agreement, (b) the Preferred A Redemption, (c) the repayment of Indebtedness of the Borrowers with the proceeds of the Closing Date Term Loan, in each case, which have been, or are contemplated to be, consummated on or prior to the Closing Date and (d) the payment of fees and expenses in connection therewith.
“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
“Collateral” shall mean and include, all right, title and interest of each Credit Party in all of the following property and assets of such Credit Party, in each case, whether now existing or hereafter arising or created and whether now owned or hereafter acquired and wherever located:
(a) all Receivables;
(b) all cash and currency;
(c) all Certificates of Title;
[Different first page setting changed from on in original to off in modified.].
13
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(d) all Chattel Paper;
(e) those certain Commercial Tort Claims set forth on Schedule 1.2(c) hereto;
(f) all Intellectual Property (other than any United States intent to use applications prior to the filing of a “Statement of Use” or “Amendment to Allege Use”);
(g) all Deposit Accounts;
(h) all Documents;
(i) all Equipment;
(j) all Fixtures;
(k) all General Intangibles (including, without limitation, the Key Executive Policy);
(l) all Goods;
(m) all Instruments;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter-of-Credit Rights;
(q) all Payment Intangibles;
(r) all Subsidiary Stock;
(s) all Software;
(t) all Supporting Obligations;
(u) all books and records pertaining to any of the foregoing; and
(v) all Accessions and Proceeds of any and all of the foregoing.
Notwithstanding the foregoing, Collateral shall not include, and no Credit Party shall be deemed to have granted a security interest in the following (each of the following, “Excluded Property”): (a) any intent-to-use trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise; (b) any interest of any Credit Party as a lessee or sublessee under a real property lease under a real property lease or an Equipment lease if such Credit Party is prohibited by the terms of such lease from granting a security interest in such
[Different first page setting changed from on in original to off in modified.].
14
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
lease or under which such an assignment or Lien would cause a default to occur under such lease (but only to the extent that such prohibition is enforceable under all applicable laws including, without limitation, the UCC); provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by any Credit Party or Agent; (c) rights held under a license that are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment is enforceable under applicable law); or (d) any interest of any Credit Party as a lessee under an Equipment lease if such Credit PARTY is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or Lien would cause a default to occur under such lease; provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by any Credit Party or Agent.
“Commitment Percentage” of any Lender shall mean, as applicable, its Term Loan Commitment Percentage and/or its Delayed Draw Term Loan Commitment Percentage, as applicable.
“Common Units Redemption” shall mean the contemplated redemption of all of the common units held in DDH by USDM Holdings, Inc. pursuant to the Redemption Agreement.
“Company Agreement” shall mean the amended and restated limited liability company agreement of DDH entered into in connection with a Qualified IPO.
“Compliance Certificate” shall mean a compliance certificate in substantially the form attached hereto as Exhibit C to be signed by an Authorized Officer of DDH.
“Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day”, the definition of “U.S. Government Securities Business Day”, the definition of “Interest Period”, “Interest Rate Reset Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent decides that adoption of any portion of such market practice is not administratively feasible or if Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as Agent decides is reasonably necessary in connection with the administration of this Agreement and the Other Documents).
“Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on the Credit Parties’ business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, the Acquisition Documents and all related documents and agreements, including any
[Different first page setting changed from on in original to off in modified.].
15
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Consents required under the ABL Loan Documents and all applicable federal, state or other Applicable Law.
“Consolidated Basis” shall mean, (a) prior to a Qualified IPO, with respect to DDH and its Subsidiaries, as the context may require, the consolidation in accordance with GAAP of the accounts and other items of DDH and its Subsidiaries, and (b) subsequent to a Qualified IPO, with respect to DDH Holdings and its Subsidiaries as the context may require, the consolidation in accordance with GAAP of the accounts and other items of DDH Holdings and its Subsidiaries.
“Consolidated Capital Expenditures” shall mean, for any period, for DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, the sum of all Capital Expenditures of such entity for such period.
“Consolidated Current Assets” shall mean, as of any date of determination, the total assets of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis that may properly be classified as current assets in accordance with GAAP, excluding cash and Cash Equivalents.
“Consolidated Current Liabilities” shall mean, as of any date of determination, the total liabilities of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis that may properly be classified as current liabilities in accordance with GAAP and shall be calculated by excluding the current portion of the Obligations.
“Consolidated EBITDA” shall mean, for any period, for DDH Holdings and its Subsidiaries on a Consolidated Basis, an amount equal to (a) Consolidated Net Income for such period plus, (b) to the extent deducted in determining such Consolidated Net Income, the sum, without duplication, of (i) Consolidated Interest Charges during such period, (ii) all federal, state, local and/or foreign income taxes payable by DDH Holdings and its Subsidiaries during such period, (iii) depreciation expenses of DDH Holdings and its Subsidiaries during such period, (iv) amortization expenses of DDH Holdings and its Subsidiaries during such period, (v) any non-cash loss or expense resulting from any impairment charge or asset write-off or write-down related to intangible assets, long-lived assets and other assets that occurs during such period, (vi) one-time loss associated with debt refinancing, (vii) without duplication, non-recurring actual, documented legal or consulting expenses or retention bonuses paid in an amount up to $500,000750,000 during any 12 month period, (viii) any cash payments (including all premiums) made with respect to the Key Executive Policies required pursuant to Section 4.21, and (ivix) reasonable and documented one-time, non-recurring severance and retention expenses in an aggregate amount not to exceed $750,000 for employees and management of the Credit Parties, in each case to the extent paid on or before June 30, 2024, and (x) with respect to the fiscal year ended on December 31, 2023, accounting, audit, auditor and/or legal costs and expenses associated with any audits, regulatory compliance, investigations, remediation of audit financings, and the implementation of required changes as a result of audit outcomes or the change in auditor due to the resignation and replacement of the Borrowers’ Accountants, provided that such add-backs shall not exceed $1,500,000 with respect to such fiscal year, (xi)
[Different first page setting changed from on in original to off in modified.].
16
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
any amounts paid out to employees in stock, including the 2023 bonus accrual which the compensation committee of the board of directors of DDH Holdings approved to pay out in stock in February 2024, (xii) the gross amount of the profit on the disputed short pay which impacted December 2023 income in the amount up to a total of $1,781,000, and (xiii) any amounts paid to publishers associated with the disputed short pay when recorded as expense in the financial statements up to a total of $8,800,000 minus (c) any extraordinary, non-recurring and/or non-cash gains or income during such period as reported in the monthly, quarterly, and annual financials of DDH Holdings and its Subsidiaries.
“Consolidated Excess Cash Flow” shall mean, for any period for DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries if applicable) on a Consolidated Basis, an amount equal to the sum, without duplication, of (a) Consolidated EBITDA, minus (b) Unfinanced Capital Expenditures, minus (c) the cash portion of Consolidated Interest Charges, minus (d) Consolidated Taxes paid in cash minus (e) Consolidated Scheduled Funded Debt Payments, minus (f) the Consolidated Working Capital Adjustment, minus (g) the aggregate amount of all voluntary prepayments of any Indebtedness permitted hereunder of DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries if applicable) made during such Fiscal Year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), minus (h) all cash expenses added back in computing Consolidated EBITDA. For the avoidance of doubt, payments with respect to Preferred Equity and obligations owing pursuant to the Redemption Agreement, in each case, made with proceeds of the Delayed Draw Term Loan advanced on the Second Amendment Date shall not be deducted in calculating Consolidated Excess Cash Flow; provided, that it is understood that the principal with respect to the Delayed Draw Term Loan shall constitute Funded Debt and the interest with respect to the Delayed Draw Term Loan shall constitute Consolidated Interest Charges.
“Consolidated Fixed Charge Coverage Ratio” shall mean for DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries if applicable) on a Consolidated Basis, as of any date of determination, the ratio of (a) Consolidated EBITDA for the period of the four (4) Fiscal Quarters most recently ended, minus Taxes paid in cash or permitted Tax Distributions during such period, minus without duplication, Unfinanced Capital Expenditures made during such period, minus Restricted Payments (other than the Preferred A Redemption) for such period paid in cash (without limiting any restrictions in respect thereof under Section 7.7) to (b) the sum of (i) Consolidated Fixed Charges for such period.
“Consolidated Fixed Charges” shall mean, for any period, for DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, an amount equal to the sum of (a) the cash portion of Consolidated Interest Charges for such period plus (b) Consolidated Scheduled Funded Debt Payments for such period, all as determined in accordance with GAAP.
“Consolidated Funded Debt” shall mean Funded Debt of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis determined in accordance with GAAP excluding any obligations under an operating lease.
[Different first page setting changed from on in original to off in modified.].
17
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Consolidated Interest Charges” shall mean, for any period, the interest expense of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis for the period in question, determined on a consolidated basis and in accordance with GAAP.
“Consolidated Net Income” shall mean, for any period, for DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, the net income (or loss) of DDH (or DDH Holdings if applicable) and its Subsidiaries for that period, as determined in accordance with GAAP.
“Consolidated Scheduled Funded Debt Payments” shall mean for any period for DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, the sum of all scheduled payments of principal on Consolidated Funded Debt, as determined in accordance with GAAP. For purposes of this definition, “scheduled payments of principal” (a) shall be deemed to include, without duplication, scheduled principal payments with respect to the Attributable Principal Amount of Capital Leases (other than in respect of any Securitization Transactions, Sale and Leaseback Transactions and Synthetic Leases) and (b) shall not include any voluntary prepayments or mandatory prepayments required pursuant to the ABL Credit Agreement except to the extent such prepayments are accompanied by a permanent reduction of the commitments thereunder.
“Consolidated Senior Net Leverage Ratio” shall mean, as of any date of determination, the ratio of (a) the result of (i) the Funded Debt of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, but excluding any Subordinated Debt and any obligations under an operating lease, minus (ii) the Unrestricted Cash of DDH and the Credit Parties in excess of $1,000,000; provided that the amount of Unrestricted Cash included in the calculation pursuant to this clause (ii) shall not exceed $15,000,000 to (b) Consolidated EBITDA for the period of the four (4) Fiscal Quarters most recently ended.
“Consolidated Taxes” shall mean, for any period, for DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries if applicable) on a Consolidated Basis, the aggregate of all taxes, as determined in accordance with GAAP.
“Consolidated Total Net Leverage Ratio” shall mean, as of any date of determination, the ratio of (a) the result of (i) the Funded Debt of DDH (or DDH Holdings if applicable) and its Subsidiaries on a Consolidated Basis, excluding any obligations under an operating lease, minus (ii) the Unrestricted Cash of DDH and the Credit Parties in excess of $1,000,000; provided that the amount of Unrestricted Cash included in the calculation pursuant to this clause (ii) shall not exceed $15,000,000 to (b) Consolidated EBITDA for the period of the four (4) Fiscal Quarters most recently ended.
“Consolidated Working Capital” shall mean, as of any date of determination, the excess of Consolidated Current Assets less Consolidated Current Liabilities.
“Consolidated Working Capital Adjustment” shall mean, for any period on a Consolidated Basis, the amount (which may be a negative number) by which Consolidated
[Different first page setting changed from on in original to off in modified.].
18
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Working Capital as of the end of such period exceeds (or is less than) Consolidated Working Capital as of the beginning of such period.
“Contractual Obligation” shall mean, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.
“Control” shall mean 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.
“Control Affiliate” shall mean, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.
“Control Agreement(s)” shall have the meaning set forth in Section 6.16(c) hereof.
“Covered Entity” shall mean (a) each Credit Party, each Subsidiary of each Credit Party, and all pledgors of Collateral and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the direct or indirect (x) ownership of, or power to vote, twenty-five percent (25%) or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“Credit Parties” shall mean the Borrowers and the Guarantors, and “Credit Party” shall mean any of them.
“Customer” shall mean and include the account debtor with respect to any Receivable of a Person and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with such Person, pursuant to which such Person is to deliver any personal property or perform any services.
“Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by 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 Agent decides that any such convention is not administratively feasible for Agent, then Agent may establish another convention in its reasonable discretion.
[Different first page setting changed from on in original to off in modified.].
19
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“DDH” shall have the meaning ascribed to such term in the preamble to this Agreement.
“DDH Holdings” shall mean Direct Digital Holdings, Inc., a Delaware corporation, which entity has been incorporated to enter into a Qualified IPO and shall, upon consummation of the Qualified IPO, be the managing member of DDH at all times while the umbrella partnership corporation structure is in effect.
“Debt Transaction” shall mean, with respect to DDH or any of its Subsidiaries, any sale, issuance, placement, assumption or guaranty of Funded Debt, whether or not evidenced by a promissory note or other written evidence of Indebtedness, except for Funded Debt permitted to be incurred pursuant to Section 7.8.
“Debtor Relief Laws” shall mean the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.
“Default Rate” shall have the meaning set forth in Section 3.1 hereof.
“Defaulting Lender” shall have the meaning set forth in Section 2.9(a) hereof.
“Delayed Draw Term Loan” shall have the meaning set forth in Section 2.1(b)(i).
“Delayed Draw Term Loan Commitment Percentage” of any Lender shall mean the percentage set forth on Schedule 1.2(b) as its “Delayed Draw Term Loan Commitment Percentage,” as the same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or 15.3(d).
“Delayed Draw Term Loan Funding Date” shall mean, with respect to the Second Amendment Delayed Draw Term Loan, the Second Amendment Date and with respect to the Fourth Amendment Delayed Draw Term Loan, the Fourth Amendment Date.
“Delayed Draw Term Loan Note” shall mean, collectively, the promissory notes described in Section 2.1(b).
“Depository Accounts” shall have the meaning set forth in Section 4.15(h)(i) hereof.
“Disqualified Assignee” shall mean any Person with respect to which (a) a voluntary or involuntary case (or comparable proceeding) has been commenced under any applicable state or federal bankruptcy, insolvency, receivership, reorganization or other debtor relief laws, (b) a custodian, conservator, receiver or similar official has been appointed for such Person or for any substantial part of such Person’s assets (or any motion or request therefor has been filed with any
[Different first page setting changed from on in original to off in modified.].
20
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Governmental Body), (c) such Person has made or agreed to make a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Body having regulatory authority over such Person or its assets to be, insolvent, bankrupt, or deficient in meeting any capital adequacy or liquidity standard of such Governmental Body, (d) such Person is a Defaulting Lender, or otherwise is unable to fulfill its obligations as a lender, under any credit facility to which it is a party (or has publicly announced that it believes that it will be any of the foregoing), or (e) which is a competitor of any Credit Party or its Subsidiaries.
“Disqualified Equity Interest” means any Equity Interest that, by its terms (or 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 Equity Interests that are not Disqualified 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 Advances and all other Obligations that are accrued and payable and the termination of this Agreement), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is ninety one (91) days after the Term; provided that if such Equity Interests are issued pursuant to a plan for the benefit of employees of any Credit Party or any Subsidiary of a Credit Party or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by any Credit Party or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Dollar” and the sign “$” shall mean lawful money of the United States of America.
“Domestic Subsidiary” shall mean each Subsidiary of DDH that is not a Foreign Subsidiary.
“EBITDA Shortfall Amount” shall have the meaning set forth in Article X hereof.
“Eligible Assignee” shall mean (a)(i) a commercial bank, commercial lender, financial institution, or Affiliate of such entity that represents and warrants that it is not a Disqualified Assignee; provided that so long as no Event of Default has occurred and is continuing, such Person shall be approved by Borrowing Agent (which approval of Borrowing Agent shall not be unreasonably withheld, conditioned or delayed), or (ii) any other Person approved by Borrowing Agent (which approval of Borrowing Agent shall not be unreasonably withheld, conditioned or delayed) provided that, in each case, Borrowing Agent will be deemed to have consented to any such assignment in this clause (a) unless it objects thereto by written notice to Agent within ten (10) days after having received notice thereof, (b) any Lender or Affiliate (other than a natural Person) of a Lender or a Related Fund (other than a natural Person) of a Lender and (c) during
[Different first page setting changed from on in original to off in modified.].
21
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
the continuation of an Event of Default under Sections 10.1, 10.3 (solely as a result of a failure to comply with Section 6.5) or 10.7, any other Person (other than a natural person).
“Eligible Impact ServicesWorker Solutions” shall mean Impact ServicesWorker Solutions and/or ImpactWorker Solutions Providers, as applicable, acceptable to Agent in its Permitted Discretion as part of its mission and identified on Exhibit A attached hereto and incorporated herein, as such Exhibit may be amended or supplemented in writing from time to time by written notice from Agent to Borrowers or otherwise as requested by Borrowers and approved by Agent in Agent’s sole discretion.
“Enterprise Value” shall mean (i) with respect to any Acquisition of Property or any Acquisition of 100% of the Equity Interests of a Person, the aggregate cash and non-cash consideration (including any assumption of Indebtedness, deferred purchase price and any equity consideration) paid for such Property or Equity Interests, and (ii) with respect to any Acquisition of less than 100% of the Equity Interests of a Person, the total enterprise value of the Person acquired, calculated based upon the aggregate cash and non-cash consideration (including any assumption of Indebtedness, deferred purchase price and any equity consideration) paid for the percentage of Equity Interests that were acquired in such Acquisition, as reasonably determined in good faith by Borrower and mutually agreed to by Agent.
“Environmental Claim” shall mean any known investigation, written notice of violation, written claim, action, suit, proceeding, written demand, abatement order or other written order or directive (conditional or otherwise), by any Person arising (a) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (b) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm to human health, safety, natural resources or the environment.
“Environmental Complaint” shall have the meaning set forth in Section 4.19(c) hereof.
“Environmental Laws” shall mean any and all current or future federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other written requirements of Governmental Bodies relating to (a) any Hazardous Materials Activity; (b) the generation, use, storage, transportation or disposal of Hazardous Materials; or (c) protection of human health and the environment from pollution, in each case, in any manner applicable to any Credit Party or any of its Subsidiaries or their respective Real Property.
“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of DDH, any other Credit Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials
[Different first page setting changed from on in original to off in modified.].
22
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which DDH or any Subsidiary of DDH assumed liability with respect to any of the foregoing.
“Equipment” shall mean and include, with respect to any Person, all of such Person’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.
“Equity Cure” shall have the meaning set forth in Article X hereof.
“Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities 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), including in each case all of the following rights relating to such Equity Interests, whether arising under the Governing Documents of the Person issuing such Equity Interests (the “Equity Issuer”) or under the Applicable Laws of such Equity Issuer’s jurisdiction of organization relating to the formation, existence and governance of corporations, limited liability companies or partnerships or business trusts or other legal entities, as the case may be: (i) all economic rights (including all rights to receive dividends and distributions) relating to such Equity Interests; (ii) all voting rights and rights to consent to any particular actions by the applicable Equity Issuer; (iii) all management rights with respect to such Equity Issuer; (iv) in the case of any Equity Interests consisting of a general partner interest in a partnership, all powers and rights as a general partner with respect to the management, operations and control of the business and affairs of the applicable Equity Issuer; (v) in the case of any Equity Interests consisting of the membership/limited liability company interests of a managing member in a limited liability company, all powers and rights as a managing member with respect to the management, operations and control of the business and affairs of the applicable Equity Issuer; (vi) all rights to designate or appoint or vote for or remove any officers, directors, managers, general partners or managing members of such Equity Issuer and/or any members of any board of members/managers/partners/directors that may at any time have any rights to manage and direct the business and affairs of the applicable Equity Issuer under its Governing Documents as in effect from time to time or under Applicable Law; (vii) all rights to amend the Governing Documents of such Equity Issuer, (viii) in the case of any Equity Interests in a partnership or limited liability company, the status of the holder of such Equity Interests as a “partner”, general or limited, or “member” (as applicable) under the applicable Governing Documents and/or Applicable Law; and (ix) all certificates evidencing such Equity Interests.
“Equity Transaction” shall mean, with respect to DDH or any of its Subsidiaries, any issuance or sale by DDH or any such Subsidiary of shares of its Equity Interests, to include, without limitation, any capital contribution by such Person’s existing members, partners or shareholders, as applicable, other than an issuance (a) to DDH Holdings or Permitted Holders,
[Different first page setting changed from on in original to off in modified.].
23
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(b) in connection with a conversion of debt securities to equity, (c) in connection with the exercise by a present or former employee, officer or director under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement, (d) which occurred on or prior to the Closing Date, (e) as consideration for an Acquisition permitted by Section 7.1(a), or (f) the proceeds of which are used to fund the purchase price consideration for a contemporaneous Acquisition permitted by Section 7.1(a) or capital expenditure permitted hereunder. For the avoidance of doubt, the equity line of credit established in connection with the registration statement filed on or before October 31, 2024 by DDH Holdings with the Securities and Exchange Commission shall not constitute Equity Transaction.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, any successor statute, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” shall mean, as applied to any Person, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member; and (c) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code for purposes of provisions relating to Section 412 of the Code of which that Person, any corporation described in clause (a) above or any trade or business described in clause (b) above is a member.
“ERISA Event” shall mean (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which notice to the PBGC has been waived by regulation) that is reasonably likely to result in material liability to any Credit Party; (b) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code), the failure to make by its due date any minimum required contribution or any required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make by its due date any required contribution to a Multiemployer Plan in either case if such failure is reasonably likely to result in liability to any Credit Party in excess of $250,000 (net of third party indemnification); (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal from any Pension Plan with two (2) or more contributing sponsors or the termination of any such Pension Plan, in either case resulting in material liability pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition reasonably likely to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA, in each case, that is reasonably likely to result in material liability to any Credit Party; (g) the withdrawal of any Credit Party, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if such
[Different first page setting changed from on in original to off in modified.].
24
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
withdrawal is reasonably likely to result in liability in excess of $250,000 (net of third party indemnification), or the receipt by any Credit Party, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in critical status or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it is in “critical” or “endangered” status within the meaning of Section 103(f)(2)(G) of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA, if such critical status, insolvency or termination is reasonably likely to result in liability to any Credit Party in excess of $250,000 (net of third party indemnification); (h) the imposition of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Pension Plan if such fines, penalties, taxes or related charges are reasonably likely to result in material liability to any Credit Party; (i) the assertion of a claim (other than routine claims for benefits and funding obligations in the ordinary course) against any Pension Plan other than a Multiemployer Plan or the assets thereof, or against any Person in connection with any Pension Plan such Person sponsors or maintains which is reasonably likely to result in material liability to any Credit Party; (j) receipt from the Internal Revenue Service of a final written determination of the failure of any Pension Plan intended to be qualified under Section 401(a) of the Code to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any such plan to qualify for exemption from taxation under Section 501(a) of the Code; or (k) the imposition of a lien pursuant to Section 430(k) of the Code or pursuant to Section 303(k) or 4068 of ERISA in each case that is reasonably likely to result in material liability to any Credit Party.
“Erroneous Payment” shall have the meaning given to such term in Section 14.13(a) hereof.
“Erroneous Payment Notice” shall have the meaning given to such term in Section 14.13(b) hereof.
“Event of Default” shall have the meaning set forth in Article X hereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
“Excluded Deposit Accounts” means any deposit account (including, for the avoidance of doubt, any cash, cash equivalents or other property contained therein): (i) solely to the extent, and for so long as, such deposit account is pledged to secure obligations arising under Section 7.02(o) of the defined term “Permitted Encumbrances”, and whether such pledge is by escrow or otherwise, in all cases with a balance no greater than such obligations under Section 7.02(o) of the defined term “Permitted Encumbrances”; (ii) used exclusively for payroll, payroll taxes and other employee wage and benefit payments with a balance no greater than such payroll, payroll taxes and other employee wage and benefit payments obligations that are to be paid within any two-week period; (iii) constituting a “zero balance” deposit account; or (iv) consisting of a disbursement account established with a payment processor to process vendor payments so long as the average monthly balance in such account (and in all such accounts in the aggregate) does not exceed $250,000 at any one time.
[Different first page setting changed from on in original to off in modified.].
25
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Excluded Perfection Action” shall mean any action with respect to assets otherwise constituting Collateral with respect to which Agent and Borrowing Agent shall have determined in their reasonable discretion and agree in writing that the costs or other consequences of such perfection action are excessive in relation to the benefit to the Lenders of the security intended to be afforded thereby.
“Excluded Property” shall have the meaning set forth in the definition of “Collateral” above.
“Excluded Taxes” shall mean any of the following Taxes on or with respect to a Payee, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of such recipient being organized under the laws of, or having its principal office or, in the case of any Payee, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), (b) in the case of a Payee, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Payee with respect to an applicable interest in an Advance or commitment pursuant to any Applicable Law in effect on the date on which (i) such Lender acquired such interest in the Advance or commitment (other than an assignee pursuant to a request by Borrowing Agent under Section 3.11) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.10, 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 Lender’s failure to comply with Section 3.10(g)(i), or (d) any withholding Taxes imposed under FATCA.
“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“Extraordinary Receipts” shall mean any cash in excess of $250,000 received by or paid to or for the account of DDH or any of its Subsidiaries not in the ordinary course of business (net of taxes paid or payable in connection with such receipts, including any applicable permitted Tax Distributions, if applicable), including, without limitation, under any indemnification provisions, all proceeds from releases of any escrowed amounts, any proceeds from insurance policies, all payments received in respect of any indemnification obligation and any applicable purchase price adjustments and in connection with income Tax refunds.
“Family” shall mean, with respect to any Person (a) such Person’s spouse, (b) any immediate family member of such Persons, and (c) any other natural person who has been adopted by such Person.
“FATCA” shall mean 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 thereunder or official
[Different first page setting changed from on in original to off in modified.].
26
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Fee Letter” shall mean, collectively, (a) the fee letter dated the date hereof among the Borrowers and Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time, (b) the fee letter dated as of the Second Amendment Date among the Borrowers and Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time, and (c) the fee letter dated as of the Fourth Amendment Date among the Borrowers and Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Fifth Amendment Closing Date” shall mean October 15, 2024.
“Financial Covenant Default” shall have the meaning set forth in Article X hereof.
“Financial Officer Certification” shall mean, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of DDH that such financial statements fairly present, in all material respects, the financial condition of DDH and its Subsidiaries as of the dates indicated on a Consolidated Basis and the results of their operations and their cash flows for the periods indicated on a Consolidated Basis, subject to changes resulting from audit and normal year-end adjustments.
“Fiscal Quarter” shall mean a fiscal quarter of any Fiscal Year.
“Fiscal Year” shall mean the fiscal year of DDH and its Subsidiaries, as such end date may be adjusted in accordance with Section 7.13.
“Flood Hazard Property” shall mean any Real Property Collateral located in an area designated by the Federal Emergency Management Agency (and any successor Governmental Body performing a similar function) as having special flood or mud slide hazards.
“Floor” shall mean one percent (1.00%) per annum.
“Foreign Subsidiary” shall mean any Subsidiary of DDH that is not organized or incorporated in the United States, any State thereof or the District of Columbia.
“Fourth Amendment” shall mean that certain Fourth Amendment to Term Loan and Security Agreement dated as of the Fourth Amendment Date among the Credit Parties, Agent and Lenders.
“Fourth Amendment Date” shall mean October 3, 2023.
“Fourth Amendment Delayed Draw Term Loan” shall have the meaning set forth in Section 2.1(b)(i).
“Fourth Amendment Delayed Draw Term Loan Amount” shall mean $3,587,274.03.
[Different first page setting changed from on in original to off in modified.].
27
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Funded Debt” shall mean, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations for borrowed money, whether current or long-term (including the Obligations hereunder, the ABL Obligations, any Subordinated Debt (other than the Preferred Equity) and all Capitalized Lease Obligations), all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than sixty (60) days after the date on which such trade account payable is due), including, without limitation, any earn-out obligations recognized as a liability on the balance sheet of such Person and its Subsidiaries in accordance with GAAP;
(c) all non-contingent obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties);
(d) the Attributable Principal Amount of Capital Leases, Synthetic Leases, Securitization Transactions and Sale and Leaseback Transactions;
(e) [reserved];
(f) all Funded Debt of others secured by (or for which the holder of such Funded Debt has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed;
(g) all Guarantees in respect of Funded Debt of another Person; and
(h) Funded Debt of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.
For purposes hereof, the amount of Funded Debt shall (I) be determined (x) based on the outstanding principal amount in the case of borrowed money indebtedness under clause (a) and purchase money indebtedness and the deferred purchase obligations under clause (b), (y) without duplication for any letter of credit sublimit within a loan facility commitment amount, based on the maximum amount available to be drawn in the case of letter of credit obligations and the other obligations under clause (c), and (z) based on the amount of Funded Debt that is the subject of the Guarantees and for which there is recourse to such Person in the case of Guarantees under clause (g) and (II) not be reduced by any origination fees related thereto.
“Funding Account” shall have the meaning set forth in Section 4.15(h)(iii).
[Different first page setting changed from on in original to off in modified.].
28
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Funds Flow Statement” shall mean the funds flow statement delivered to Agent as of the Closing Date with respect to the Closing Date Transactions.
“GAAP” shall mean, subject to the limitations on the application thereof set forth in Section 1.1, generally accepted accounting principles in the United States of America in effect from time to time.
“General Intangibles” shall mean and include, with respect to any Person, all of such Person’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Person to secure payment of any of the Receivables (other than to the extent covered by Receivables), all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
“Governing Documents” shall mean, for a corporation, its articles of incorporation or certificate of incorporation and its bylaws, for a limited liability company, its articles of organization or certificate of formation and its operating agreement, and for a partnership, its certificate of formation and its partnership agreement.
“Governmental Authorization” shall mean any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Body.
“Governmental Body” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to a government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Guarantee” shall mean, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner (including as a result of joint and several liability with such primary obligor), whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of
[Different first page setting changed from on in original to off in modified.].
29
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranteed Obligations” shall have the meaning set forth in Section 16.1 hereof.
“Guarantor” shall mean (i) Orange142, LLC, (ii) Huddled Masses LLC, (iii) Colossus Media, LLC, (iv) subject to Section 6.16 hereof, DDH Holdings, (v) each Person who subsequent to the Closing Date becomes a party to this Agreement as a Guarantor, and (vi) each other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” shall mean collectively all such Persons.
“Guarantor Security Agreement” shall mean, individually and collectively, any Security Agreement, or joinder thereto, executed by any Guarantor in favor of Agent securing the Guarantee of such Guarantor or otherwise securing the Obligations, in form and substance satisfactory to Agent.
“Hazardous Discharge” shall have the meaning set forth in Section 4.19(c) hereof.
“Hazardous Materials” shall mean any hazardous substances defined by CERCLA, including any hazardous waste as defined under 40 C.F.R. Parts 260-270, gasoline or petroleum (including crude oil or any fraction thereof), asbestos or polychlorinated biphenyls.
“Hazardous Materials Activity” shall mean any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.
“Immaterial Subsidiary” shall mean any direct or indirect Subsidiary of DDH Holdings which (a) is not actively engaged in any business activities, and (b) maintains assets of not more $250,000 in the aggregate at any time. In no event shall the aggregate amount of Consolidated EBITDA of all Immaterial Subsidiaries for any fiscal quarter and consolidated assets of all
[Different first page setting changed from on in original to off in modified.].
30
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Immaterial Subsidiaries exceed 5.0% of Consolidated EBITDA for such fiscal quarter or the consolidated total assets of DDH Holdings and its Subsidiaries, respectively.
“Impact Certificate” shall mean a certificate in substantially the form attached hereto as Exhibit D to be signed by an Authorized Officer of Borrowers.
“Impact Provider” shall mean any third-party provider or other third party vendor providing Impact Services.
“Impact Services” shall mean programs or services intended to provide to companies and their employees, as applicable, long-term, sustainable impact in financial inclusion and empowerment, housing, jobs, wellness, diversity and inclusion or such other core values acceptable to Agent in its sole discretion.
“Impact Subscription” shall mean the subscription to, participation in or other purchase or acquisition of one or more (as applicable) Impact Services by Borrowers (or any of them, as applicable) for any period identified and offered by an Impact Provider to Borrowers. “Impact Subscribe” and “Impact Subscribed” shall have the corollary meaning thereto.
“Inchoate Obligations” shall mean contingent indemnification or expense reimbursement Obligations other than those related to claims, causes of action, or liabilities that have been asserted or threatened in writing or that otherwise can be reasonably identified by Agent or any Lender based on the then-known facts and circumstances.
“Indebtedness” shall mean, as to any Person, at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP (without duplication):
(a) all Funded Debt;
(b) net obligations under any Swap Agreement;
(c) all Guarantees in respect of Indebtedness of another Person; and
(d) all Indebtedness of the types referred to in clauses (a) through (c) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which any Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is non-recourse to such Borrower or Subsidiary and excluded as Indebtedness of such Borrower or Subsidiary for purposes of GAAP.
For purposes hereof, the amount of Indebtedness shall be determined based on Swap Termination Value in the case of net obligations under any Swap Agreement under clause (b).
[Different first page setting changed from on in original to off in modified.].
31
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Indemnified Taxes” shall mean (a) Taxes other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligations of any Credit Party under this Agreement or any Other Document, and (b) to the extent not otherwise described in (a), Other Taxes.
“Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.
“Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated as of January 9July 7, 2023 by and between Agent and ABL Lender, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Interest Period” shall mean the period provided for any SOFR Loan, which shall be one (1) month or three (3) months, as applicable.
“Interest Rate Reset Period” shall mean, (a) with respect to any Term Loan, (a) initially, the period commencing on the date such Term Loan is made and ending on the last day of the fiscal quarter immediately succeeding the date such Term Loan is madethe interest period(s) in effect immediately prior to the Fifth Amendment Closing Date, November 29, 2024, and (b) thereafter, (1) with respect to a one (1) month Interest Period, the period commencing on the date immediately after the end of the previous Interest Period and ending on the earlier of (i) the last day of the fiscal quarter then ending and (ii) the day before the last day of the Term, first calendar day of the month during which an Advance or any portion thereof is continued and ending on the last Business Day of such month and (2) with respect to a three (3) month Interest Period, the period commencing on the first calendar day of the month during which an Advance or any portion thereof is continued and ending on the last Business Day of the third month during such three-month Interest Period; provided, that if any Interest Rate Reset Period would end on a day other than a Business Day, such Interest Rate Reset Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Rate Reset Period shall end on the immediately preceding Business Day. Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 3:00 p.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Term SOFR Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected a one (1) month Interest Period.
“Intermediate Holdco” shall have the meaning set forth in Section 6.12 hereof.
“Inventory” shall mean and include, with respect to any Person, all of such Person’s now owned or hereafter acquired inventory, goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such
[Different first page setting changed from on in original to off in modified.].
32
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Person’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
“Investment” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“Investment Property” shall mean and include, with respect to any Person, all of such Person’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
“Involuntary Disposition” shall mean the receipt by DDH or any of its Subsidiaries of any cash insurance proceeds or condemnation awards payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of its Property in excess of $100,000.
“Key Executive Policy” shall have the meaning set forth in Section 4.21.
“Key Performance Indicators” shall mean the key performance indicators set forth on Exhibit E attached hereto and such other key performance indicators as Borrowers and Agent shall agree from time to time in replacement of (provided that such replacement shall provide a reasonably similar metric) or in addition to any of the foregoing; provided, however, that any foregoing key performance indicators may be removed or modified by Borrowers with the consent of Agent (such approval not to be unreasonably withheld, delayed or conditioned); provided, further, that all foregoing key performance indicators shall be developed and disclosed to Agent within three months of the Closing Date.
“Lafayette Square” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and permitted assigns.
“Leasehold Interests” shall mean each Credit Party’s right, title and interest in and to the leased Real Property.
“Lender” and “Lenders” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a permitted transferee, successor or permitted assign of any Lender.
“LIBOR Rate” shall mean, for any Interest Period, the greater of (i) the rate per annum determined by Agent by dividing (a) the Published Rate as of 11:00 a.m. (London time) two (2)
[Different first page setting changed from on in original to off in modified.].
33
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Business Days prior to the first day of the applicable Interest Period by (b) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any eurocurrency funding by banks on the date of determination and (ii) one percent (1.00%).
“Lien” shall mean (a) any mortgage, deed of trust, pledge, hypothecation, collateral assignment, security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction and (b) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.
“Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent, in form and content satisfactory to Agent in its Permitted Discretion, by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive or subordinate any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Collateral.
“Liquidity” shall mean, as of any date of determination, the sum of (a) Unrestricted Cash plus (b) Revolving Credit Availability (as defined in the ABL Credit Agreement as in effect on the date hereofFifth Amendment Closing Date).
“Liquidity Shortfall Amount” shall have the meaning set forth in Article X hereof.
“LLC Division” shall mean, in the event a Credit Party is a limited liability company, (a) the division of any such Borrower or Guarantor into two or more newly formed limited liability companies (whether or not such Borrower or Guarantor is a surviving entity following any such division) pursuant to Section 18-217 of the Delaware Limited Liability Company Act or any similar provision under any similar act governing limited liability companies organized under the laws of any other State or Commonwealth or of the District of Columbia, or (b) the adoption of a plan contemplating, or the filing of any certificate with any applicable Governmental Body that results or may result in, any such division.
“Management Fee Subordination Agreement” shall mean that certain Management Fee Subordination Agreement, dated as of the date hereof, by and among Mark Walker, Keith Smith, the Credit Parties, and Agent, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, which agreement shall terminate upon the occurrence of a Qualified IPO.
[Different first page setting changed from on in original to off in modified.].
34
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Management Fees” shall mean management fees or advisory fees required to be paid to the Keith Smith or Mark Walker pursuant to those certain Board Services and Consulting Agreements each dated as of September 30, 2020, by and between DDH, on the one hand, and Keith Smith and Mark Walker on the other hand, together with any other similar fees pursuant to any management agreement or management services agreement entered into now or hereafter by and between Keith Smith or Mark Walker and a Credit Party.
“Margin Stock” shall have the meaning as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.
“Material Adverse Effect” shall mean any effect, event, condition, action, omission, change or state of facts that, individually or in the aggregate, has resulted in, or could reasonably be expected to result in, a material adverse effect with respect to (a) the business operations, properties, assets, or financial condition of DDH and its Subsidiaries; (b) the ability of the Credit Parties to fully and timely perform the Obligations; (c) the legality, validity, binding effect, or enforceability against an Credit Party of this Agreement or any Other Document to which it is a party; (d) the priority of Liens in the whole of the Collateral in favor of Agent; or (e) the material rights, remedies and benefits available to, or conferred upon Agent under this Agreement or any Other Document.
“Material Contract” shall mean any contract or other arrangement (other than the Other Documents) to which any Credit Party or any Subsidiary of any Credit Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.
“Modified Transfer Supplement” shall have the meaning set forth in Section 15.3(d).
“Moody’s” shall mean Moody’s Investor Services, Inc., together with its successors.
“Mortgage” shall mean, with respect to any Real Property Collateral, any mortgage, deed of trust or deed to secure debt that purports to grant to Agent a Lien on such Real Property or any interest (including with respect to any improvements and fixtures) of any Credit Party in such Real Property.
“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) of ERISA which is sponsored, maintained or contributed to by, or required to be contributed to by, any Credit Party or any of its ERISA Affiliates or with respect to which any Credit Party or any of its ERISA Affiliates previously sponsored, maintained or contributed to or was required to contribute to, and still has liability.
“Net Cash Proceeds” shall mean the aggregate proceeds paid in cash or Cash Equivalents received by DDH or any of its Subsidiaries in connection with any Asset Sale, Debt Transaction, Involuntary Disposition, Equity Transaction or Extraordinary Receipts, net of (a) direct costs incurred or estimated costs for which reserves are maintained, in connection therewith (including reasonable legal, accounting and investment banking fees and expenses, sales commissions and
[Different first page setting changed from on in original to off in modified.].
35
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
underwriting discounts); (b) estimated taxes paid or payable (including sales, use or other transactional taxes and any net marginal increase in income taxes) directly, or indirectly, by DDH or any of its Subsidiaries, including any such estimated taxes paid or payable by any holder of the Equity Interest issued by DDH (including, DDH Holdings), in each case as a result thereof; and (c) the amount required to retire any Indebtedness secured by a Permitted Encumbrance (excluding any Permitted Encumbrance that is pari passu or junior to the Agent’s Lien on or security interest in the Collateral) on the related property (in all cases paid to Persons other than Affiliates of a Credit Party). For purposes hereof, “Net Cash Proceeds” includes any cash or Cash Equivalents received upon the disposition of any non-cash consideration received by DDH or any of its Subsidiaries in any Asset Sale, Debt Transaction, Involuntary Disposition, Equity Transaction or Extraordinary Receipts.
“Non-Defaulting Lender” shall have the meaning set forth in Section 2.9(a).
“Notes” shall mean Term Notes.
“Obligations” shall mean and include, in each case to the extent arising under or in connection with this Agreement and/or the Other Documents: any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Credit Parties (or any of them) to Lenders or Agent of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Credit Party, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Credit Parties’ Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Credit Party and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable, documented (to the extent readily available) attorneys’ fees, allocated costs of internal counsel and out-of-pocket expenses and all obligations of the Credit Parties (or any of them) to Agent or Lenders to perform acts or refrain from taking any action.
[Different first page setting changed from on in original to off in modified.].
36
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Orange142 Canada” shall mean Orange142 Advertising Canada, Inc., a corporation organized under the laws of British Columbia.
“Other Connection Taxes” shall mean, with respect to any Payee, Taxes imposed as a result of a present or former connection between such Payee and the jurisdiction imposing such Tax (other than connections arising from such Payee 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 this Agreement or any Other Document, or sold or assigned an interest in any Obligation or Other Document).
“Other Documents” shall mean the Notes, the Fee Letter, all related Guarantees, all Security Agreements, all Guarantor Security Agreements, all Pledge Agreements, the Intercreditor Agreement, the Management Fee Subordination Agreement, any subordination agreement relating to Subordinated Debt, if applicable, any Swap Agreement with any Lender or Affiliate thereof, any Lien Waiver Agreements, Mortgages (if any), environmental indemnities with respect to Real Property, and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by any Credit Party and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement; provided that “Other Documents” shall not include any document evidencing any rights of any Lender as a holder of Equity Interests of DDH or DDH Holdings.
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing, other excise or property Taxes or similar Taxes, charges or similar levies 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, this Agreement or any Other Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.11).
“Participant” shall have the meaning set forth in Section 15.3(b) hereof.
“Payee” shall mean Agent, any Lender, assignee of any Lender or Participant.
“Payment Conditions” shall mean that prior to and after giving effect to the relevant dividend, distribution, acquisition, investment or applicable transaction as to which the satisfaction of the Payment Conditions is being determined, each of the following conditions is satisfied: (i) no Default or Event of Default is continuing or would occur after giving Pro Forma effect to such action, (ii) DDH and its Subsidiaries shall, on a Pro Forma Basis, have a Consolidated Senior Net Leverage Ratio of not greater than 1.5 to 1.00, and (iii) DDH and its Subsidiaries shall, on a Pro Forma Basis, have Liquidity of not less than $15,000,000.
[Different first page setting changed from on in original to off in modified.].
37
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
“Pension Plan” shall mean any “employee pension benefit plan” as defined in Section 3(2) of ERISA other than a Multiemployer Plan, which is subject to Section 412 of the Code or Section 302 of ERISA and which is sponsored, maintained or contributed to by, or required to be contributed to by, any Credit Party or any of its ERISA Affiliates or with respect to which any Credit Party or any of its ERISA Affiliates previously sponsored, maintained or contributed to, or was required to contribute to, and still has liability.
“Periodic Term SOFR Determination Day” shall have the meaning set forth in the definition of “Term SOFR”.
“Permitted Acquisition” shall mean any Acquisition by a Credit Party that satisfies the following conditions:
(a)the Property acquired (or the Property of the Person acquired) in such Acquisition is a business or is used or useful in a business permitted under Section 7.9 and constitutes all or substantially all of the assets (or all or substantially all of the assets constituting a business unit, division, product line, or line of business of any Person);
(f)with respect to the acquisition of Equity Interests, the target shall have a positive EBITDA, calculated in accordance with GAAP for the trailing twelve month period immediately prior to such acquisition,
(g)in the case of an Acquisition of Equity Interests, (i) the board of directors (or other comparable governing body) of such other Person shall have approved the Acquisition, (ii) such Person shall be organized and existing under the laws of any state of the United States or the District of Columbia and (iii) all of the Equity Interests of such Person are being acquired;
(h)the total costs and liabilities (including without limitation, all assumed liabilities, all earn-out payments, deferred payments and the value of any other stock or assets transferred, assigned or encumbered with respect to such acquisitions) each such acquisition consummated during the Term do not exceed, as of the date of determination, 40% of the Credit Parties’ Consolidated EBITDA calculated on a Pro Forma Basis;
(i)after giving effect to such Acquisition (including the incurrence of any Indebtedness and Delayed Draw Term Loans incurred in connection therewith), DDH and its Subsidiaries (or DDH Holdings and its Subsidiaries after a Qualified IPO) shall, on a Pro Forma Basis, have a Consolidated Senior Net Leverage Ratio of not greater than 1.5 to 1.00;
(j)(i) no Default or Event of Default shall exist and be continuing immediately before or immediately after giving effect thereto, (ii) the representations and warranties made by each of the Credit Parties in this Agreement and each Other Document shall be true and correct in all material respects as if made on the date of such Acquisition (after
[Different first page setting changed from on in original to off in modified.].
38
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (or, in each case, in all respects with respect to any representation or warranty which, by its terms is expressly qualified by materiality, Material Adverse Effect or dollar amount thresholds), and (iii) the Borrowers shall have given Agent written notice of such Acquisition with reasonable detail thereof, and all business, financial/accounting and legal due diligence and documentation with respect thereto (including any quality of earnings reports obtained by the Credit Parties with respect thereto), in each case, no later than thirty (30) days prior to the consummation thereof (or such shorter notice as may be acceptable to Agent in its sole discretion); and
(k)the Property acquired in such Acquisition shall constitute Collateral, and the Person acquired in such Acquisition shall be a Credit Party.
“Permitted Discretion” shall mean a determination made in the exercise of reasonable (from the perspective of a secured creditor) business judgment.
“Permitted Dividends” shall mean (a) dividends and/or distributions required to be paid to the holders of the Preferred Equity (as set forth in the Governing Documents of DDH in effect on the date hereof) so long as (i) the Consolidated Fixed Charge Coverage Ratio, calculated on a Pro Forma Basis, would not be less than 1.5 to 1.00 after giving effect thereto, (ii) no Default or Event of Default is continuing or would occur after giving Pro Forma effect to such dividend, and (iii) expressly permitted under the terms of the Preferred Equity Subordination Agreement and (b) after consummation of a Qualified IPO, dividends and distributions to DDH Holdings and any shareholders of DDH Holdings so long as the Payment Conditions are satisfied.
“Permitted Encumbrances” shall mean each of the Liens permitted pursuant to Section 7.2.
“Permitted Holders” shall mean Keith Smith, Mark Walker, Leah Woolford and/or their respective Related Persons.
“Permitted Lines of Business” shall mean any business engaged in by any Credit Party or its Subsidiaries as of the Closing Date and businesses that are substantially similar, related or incidental thereto, and, the offering of products and services that are complementary or ancillary thereto, as may be adjusted from time to time.
“Permitted Management Fee Payments” shall mean at any time prior to the consummation of a Qualified IPO, the payment of regularly scheduled Management Fees in accordance with the Board Services and Consulting Agreements each dated as of September 30, 2020 (as in effect on the date hereof) so long as at the time of and after giving pro forma effect thereto (calculated with respect to the financial covenants set forth in Section 6.5 as of the last day of the fiscal quarter for which Borrowers were required to deliver financial statements pursuant to Section 9.8 hereof as if such payment was made on the last day of such fiscal quarter
[Different first page setting changed from on in original to off in modified.].
39
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
and without giving effect to the addback set forth in clause (v) of the definition Consolidated EBITDA) no Default or Event of Default has occurred or would occur.
“Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
“Personal Information” shall mean, in addition to any definition for any similar term (e.g., “personal data,” “personally identifiable information,” or “PII”) provided by applicable law or by a Credit Party or Subsidiary in any of its privacy policies, notices or contracts, all information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular individual or household, including (a) name, physical address, telephone number, email address, financial information, financial account number or government-issued identifier (including Social Security number and driver’s license number), medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations, marital or other status, and any other data used or intended to be used to identify, contact or precisely locate an individual (e.g., geolocation data), (b) any data regarding an individual’s activities online or on a mobile device or application, and (c) Internet Protocol addresses and unique device identifiers. Personal Information may relate to any individual, including a current, prospective or former customer, end user or employee of any Person and includes information in any form or media, whether paper, electronic, or otherwise.
“Pledge Agreements” shall mean that certain Pledge Agreement, dated as of the Closing Date, by DDH pursuant to which DDH pledges all of the Equity Interests owned by DDH in its Subsidiaries and any other pledge agreement executed and delivered by any other Person subsequent to the Closing Date to secure the Obligations.
“Preferred A Redemption” shall mean the redemption of the preferred A units held in DDH pursuant to the Redemption Agreement.
“Preferred B Redemption” shall mean the contemplated redemption of the preferred B units held in DDH pursuant to the Redemption Agreement.
“Preferred Equity” shall mean the preferred B units issued to USDM Holdings, Inc., a Texas corporation and other “Preferred Unit Holders” pursuant to the Amended and Restated Limited Liability Company Agreement of DDH dated September 30, 2020.
“Preferred Equity Subordination Agreement” shall mean that certain Preferred Equity Subordination Agreement of even date herewith, by and among DDH, the holder(s) of the Preferred Equity and Agent, as amended, restated, supplemented or otherwise modified from time to time, which agreement shall terminate upon the occurrence of a Qualified IPO and shall expressly permit the transactions contemplated by a Qualified IPO.
[Different first page setting changed from on in original to off in modified.].
40
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Privacy and Security Laws” shall mean any and all applicable laws, legal requirements, executive orders, regulations and self-regulatory guidelines (including of any applicable foreign jurisdiction) relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical and administrative), disposal, destruction, disclosure or transfer (including cross-border) of any Personal Information, including the Federal Trade Commission Act, the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), Virginia’s Consumer Data Protection Act (CDPA), the Colorado Privacy Act (CPA), Massachusetts General Law Chapter 93H and its implementing regulations 201 CMR 17.00, New York’s Stop Hacks and Improve Electronic Data Security Act (SHIELD Act), the Payment Card Industry Data Security Standard (PCI-DSS), the CAN-SPAM Act, the Telephone Consumer Protection Act (TCPA), the EU General Data Protection Regulation, Regulation 2016/679/EU (GDPR), and any and all applicable federal, state or global laws relating to the privacy and security of Personal Information, and any laws relating to the use of biometric identifiers.
“Privacy Laws” shall have the meaning ascribed to such term in the definition of HIPAA.
“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.9(c) hereof.
“Pro Forma Basis” shall mean, for purposes of calculating any financial covenants set forth in Section 6.5 or set forth in any other provision hereof (including for purposes of calculating compliance with clause (d) of the definition of Permitted Acquisition), that any Asset Sale, Involuntary Disposition, Acquisition, incurrence of Indebtedness (including the incurrence of any Delayed Draw Term Loan) or Restricted Payment shall be deemed to have occurred as of the first day of the most recent four (4) Fiscal Quarter period ended prior to the date of such transaction for which Borrowers were required to deliver financial statements pursuant to Sections 9.7 or 9.8. In connection with the foregoing, (a) (i) with respect to any Asset Sale or Involuntary Disposition, income statement and cash flow statement items (whether positive or negative) attributable to the property disposed of shall be excluded to the extent relating to any period occurring prior to the date of such transaction and (ii) with respect to any Acquisition, income statement items attributable to the Person or property that is the subject of such transaction shall be included to the extent relating to any period applicable in such calculations to the extent (A) such items are not otherwise included in such income statement items for DDH (or DDH Holdings, if applicable) and its Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section Error! Reference source not found.1.2 and (B) such items are supported by financial statements or other information reasonably satisfactory to Agent, (b) any Indebtedness (including any Delayed Draw Term Loan) incurred or assumed by any Credit Party or any Subsidiary of a Credit Party (including the Person or property acquired) in connection with such transaction (i) shall be deemed to have been incurred as of the first day of the applicable period and (ii) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination, and (c) any Restricted Payment shall be deemed to have been paid as of the first day of the applicable period.
[Different first page setting changed from on in original to off in modified.].
41
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Pro Forma Financial Statements” shall have the meaning set forth in Section 5.9(d) hereof.
“Projections” shall have the meaning set forth in Section 5.9(d) hereof.
“Property” shall mean an interest of any kind in any property or asset, whether real, personal or mixed, and whether tangible or intangible.
“Public Company Costs” shall mean actual documented costs relating to compliance with the Sarbanes-Oxley Act of 2002, as amended, and other actual documented expenses arising out of or incidental to DDH Holdings’ status as a reporting company, including actual documented costs, fees and expenses (including reasonable legal, accounting and other professional fees) relating to compliance with provisions of the Securities Act and the Exchange Act, registration and reporting obligations, the rules of securities exchange companies with listed equity securities, directors’ compensation, fees and expense reimbursement, shareholder meetings and reports to shareholders, indemnification and reimbursement of directors, officers and employees in respect of liabilities relating to their serving in any such capacity, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees.
“Published Rate” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a three month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the Eurodollar rate for a three month period as published in another publication determined by Agent).
“Purchasing CLO” shall have the meaning set forth in Section 15.3(d) hereof.
“Purchasing Lender” shall have the meaning set forth in Section 15.3(c) hereof.
“Qualified IPO” shall mean the issuance of Equity Interests by DDH Holdings in an underwritten primary public offering which had an effective date of February 10, 2022 and closed on February 15, 2022 pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act and pursuant to which the Reorganization Transactions occurred.
“Quality of Earnings Report” shall mean that certain Quality of Earnings Report prepared by DoerenMayhew dated November 15, 2021 (with quality of earnings diligence analysis through August 31, 2021).
“Real Property” shall mean all of each Credit Party’s right, title and interest in and to owned and leased premises now owned or hereafter acquired by any Credit Party.
“Real Property Collateral” shall mean all Real Property (including any Leasehold Interests) subject to the Liens of Agent.
[Different first page setting changed from on in original to off in modified.].
42
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Receivables” shall mean and include, as to any Person, all of such Person’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Person by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Person arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.
“Redemption Agreement” shall mean that certain redemption agreement dated as of November 14, 2021, by and between DDH and USDM Holdings, Inc., as amended by that certain Amendment to Redemption Agreement dated as of February 15, 2022, as further amended by that certain Second Amendment to Redemption Agreement dated as of July 28, 2022.
“Redemption/Exchange Transactions” shall mean at any time following the consummation of a Qualified IPO, the transactions pursuant to which DDH redeems Class A Common Units for either (A)(1) a stock exchange payment or (2) a cash exchange payment, in each case in accordance with the Company Agreement or (B) the direct purchase by DDH Holdings of vested Class A Common Units and paired voting stock pursuant any call right, in accordance with the Company Agreement.
“Register” shall have the meaning set forth in Section 15.3(e) hereof.
“Related Fund” shall mean, with respect to any Person that is an investment fund, any other investment fund that is managed or advised by the same investment advisor as such Person or by an Affiliate of such investment advisor.
“Related PartiesPerson” shall mean, with respect to a particular Person: (a) each other member of such Person’s Family; (b) any Person that is directly or indirectly Controlled by such Person and/or any one or more members of such Person’s Family; (c) any Person with respect to which such Person and/or one or more members of such Person’s Family constitute all of the executors or trustees thereof (or in a similar capacity); and (d) any estate planning trust or limited partnership formed or organized for the benefit of such Person or such Person’s Family so long as during his/her lifetime, such Person remains in Control of the voting rights with respect to any actions to be taken by such trust or limited partnership.
“Release” shall mean any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
[Different first page setting changed from on in original to off in modified.].
43
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Relevant Governmental Body” shall mean the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.
“Reorganization Transactions” shall mean the transactions contemplated pursuant to which DDH will effect an initial public offering, including, (i) the preferred equity units held in DDH will be redeemed, including pursuant to the Preferred A Redemption and the Preferred B Redemption, (ii) the Common Units Redemption shall be consummated with proceeds from a Qualified IPO, (iii) the Equity Interests held in DDH will be reclassified into two classes of units, (iv) the holders of Class A common units will contribute all of their Class A common units to DDH Holdings in exchange for Class A common stock, (v) immediately after which the holders of Class B voting units will contribute all of their Class B voting units to DDH Holdings in exchange for Class B common stock, (vi) immediately following such exchanges, DDH Holdings will be designated as the managing member of DDH, and (vii) DDH Holdings shall use the net proceeds received from an initial public offering to purchase Class A common units from DDH.
“Replacement ABL Credit Agreement” shall mean any loan or credit agreement entered into subsequent to the date hereof which (a) makes available to Borrower a revolving credit facility in an amount equal to $7,500,000 (or such other amount reasonably acceptable to Agent and the Required Lenders), (b) has terms which are not in any material respect less favorable to the Borrower than the terms in effect under the ABL Credit Agreement in effect on the Fifth Amendment Closing Date, (c) is subject to an intercreditor agreement granting Agent the same priority collateral and substantially the same rights with respect to the Collateral as those set forth in the Intercreditor Agreement, and (d) is otherwise satisfactory to Agent and the Required Lenders in its reasonable discretion exercised in good faith.
“Replacement Lender” shall have the meaning set forth in Section 3.11.
“Replacement Notice” shall have the meaning set forth in Section 3.11.
“Required Lenders” shall mean Lenders holding more than fifty percent (50%) of the sum of (a) the aggregate unused Term Loan Commitment Percentages and Delayed Draw Term Loan Commitment Percentages, and (b) the aggregate outstanding principal amount of the Closing Date Term Loan and Delayed Draw Term Loans; provided, however, that (x) so long as Agent is also a Lender hereunder, Required Lenders shall include Agent, and (y) any portion of unused Term Loan Commitment Percentages and Delayed Draw Term Loan Commitment Percentages (or portion of outstanding Closing Date Term Loans or Delayed Draw Term Loans) held, or deemed held by, a Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Restricted Payment” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests of DDH Holdings, DDH or any Subsidiary thereof, or any payment (whether in cash, securities or other property and including, any cash payments to any holders of DDH’s Preferred Equity), including any sinking fund or
[Different first page setting changed from on in original to off in modified.].
44
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or on account of any return of capital to any such Person’s stockholders, partners or members (or the equivalent Person thereof), or any setting apart of funds or property for any of the foregoing.
“S&P” shall mean Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., together with its successors.
“Sale and Leaseback Transaction” shall mean, with respect to DDH or any Subsidiary of DDH, any arrangement, directly or indirectly, with any Person (other than a Credit Party) whereby DDH or such Subsidiary shall sell or transfer to a third party 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 being sold or transferred.
“Sanctioned Country” shall mean (a) a country, region, territory or a government of a country or territory, (b) an agency of the government of a country, region or territory, or (c) an organization directly or indirectly owned or controlled by a country, region, territory or its government, that is subject to Sanctions.
“Sanctioned Person” shall mean (a) a Person named on the list of “Specially Designated Nationals” or any other Sanctions related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, (b) the United Nations Security Council, (c) the European Union, (d) any European Union member state, (e) Her Majesty’s Treasury of the United Kingdom or (f) any other relevant sanctions authority.
“SBA Forms” shall mean, collectively, (i) Portfolio Financing Report (SBA Form 1031), (ii) Size Status Declaration (SBA Form 480), (iii) Assurance of Compliance for Nondiscrimination (SBA Form 652), and (iv) the SBIC Regulatory Side Letter.
“SBIC” shall mean a small business investment company licensed under the SBIC Act.
“SBIC Act” shall mean the Small Business Investment Act of 1958, as amended.
“SBIC Lender” shall mean a Lender that is an SBIC and is subject to the SBIC Act and the regulations promulgated thereunder by the SBA relating to the small business investment company program.
[Different first page setting changed from on in original to off in modified.].
45
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“SBIC Regulatory Side Letter” shall mean a letter agreement, dated on or after the Closing Date, made by certain of the Credit Parties in favor of the SBIC Lender.
“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Second Amendment” shall mean that certain Second Amendment and Joinder to Term Loan and Security Agreement dated as of the Second Amendment Date among the Credit Parties, Agent and Lenders.
“Second Amendment Date” shall mean July 28, 2022.
“Second Amendment Delayed Draw Term Loan” shall have the meaning set forth in Section 2.1(b)(i).
“Securities” shall mean any stock, shares, partnership interests, limited liability company interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement (e.g., stock appreciation rights), options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Securitization Transaction” shall mean any financing or factoring or similar transaction (or series of such transactions) entered by DDH or any of its Subsidiaries pursuant to which DDH or such Subsidiary may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment (the “Securitization Receivables”) to a special purpose subsidiary or affiliate (a “Securitization Subsidiary”) or any other Person.
“Security Agreement” shall mean any security agreement or pledge agreement executed and delivered in favor of Agent pursuant to this Agreement or any Other Document, including, without limitation, the Pledge Agreements and any other security agreement or pledge agreement delivered in connection with the Other Documents, including any intellectual property assignments or security agreements required to be delivered by this Agreement or any Other Document, in each case, as amended, amended and restated, modified and supplemented from time to time.
“Security Incident” shall mean any unauthorized access, acquisition, use, disclosure, modification, deletion or destruction of Personal Information or interference with the operation of computer systems, including software, hardware, servers, networks and interfaces used by any Credit Party or Subsidiary, both for internal purposes and for the customers of any Credit Party or Subsidiary.
[Different first page setting changed from on in original to off in modified.].
46
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Senior Officer” shall mean, with respect to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, vice president, chief financial officer or treasurer of such Person.
“SOFR” shall mean a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Loan” shall mean a Loan that bears interest at a rate based on Adjusted Term SOFR.
“Solvent” or “Solvency” shall mean, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (e) 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. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in 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.
“Subordinated Debt” shall mean any Indebtedness of any Credit Party to any Person (including any shareholder, officer, director, employee, consultant, or Affiliate of any Borrower) which Indebtedness shall be subordinated to any Term Loan on terms and conditions satisfactory to Agent in its Permitted Discretion, including but not limited to the Preferred Equity.
“Subordination Agreement” shall mean, collectively, those certain subordination agreements with respect to Subordinated Debt, including but not limited to the Preferred Equity Subordination Agreement, which shall be executed and delivered in connection therewith and as a condition thereto, each of which must be acceptable to Agent in its sole and absolute discretion.
“Subsidiary” shall mean, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than fifty percent (50%) of the Voting Stock is at the time owned or controlled, directly or indirectly, by that Person, or the accounts of which would be consolidated with those of such Person in its consolidated financial statements in accordance with GAAP, if such statements were prepared as
[Different first page setting changed from on in original to off in modified.].
47
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
of such date, or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding. Unless otherwise provided, “Subsidiary” shall refer to a Subsidiary of a Credit Party; provided, that so long as Orange142 Canada does not conduct any business operations, have any material assets (other than holding a bank account with a de minimis account balance), incur any material liabilities or engage in any transactions with the Credit Parties, such entity shall not constitute a Subsidiary.
“Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by a Credit Party.
“Swap Agreement” shall mean (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, currency swap transactions, cross-currency rate swap transactions, currency options, cap transactions, floor transactions, collar transactions, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options or warrants to enter into any of the foregoing), whether or not any such transaction is governed by, or otherwise subject to, any master agreement or any netting agreement, and (b) any and all transactions or arrangements of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement (or similar documentation) published from time to time by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such agreement or documentation, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” shall mean, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap 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 Swap Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Agreements (which may include Agent, any Lender or any Affiliate of Agent or any Lender).
“Synthetic Lease” shall mean a lease transaction under which the parties intend that (a) the lease will be treated as an “operating lease” by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended and (b) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.
[Different first page setting changed from on in original to off in modified.].
48
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Tax” or “Taxes” (and, with correlative meaning, “Taxable” or “Taxing”) shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholdings), assessments, fees or other charges imposed by any Governmental Body, including any interest, additions to tax or penalties applicable thereto.
“Tax Distribution” shall mean the Taxes assumed to be payable by a direct or indirect shareholder or member of any Credit Party as a result of the allocation of income of such Credit Party to such shareholder or member due to such Credit Party’s status for federal, state or local Tax purposes as a partnership, subchapter S corporation or any other entity that is a pass-through entity or disregarded entity for federal, state and local Tax purposes (as applicable) but only for so long as such Credit Party continues to be so treated as a pass-through entity or disregarded entity for federal, state and local tax purposes, as evidenced and substantiated by the tax returns filed by such Credit Party (as applicable), with such Taxes assumed to be payable by such shareholder or member of any Credit Party being calculated for all members or shareholders, as applicable, at the highest combined marginal federal, state and local Tax rate applicable to any Credit Party that is allocated to such member or shareholder of the Credit Party, taking into consideration (A) the character and nature of such income or gain (i.e., whether such income is subject to Tax at capital gains rates, ordinary income rates or any special rates), (B) losses previously allocated to each such member or shareholder, as applicable, by such Credit Party to the extent such losses have not previously been applied to reduce the Tax Distribution hereunder, provided that capital losses and capital loss carry forwards shall be taken into account only to the extent they are currently usable to offset income or gain allocated by such Credit Party to a member or shareholder, as applicable; and provided, further, that to the extent that any losses allocated by such Credit Party result in a payback by a member to such Credit Party of previous Tax Distributions pursuant to Section 7.7 hereof, then such losses shall not be taken into account for purposes of determining the Tax Distribution hereunder, and (C) the deduction under Section 199A of the Internal Revenue Code in respect of the taxable income of the Credit Parties, to the extent such deduction may be currently utilized by such shareholder or member.
“Tax Receivable Agreement” shall mean that certain tax receivable agreement to be entered into by and among DDH Holdings, DDH, and Direct Digital Management, LLC.
“Term” shall have the meaning set forth in Section 13.1 hereof.
“Term Loan Commitment Percentage” of any Lender shall mean the percentage set forth on Schedule 1.2(b) as its “Term Loan Commitment Percentage,” as the same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or 15.3(d).
“Term Loan Rate” shall mean an interest rate per annum equal to the LIBOR Rate plussum of the Applicable Margin plus Adjusted Term SOFR for the then-current Interest Rate Reset Period less any Applicable Impact DiscountWorker Solutions Performance Incentive.
“Term Loans” shall mean, collectively, the Closing Date Term Loan and the Delayed Draw Term Loan.
[Different first page setting changed from on in original to off in modified.].
49
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Term Notes” shall mean, collectively, the Closing Date Term Note and the Delayed Draw Term Loan Notes.
“Term SOFR” shall mean, for any calculation with respect to a SOFR Loan for any Interest Rate Reset Period, the Term SOFR Reference Rate for a tenor comparable to the 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 Rate Reset Period, as such rate is published by the Term SOFR Administrator; provided, however that if as of 5:00 p.m. 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.
“Term SOFR Adjustment” shall mean 0.10% (10 basis points) for an Interest Period of one-month’s duration and 0.15% (15 basis points) for an Interest Period of three-months’ duration.
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by Agent in its reasonable discretion).
“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.
“Title Policy” shall have the meaning set forth in Section 6.8(b)(iii) hereof.
“Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.
“Transfer Supplement” shall mean a document in the form of Exhibit B hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of (i) the obligation of Lenders to make Advances under this Agreement or (ii) the right and option of Lenders to make Delayed Draw Term Loans under this Agreement.
“Transferee” shall have the meaning set forth in Section 15.3(d) hereof.
“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfinanced Capital Expenditures” shall mean, for any specified Persons, all Consolidated Capital Expenditures of such Persons other than those made utilizing financing provided by the applicable seller or third party lenders (including (x) by any Lender to the extent
[Different first page setting changed from on in original to off in modified.].
50
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
that the Indebtedness arising with respect to such financing does not constitute Advances or Obligations, and (y) expenditures made with advance under the ABL Credit Agreement).
“Uniform Commercial Code” or “UCC” shall have the meaning set forth in Section 1.3 hereof.
“United States” and “U.S.” shall mean the United States of America.
“Unrestricted Cash” shall mean that portion of the Credit Parties’ cash that is (a) free and clear of all Liens, other than Liens in favor of Agent and ABL Lender pursuant to the ABL Credit Agreement, (b) maintained by the Credit Parties in one or more deposit accounts that are located in the United States and are subject to Control Agreements and (c) not listed as “restricted” on the Credit Parties’ balance sheet.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“U.S. Government Securities Business Day” shall mean 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.
“Voting Stock” shall mean, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
“Warrant Tender Offer” shall mean DDH Holdings offer to purchase for cash any and all of its outstanding warrants at a price of $1.20 per warrant as set forth in the combined Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO, including the Second Amended and Restated Offer to Purchase and Consent Solicitation dated September 21, 2023, originally filed with the Securities and Exchange Commission on August 29, 2023, as amended on September 14, 2023, September 21, 2023 and September 29, 2023.
“Worker Solutions” shall mean programs or services intended to provide to companies and their employees, as applicable, long-term, sustainable impact in financial inclusion and empowerment, housing, jobs, wellness, diversity and inclusion or such other core values acceptable to Agent in its sole discretion.
“Worker Solutions Certificate” shall mean a certificate in substantially the form attached hereto as Exhibit D to be signed by an Authorized Officer of Borrowers.
“Worker Solutions Performance Incentive” shall mean (a) as of the Closing Date and through and including the date immediately prior to the first Worker Solutions Performance
[Different first page setting changed from on in original to off in modified.].
51
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Incentive Reset Date, a rate per annum equal to 0.00 % and (b) on and after each Worker Solutions Performance Incentive Reset Date, (i) a rate per annum as set forth in the table below based upon the Worker Solutions Subscription to each of the Eligible Worker Solutions by Borrowers:
| | | | | |
No Eligible Worker Solutions | 0.00% |
One or more Eligible Worker Solutions | 0.05% |
plus (ii) solely to the extent Borrowers received a B Corp Certification by Standards Analysts at the non-profit B Lab (or any successor certification or administrator identified by Agent in its sole discretion), as listed in https://bcorporation.net/directory (or any successor directory identified by Agent in its sole discretion) or such other comparable certification from a nationally recognized and reputable third party assessment and validation of social and environmental performance identified to and approved by Agent in writing, a rate per annum equal to 0.05% so long as Borrowers maintain such certification.
The component of the Worker Solutions Performance Incentive set forth in clause (b)(i) above shall (i) remain in effect for the period of the applicable Worker Solutions Subscription to any applicable Eligible Worker Solution(s) notwithstanding removal of such provider, program or service from Exhibit A (unless Agent has notified Borrowers in writing that such provider, program or service is removed or to be removed from Exhibit A prior to the commencement of the period of any such Worker Solutions Subscription) and (ii) be adjusted, to the extent applicable, (x) as of each Worker Solutions Performance Incentive Reset Date based upon and to the extent that Borrowers have certified in the applicable Worker Solutions Certificate as to the Worker Solutions Subscription to any such applicable Eligible Worker Solution or (y) otherwise at such time agreed by Agent and Borrowers as a result of a mutual determination to (1) cease or otherwise terminate any applicable Eligible Worker Solution (thereby reducing the Worker Solutions Performance Incentive) or (2) Worker Solutions Subscribe to a Worker Solution which had not been the subject of a Worker Solutions Subscription immediately prior to such determination (thereby increasing the Worker Solutions Performance Incentive to the extent applicable).
If Agent determines that Borrowers did not successfully make a Worker Solutions Subscription to any such Eligible Worker Solution during an earlier period in which the Worker Solutions Performance Incentive applied (or were otherwise not certified as a B Corporation under clause (b)(ii) above during any such earlier period), without limiting any other rights or remedies arising as a result of any certification in a Worker Solutions Certificate which may prove to have been false or misleading, Borrowers shall automatically and retroactively be obligated to pay to Agent, for the benefit of the applicable Lenders, promptly on demand by Agent, an amount equal to the
[Different first page setting changed from on in original to off in modified.].
52
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
excess of the amount of interest that should have been paid for such period without the Worker Solutions Performance Incentive over the amount of interest actually paid for such period.
“Worker Solutions Performance Incentive Reset Date” shall mean the first day of the month following the date on which financial statements, Compliance Certificate and Worker Solutions Certificate are required to be delivered pursuant to Section 9.8 after the end of each related Fiscal Quarter.
“Worker Solutions Provider” shall mean any third-party provider or other third party vendor providing Worker Solutions.
“Worker Solutions Subscription” shall mean the subscription to, participation in or other purchase or acquisition of one or more (as applicable) Worker Solutions by Borrowers (or any of them, as applicable) for any period identified and offered by a Worker Solutions Provider to Borrowers. “Worker Solutions Subscribe” and “Worker Solutions Subscribed” shall have the corollary meaning thereto.
I.3Uniform Commercial Code Terms
. All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms “accessions”, “accounts”, “certificates of title”, “chattel paper”, “commercial tort claims”, “commodities accounts”, “commodities contracts”, “documents”, “deposit accounts”, “electronic chattel paper”, “equipment”, “fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “payment intangibles”, “proceeds”, “securities”, “securities accounts”, “securities entitlements”, “supporting obligations” and “software”, as and when used in the description of Collateral (and related underlying definitions) have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.
I.4Certain Matters of Construction.
.
(a)The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. 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. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which
[Different first page setting changed from on in original to off in modified.].
53
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions, renewals or restatements thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be determined on a first-in-first-out basis. Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is remedied within any grace period expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of each Credit Party’s knowledge” or words of similar import relating to the knowledge or the awareness of a Credit Party are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a Senior Officer of a Credit Party or (ii) the knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of a Credit Party and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.
I.5Early Opt-In Election. Agent notified Borrower on June 1, 2023 that pursuant to Section 3.8 hereof, Agent and the Credit Parties have jointly elected to trigger a fallback from USD LIBOR to Term SOFR. Pursuant thereto, effective May 31, 2023 (the “Replacement Date”), Term SOFR replaced LIBOR for all purposes under this Agreement and the Other Documents in respect of such Benchmark setting without any amendment to, or further action or consent of any other party to, the Loan Agreement or any Other Document. On the Replacement Date, the Benchmark Replacement shall mean the sum of (x) Term SOFR and (y) 0.15% (15 basis points) for an Available Tenor of three-months’ duration. In connection with the implementation and administration of Term SOFR, Agent reserves the right to make Benchmark Replacement Conforming Changes from time to time in accordance with this Agreement.
[Different first page setting changed from on in original to off in modified.].
54
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
I.1Disclaimer. Agent neither warrants nor accepts 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 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) 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 Conforming Changes. Neither Agent nor its affiliates or other related entities may engage in transactions that affect the calculation of the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Credit Parties. Agent may select information sources or services in its reasonable discretion to ascertain the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to any Credit Party, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
II.ADVANCES, PAYMENTS.
II.1Term Loans.
.
(a)Closing Date Term Loan.
(i)Subject to the terms and conditions of this Agreement, each Lender, severally and not jointly, will make a term loan to Borrowers in the amount equal to such Lender’s Term Loan Commitment Percentage of the Closing Date Term Loan Amount (collectively, the “Closing Date Term Loan”). Subject to acceleration upon the occurrence and during the continuance of an Event of Default under this Agreement or termination of this Agreement, and subject to the application of any prepayments in accordance with the terms hereof, the Closing Date Term Loan shall be, with respect to principal, due and payable in quarterly installments on the last Business Day of each fiscal quarter: (x) commencing January 1, 2022 (with the first payment due March 31, 2022) through and including December 31, 2023, in an amount equal to $137,500.00 each, and (y) at all times thereafter, in an amount equal to $275,000.00 each, with a final installment due at the end of the Term in an amount equal to the entire unpaid principal balance thereof; provided that during the period commencing with the fiscal quarter ended June 30, 2024, and each fiscal quarter thereafter and ending on, but including, the fiscal quarter ending December 31, 2025, there shall be no payments of principal
[Different first page setting changed from on in original to off in modified.].
55
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
due and payable under this Section 2.1(a). The Closing Date Term Loan shall be evidenced by one or more secured promissory notes (collectively, the “Closing Date Term Note”) in substantially the form attached hereto as Exhibit F-1.
(ii)Borrowing Agent may, from time to time, prepay the principal amount owing under the Closing Date Term Loan, so long as: (A) Borrowing Agent shall have provided at least three (3) Business Days prior written notice not later than 1:00 p.m. (New York City time) to Agent of such prepayment, specifying the amount of such prepayment (which notice, once given, shall be irrevocable); (B) each such prepayment is in a minimum amount of $500,000, or an increment of $250,000 in excess thereof and (C) such prepayment shall be accompanied by the payment of any prepayment fee set forth in the Fee Letter. Such prepayments shall be applied to the principal installments due on the Closing Date Term Loan on a pro rata basis; provided that any such prepayments shall be applied on a pro rata basis to the Closing Date Term Loan and the then outstanding portion of the Delayed Draw Term Loans.
(b)Delayed Draw Term Loans.
(i)Pursuant to the Second Amendment, Lenders made a term loan to Borrower on the Second Amendment Date in an aggregate amount equal to $4,260,000 (the “Second Amendment Delayed Draw Term Loan”) in accordance with each Lender’s Delayed Draw Term Loan Commitment Percentage, the proceeds of which were applied in accordance with the Second Amendment. On the Fourth Amendment Date and pursuant to the Fourth Amendment, each Lender will make a term loan to Borrower equal to such Lender’s Delayed Draw Term Loan Commitment Percentage of $3,587,274.03 (the “Fourth Amendment Delayed Draw Term Loan”, together with the Second Amendment Delayed Draw Term Loan, the “Delayed Draw Term Loans”). Notwithstanding anything to the contrary contained herein, after giving effect to the Fourth Amendment Delayed Draw Term Loan made on the Fourth Amendment Date, Borrower shall not be permitted to request, and no Lender shall be obligated to make, any additional term loans or Delayed Draw Term Loan.
(ii)[Reserved].
(iii)Subject to the terms and conditions of this Agreement, including satisfaction of the conditions set forth in Section 8.2 hereof, each Lender severally and not jointly, shall make, on the Fourth Amendment Date, the Fourth Amendment Delayed Draw Term Loan in the sum equal to such Lender’s Delayed Draw Term Loan Commitment Percentage of the Fourth Amendment Delayed Draw Term Loan Amount.
(iv)Subject to acceleration upon the occurrence and during the continuance of an Event of Default under this Agreement or termination of this Agreement, and subject to the application of any prepayments in accordance with the terms hereof, each Delayed Draw Term Loan shall be, with respect to principal, payable in quarterly installments in an amount equal to (x) commencing January 1, 2022 through and including December 31, 2023, six hundred twenty-five thousandths of one percent (0.625%) of the amounts of the applicable
[Different first page setting changed from on in original to off in modified.].
56
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Delayed Draw Term Loan, and (y) at all times thereafter, one and one quarter of one percent (1.25%) of the amounts of the applicable Delayed Draw Term Loan, commencing on the last day of the first full Fiscal Quarter ending after the applicable Delayed Draw Term Loan Funding Date of such Delayed Draw Term Loan, with a final installment due at the end of the Term in an amount equal to the entire unpaid principal balance thereof; provided that during the period commencing with the fiscal quarter ended June 30, 2024, and each fiscal quarter thereafter and ending on, but including, the fiscal quarter ending December 31, 2025, there shall be no payments of principal due and payable under this Section 2.1(b)(iv). Notwithstanding anything to the contrary set forth above, the Second Amendment Delayed Draw Term Loan shall be, with respect to principal, paid in accordance with the Second Amendment and with respect to the Fourth Amendment Delayed Draw Term Loan, the first installment of principal shall be due on December 31, 2023. Each Delayed Draw Term Loan shall be evidenced by one or more secured promissory notes (collectively, the “Delayed Draw Term Loan Note”) in substantially the form attached hereto as Exhibit F-2.
(v)Borrowing Agent may, from time to time, prepay the principal amount owing under each Delayed Draw Term Loan, so long as: (A) Borrowing Agent shall have provided at least three (3) Business Days prior written notice not later than 11:00 a.m. (New York City time) to Agent of such prepayment, specifying the amount of such prepayment (which notice, once given, shall be irrevocable); (B) each such prepayment is in a minimum amount of $500,000, or an increment of $250,000 in excess thereof and (C) such prepayment shall be accompanied by the payment of any prepayment fee set forth in the Fee Letter. Such prepayments shall be applied to the principal installments due on such Delayed Draw Term Loan on a pro rata basis; provided that any such prepayments shall be applied on a pro rata basis to the Closing Date Term Loan and the then outstanding portion of the Delayed Draw Term Loans.
II.2Repayment of Advances.
.
(a)The Term Loans shall be due and payable as provided in Section 2.1 and in the Term Notes, subject to mandatory prepayments as herein provided. Notwithstanding the foregoing, all Advances shall be subject to earlier repayment upon (i) acceleration upon the occurrence and during the continuance of an Event of Default under this Agreement or (ii) termination of this Agreement.
(b)Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as of the next Business Day following Agent’s receipt of those items of payment, each Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations (i) on the Business Day following Agent’s receipt of such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other
[Different first page setting changed from on in original to off in modified.].
57
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
form, the Business Day such payment constitutes good funds in Agent’s account. Agent is not, however, required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent in its Permitted Discretion and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned to Agent unpaid.
(c)All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent via wire transfer or electronic depository check not later than 1:00 p.m. (New York City time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent.
(d)Borrowers shall, jointly and severally, pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.
(e)Any amount prepaid or repaid in respect of Term Loans may not be reborrowed.
II.3[Reserved].
.
II.4Statement of Account
. Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’ Account”) in the name of the Borrowers in which shall be recorded the date and amount of each Advance made by Lenders, the Lender(s) making such Advance and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. The records of Agent with respect to the loan account shall be prima facie evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.
II.5Additional Payments
. Any sums expended by Agent or any Lender due to any Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including the Borrowers’ obligations under Sections 4.2, 4.4, 4.12, 4.13 and 4.14 hereof, may be charged to Borrowers’ Account and added to the Obligations.
II.6Manner of Borrowing and Payment.
.
(a)Each payment (including each prepayment) by Borrowers on account of the principal of and interest on the Term Loans shall be applied to the Term Loans pro rata
[Different first page setting changed from on in original to off in modified.].
58
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
according to the Term Loan Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by Borrowers on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders, in each case, via wire transfer or electronic depository check on or prior to 1:00 p.m. (New York City time) in Dollars and in immediately available funds.
(b)Except as otherwise expressly provided in this Agreement with respect to any such specified payment required to be made by Borrowers hereunder or with respect to any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Advances to any assignee or participant as contemplated under Section 15.3 of this Agreement, if any Lender or Participant (a “benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or, if consented to by Agent, by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including, if consented to by Agent, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
II.7Mandatory Prepayments.
.
(a)Asset Dispositions and Involuntary Dispositions. The Credit Parties shall prepay the Obligations in an amount equal to one hundred percent (100%) of the Net Cash Proceeds received from any Asset Sale (other than Asset Sales permitted pursuant to Section 7.1(b)) or Involuntary Disposition by DDH or any of its Subsidiaries on the Business Day following receipt of Net Cash Proceeds required to be prepaid pursuant to the provisions hereof; provided that such prepayment shall not be required to be made to the extent Borrowing Agent delivers to Agent a certificate stating that the applicable Credit Party intends to reinvest such Net Cash Proceeds in replacement assets (excluding Consolidated Current Assets) that are useful in the business of DDH or any of its Subsidiaries within 180 days after the date of such Asset Sale or Involuntary Disposition and such Net Cash Proceeds are so reinvested during such period, provided, further that in the case of an Involuntary Disposition, if a definitive agreement to so reinvest has been executed within such 180-day period, then such reinvestment shall have been consummated within 180 days after the date such definitive agreement was executed; it being
[Different first page setting changed from on in original to off in modified.].
59
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
understood that any such Net Cash Proceeds not so reinvested during such periods, shall be used to prepay the Obligations immediately following the expiration of such respective period. Until the date of payment, such Net Cash Proceeds required to be prepaid shall be held in trust for Agent and, upon such prepayment, shall be applied to the Term Loans in the inverse order of maturities thereof (x) in respect of the Closing Date Term Loan and the Delayed Draw Term Loans, and (y) to all remaining principal installments thereof until paid in full. The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof.
(b)[Reserved].
(c)Equity Proceeds. The Credit Parties shall prepay the Obligations in an amount equal to one hundred percent (100%) of the Net Cash Proceeds from any Equity Transactions (other than a Qualified IPO and Equity Transactions used solely to consummate Permitted Acquisitions and completed substantially contemporaneously therewith), including any Equity Cure, on the Business Day following receipt thereof unless waived by Agent in its sole and absolute discretion. Until the date of payment, such Net Cash Proceeds required to be prepaid shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such issuance otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied to the outstanding principal installments of the Term Loans in the inverse order of maturities thereof (x) in respect of the Closing Date Term Loan and the Delayed Draw Term Loans, and (y) to all remaining principal installments thereof until paid in full.
(d)Indebtedness Proceeds. The Credit Parties shall prepay the Obligations in an amount equal to one hundred percent (100%) of the Net Cash Proceeds from any Debt Transactions on the Business Day following receipt thereof. Until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such incurrence otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied to the outstanding principal installments of the Term Loans in the inverse order of maturities thereof (x) in respect of the Closing Date Term Loan and the Delayed Draw Term Loans, and (y) to all remaining principal installments thereof until paid in full.
(e)Consolidated Excess Cash Flow. The Credit Parties shall prepay the Obligations, within thirty (30) days of delivery of each annual Compliance Certificate delivered under Section 9.7, commencing with the Compliance Certificate delivered for the Fiscal Year ending December 31, 2022, in an amount equal to (i) so long as no Event of Default has occurred and is continuing, 50% of Consolidated Excess Cash Flow and (ii) following the occurrence and during the continuance of an Event of Default, 100% of Consolidated Excess Cash Flow for the immediately preceding Fiscal Year unless waived in writing by Agent. The prepayments specified in this Section 2.7(e) shall be applied to the outstanding principal installments of the Term Loans in the inverse order of maturities thereof (x) in respect of the Closing Date Term Loan and the Delayed Draw Term Loans, and (y) to all remaining principal installments thereof until paid in full. In the event that the Compliance Certificate required by Section 9.7 is not delivered on or before the due date, then a calculation based upon estimated amounts shall be
[Different first page setting changed from on in original to off in modified.].
60
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
made by Agent upon which calculation Borrowers shall make the prepayments required by this Section 2.7(e), subject to adjustment when the applicable financial statements and Compliance Certificate are delivered to Agent as required hereby. Such calculations made by Agent and/or acceptance of any related estimated prepayments shall not be deemed a waiver of any rights Agent or Lenders may have, whether as a result of the failure by Borrowers to timely deliver such financial statements or otherwise.
(f)Extraordinary Receipts. When any Credit Party or Subsidiary thereof receives the cash proceeds of any Extraordinary Receipt, unless such Credit Party or Subsidiary reinvests such proceeds in the same manner that it would be entitled to under Section 2.7(a), the Credit Parties shall repay the Term Loans in an amount equal to 100% of the Net Cash Proceeds of such Extraordinary Receipts, such prepayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such proceeds shall be held in trust for Agent. Such repayments shall be applied to the outstanding principal installments of the Term Loans in the inverse order of maturities thereof (x) in respect of the Closing Date Term Loan and the Delayed Draw Term Loans, and (y) to all remaining principal installments thereof until paid in full.
(g)ABL Loan Documents. The terms of this Section 2.7 are subject to the terms and conditions of the Intercreditor Agreement. To the extent that any mandatory prepayment pursuant to the ABL Loan Documents is, contemporaneously with the event giving rise to such prepayment, required and permitted to be paid to the ABL Obligations pursuant to the Intercreditor Agreement, then the amount of such payment required pursuant to the ABL Loan Documents at such time shall reduce the amount of any mandatory prepayment owing pursuant to this Section 2.7 on a dollar for dollar basis or as otherwise required pursuant to the Intercreditor Agreement.
II.8Use of Proceeds.
.
(a)Borrowers shall use the proceeds of (i) the Closing Date Term Loans to (A) fund the Preferred A Redemption, (B) refinance certain Indebtedness of the Borrowers existing immediately prior to the Closing Date, (C) pay fees and expenses associated with the Closing Date Transactions and (D) provide for their general corporate needs and working capital requirements, including, funding for creation and retention of direct and indirect jobs and/or opening of new revenue-generating locations, and (ii) the Second Amendment Delayed Draw Term Loans as set forth in the Second Amendment and Fourth Amendment Delayed Draw Term Loan to make payments due in connection with the consummation of the Warrant Tender Offer in accordance with its terms (not to exceed approximately $3,021,103.55) and fees and expenses incurred in connection therewith.
(b)Without limiting the generality of Section 2.8(a) above, neither any Borrower, any other Credit Party, nor any other Person which may in the future become a Credit
[Different first page setting changed from on in original to off in modified.].
61
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Party, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act or to purchase or carry, or to reduce or refinance any Indebtedness incurred to purchase or carry, any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) or for any related purpose governed by Regulations T, U or X of the Board of Governors of the Federal Reserve System.
II.9Defaulting Lender.
.
(a)Notwithstanding anything to the contrary contained herein, in the event any Lender (i) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or (ii) notifies either Agent or Borrowing Agent that it does not intend to make available its portion of any Advance and such actual refusal would constitute a breach by such Lender of its obligations under this Agreement (each, a “Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.9 while such Lender Default remains in effect.
(b)Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are not Defaulting Lenders based on their respective applicable Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of such Lender Default. Amounts received in respect of principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Advances of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent and, if so paid or retained, shall be deemed to have been paid by Borrowers for all purposes hereunder. Agent may hold and, in its discretion, re-lend to Borrowers the amount of such payments received or retained by it for the account of such Defaulting Lender.
(c)A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents. All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, solely for purposes of any determination of “Required Lenders” in accordance with the definition thereof, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances outstanding or a Commitment Percentage.
[Different first page setting changed from on in original to off in modified.].
62
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(d)Other than as expressly set forth in this Section 2.9, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.9 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.
(e)In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.
II.10Joint and Several Liability, Waivers, etc
. Each Borrower hereby agrees as follows.
(a)Each Borrower is accepting joint and several liability hereunder and under the Other Documents in consideration of the financial accommodations to be provided by Agent and the Lenders 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 2.10), it being the intention of each Borrower and 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.
(d)The Obligations of each Borrower under the provisions of this Section 2.10 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 this Agreement or any other circumstances whatsoever.
(e)Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by Applicable Law, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Advances 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 Agent or Lenders
[Different first page setting changed from on in original to off in modified.].
63
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
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, to the fullest extent permitted by Applicable Law, 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 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 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 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 2.10 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.10, 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 2.10 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.10 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or Agent or any Lender.
(f)Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of the other 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 Agent and Lenders that such Borrower has read and understands the terms and conditions of this Agreement and the Other Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of the other Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.
(g)Each Borrower waives, to the maximum extent permitted by law, all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against any Borrower by the operation of Section 580(d) of the California Code of Civil Procedure, any comparable statute, or otherwise.
(h)[Reserved].
[Different first page setting changed from on in original to off in modified.].
64
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(i)The provisions of this Section 2.10 are made for the benefit of Agent, Lenders and their respective successors and assigns, and may be enforced by it or them from time to time against any Borrower as often as occasion therefor may arise and without requirement on the part of Agent, any Lender, any of their respective 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 2.10 shall remain in effect until all of the Obligations shall have been paid in full in accordance with the terms of this Agreement. 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 Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.10 will forthwith be reinstated in effect, as though such payment had not been made.
(j)Until the Obligations (other than Inchoate Obligations) have been paid in full in cash in accordance with the terms hereof, all of the commitments of the Lenders hereunder have been terminated and this Agreement has been terminated, 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 Documents, any payments made by it to Agent or any Lender with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations (other than Inchoate 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 Agent or any Lender hereunder or under any Other Documents 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 (other than Inchoate 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.
(k)Each Borrower hereby agrees that, after the occurrence and during the continuance of any Event of Default, the payment of any amounts due with respect to the indebtedness or other obligations owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations (other than Inchoate Obligations) in accordance with the terms of this Agreement. Each Borrower hereby agrees that after the occurrence and during the continuance of any 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 (other than Inchoate Obligations) shall have been paid in full in cash. If, notwithstanding the foregoing sentence, any 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 Agent, and such Borrower shall deliver any such
[Different first page setting changed from on in original to off in modified.].
65
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
amounts to Agent for application to the Obligations in accordance with the terms of this Agreement.
III.INTEREST AND FEES.
III.1Interest
. Interest on Advances shall be payable in arrears on the last Business Day of each month. Interest charges shall be computed on the actual principal amount of Advances outstanding during the monthly period, at a rate per annum equal to the applicable Term Loan Rate. Whenever, subsequent to the date of this Agreement, the LIBOR RateAdjusted Term SOFR is increased or decreased, the Term Loan Rate shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the LIBOR RateAdjusted Term SOFR during the time such change or changes remain in effect. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the Term Loan Rate plus two (2%) percent per annum (the “Default Rate”).
III.2[Reserved].
.
III.3[Reserved].
.
III.4Fee Letter
. Borrowers shall pay the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter.
III.5Computation of Interest and Fees
. Interest hereunder shall be computed on the basis of a 360 day year and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Term Loan Rate during such extension, unless such next succeeding Business Day would fall in the next calendar month, in which case the due date shall be on the immediately preceding Business Day.
III.6Maximum Charges
. In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrowers, and if the then
[Different first page setting changed from on in original to off in modified.].
66
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrowing Agent and the provisions hereof shall be deemed amended to provide for such permissible rate.
III.7Increased Costs
. In the event that any Applicable Law or any change therein or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Advances with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
(a)subject Agent or any Lender to any Tax of any kind whatsoever (other than (A) Indemnified Taxes and (B) Excluded Taxes) on the Advances, this Agreement, any Other Document, any commitments or other obligations or participations therein, or its deposits, reserves, other liabilities or capital attributable thereto;
(b)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or
(c)impose on Agent or any Lender or the London interbank market any other condition, loss or expense (other than Taxes) affecting this Agreement or any Other Document or any Advance made by any Lender or participation therein;
and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrowers shall within 30 days of the events or conditions giving rise thereto pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the LIBOR RateAdjusted Term SOFR, as the case may be. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent (in writing and providing in reasonable detail the reasons for and calculations of such amounts), and such certification shall be conclusive evidence absent manifest error.
Failure or delay on the part of Agent or any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.7 shall not constitute a waiver of Agent’s or such Lender’s right to demand such compensation, provided that no Credit Party shall be required to compensate Agent or any Lender pursuant to the foregoing provisions of this Section 3.7 for any
[Different first page setting changed from on in original to off in modified.].
67
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
increased costs incurred or reductions suffered more than nine (9) months prior to the date that Agent or such Lender notifies Borrowing Agent of the circumstance giving rise to such increased costs or reductions and of Agent’s or such Lender’s intention to claim compensation therefor (except that, if the circumstance giving rise to such increased costs or reductions involves a change in law that is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
III.8Benchmark Replacement Setting.
.
(a)Replacing USD LIBOR. On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory supervisor of USD LIBOR’s administrator (“IBA”), announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-month, 3-month, 6-month and 12- month USD LIBOR tenor settings. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, if Benchmark Replacement. Notwithstanding anything to the contrary herein or in any Other Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior any setting of the then-current Benchmark is USD LIBOR, the Benchmark , then (i) 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 this Agreement or any Other Document in respect of any setting of such Benchmark on such day and allsetting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any Other Document. If the, and (ii) if a Benchmark Replacement is based on Daily Simple SOFR pursuant todetermined in accordance with clause (iib) of the definition of “Benchmark Replacement”, all interest payments will be payable on a monthly basis.
(b) for such Replacing Future Benchmarks. Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement Date, such Benchmark Replacement will replace the then-currentsuch Benchmark for all purposes hereunder and under this Agreement or any Other Document in respect of any Benchmark setting at or after 5:00 p.m. 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 Document so long as Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
(a)(c) Benchmark Replacement Conforming Changes. In connection with the implementation anduse, administration, adoption or implementation of a Benchmark Replacement, Agent will have the right to make Benchmark Replacement Conforming Changes
[Different first page setting changed from on in original to off in modified.].
68
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
from time to time and, notwithstanding anything to the contrary herein or in any Other 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 Document.
(b)(d) Notices; Standards for Decisions and Determinations. Agent will promptly notify the BorrowersBorrowing Agent and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. Agent will promptly notify Borrowing Agent of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.8. Any determination, decision or election that may be made by Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.83.8, 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 heretoto this Agreement or any Other Document, except, in each case, as expressly required pursuant to this Section 3.83.8.
(c)(e) Unavailability of Tenor of Benchmark. AtNotwithstanding anything to the contrary herein or in any Other Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR or USD LIBOR), then Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) Agent may Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by Agent in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, then 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, non-representative, non-compliant or non-aligned tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks for a Benchmark (including a Benchmark Replacement), then Agent may modify the definition of “Interest Period” and the related provisions hereof (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
[Different first page setting changed from on in original to off in modified.].
69
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(d)Benchmark Unavailability Period. Upon the Borrowing Agent’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrowing Agent may revoke any pending request for an Advance of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period.
(f) Definitions Applicable to this Section 3.8.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of the three month period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
“Benchmark” means, initially, USD LIBOR; provided that if a replacement of the Benchmark has occurred pursuant to this Section 3.8, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, for any Available Tenor, the alternative set forth below that that has been selected by the Agent and can be determined by the Agent:
(i) the sum of: (x) Term SOFR and (y) 0.10% (10 basis points) for an Available Tenor of one month’s duration, 0.15% (15 basis points) for an Available Tenor of three-months’ duration, and 0.25% (25 basis points) for an Available Tenor of six-months’ duration,
(ii) the sum of: (x) Daily Simple SOFR and (y) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of USD LIBOR with a SOFR-based rate having approximately the same length as the interest payment period specified in clause (a) of this Section 3.8, or
(iii) the sum of: (x) the alternate benchmark rate that has been selected by the Agent as the replacement for the then-current Benchmark for the applicable corresponding tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (y) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by Agent as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the
[Different first page setting changed from on in original to off in modified.].
70
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time;
provided that, if the Benchmark Replacement as determined pursuant to this definition of “Benchmark Replacement” 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 Documents.
Any Benchmark Replacement shall be applied in a manner consistent with market practice.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including, without limitation, changes to timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage 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 such Benchmark Replacement exists, in such other manner of administration as Agent decides is reasonably necessary in connection with the administration of this Agreement and the Other Documents).
“Benchmark Transition Event” means, with respect to any then-current Benchmark other than USD LIBOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, 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 (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by Agent in a manner consistent
[Different first page setting changed from on in original to off in modified.].
71
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
with market practice in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if Agent decides that any such convention is not administratively feasible for Agent, then Agent may establish another convention consistent with market practice in its reasonable discretion.
“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
“Early Opt-in Election” means the occurrence of:
(a) a notification by Agent to (or the request by the Borrowers to Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
(b) the joint election by Agent and the Borrowers to trigger a fallback from USD LIBOR and the provision by Agent of written notice of such election to the Lenders.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“SOFR” means a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on 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 administrator of the secured overnight financing rate from time to time).
[Different first page setting changed from on in original to off in modified.].
72
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
“Term SOFR” means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“USD LIBOR” means the London interbank offered rate for U.S. dollars.
III.9Capital Adequacy.
.
(a)In the event that Agent or any Lender shall have determined that any Applicable Law or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Advances with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law or condition.
(b)A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive evidence absent manifest error.
(c)Failure or delay on the part of Agent or any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.9 shall not constitute a waiver of Agent’s or such Lender’s right to demand such compensation, provided that no Credit Party shall be required to compensate Agent or any Lender pursuant to the foregoing provisions of this Section 3.9 for any reductions suffered more than six months prior to the date that Agent or such Lender notifies Borrowing Agent of the circumstance giving rise to such reductions and of such Lender’s intention to claim compensation therefor (except that, if the circumstance giving rise to such increased costs or reductions involves a change in law that is retroactive, then
[Different first page setting changed from on in original to off in modified.].
73
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
the six-month period referred to above shall be extended to include the period of retroactive effect thereof).
III.10Taxes.
.
(a)[Reserved].
(b)Payment Free of Taxes. Any and all payments by or on account of any Obligations of any Credit Party under this Agreement or any Other 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 Borrowing Agent or a Payee) requires the deduction or withholding of any Tax from any such payment by a Payee, then Borrowing Agent or such Payee, as applicable, shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Body 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 Payee, as the case may be, receives an amount equal to the sum it would have received had no such deduction or withholding been made. For clarity, notwithstanding the submission of documentation by a Payee under Section 3.10(g)(i) claiming a reduced rate of or exemption from U.S. withholding Tax, Agent shall be entitled to withhold United States federal income Taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon Agent under § 1.1441-7(b) of the United States Income Tax Regulations or other Applicable Law.
(c)Payment of Other Taxes by the Credit Parties. The Credit Parties shall timely pay to the relevant Governmental Body in accordance with Applicable Law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.
(d)Indemnification by the Credit Parties. Each Credit Party shall jointly and severally indemnify Agent and each Payee, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Agent or any Payee or required to be withheld or deducted from a payment to such Agent or Payee, as the case may be, and any penalties, interest and out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Body. A certificate as to the amount of such payment or liability delivered to Borrowers by any Payee (with a copy to Agent), or by Agent on its own behalf or on behalf of a Payee shall be conclusive absent demonstrable error.
(e)Indemnification by the Payees. Each Payee shall severally indemnify Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to
[Different first page setting changed from on in original to off in modified.].
74
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
such Payee (but only to the extent that any Credit Party has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), and (ii) any Excluded Taxes attributable to such Payee, in each case, that are payable or paid by Agent in connection with this Agreement or any Other 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 Body. In addition, and for clarity, Agent is hereby indemnified severally by the Lenders under § 1.1461-1(e) of the United States Income Tax Regulations against any claims and demands of any Payee for the amount of any Tax it deducts and withholds in accordance with regulations under § 1441 of the Code. A certificate as to the amount of such payment or liability delivered to any Payee by Agent shall be conclusive absent manifest error. Each Payee hereby authorizes Agent to set off and apply any and all amounts at any time owing to such Payee under any Other Document or otherwise payable by Agent to the Payee from any other source against any amount due to Agent under this clause (e).
(f)Evidence of Payments. As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Body pursuant to this Section 3.10, such Credit Party shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.
(g)Status of Payees. (i) Any Payee that is entitled to an exemption from or reduction of withholding Tax with respect to payments hereunder or under any Other Document shall deliver to Borrowers and Agent, at the time or times reasonably requested by Borrowing Agent or Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Payee, if reasonably requested by Borrowing Agent or Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Borrowing Agent or Agent as will enable Borrowing Agent or Agent to determine whether or not such Payee 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 Sections 3.10(g)(A), 3.10(g)(B) and Error! Reference source not found. 1.1(g)(ii)(A), 1.1(g)(ii)(B) and 3.10(g)(ii)(D) below) shall not be required if in Payee’s reasonable judgment such completion, execution or submission would subject such Payee to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Payee, and Payee hereby acknowledges and agrees that in such circumstance Borrowers and Agent shall withhold against all payments to be made by Borrowers or Agent to such Payee in accordance with Applicable Law.
(ii) Without limiting the generality of the foregoing, in the event that any Borrower is a “United States Person” as defined in Section 7701(a)(30) of the Code (a “U.S. Person”),
(A)any Payee that is a U.S. Person shall deliver to Borrowing Agent and Agent on or prior to the date on which such Payee becomes a Payee under this
[Different first page setting changed from on in original to off in modified.].
75
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
Agreement (and from time to time thereafter upon the reasonable request of the Borrower or Agent), two (2) duly completed and executed copies of IRS Form W-9 certifying that such Payee is exempt from U.S. federal backup withholding Tax;
(B)any Payee that is organized under the laws of a jurisdiction other than that in which the Credit Parties are resident for income Tax purposes (a “Foreign Lender”) shall, to the extent it is legally entitled to do so, deliver to Borrowing Agent and 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 Payee under this Agreement (and from time to time thereafter upon the reasonable request of any Borrower or Agent), whichever of the following is applicable:
a.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 this Agreement or any Other Document, two (2) duly completed and executed copies of IRS Form W-8BEN or W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement or any Other Document, two (2) duly completed and executed copies of IRS Form W-8BEN or W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
b.two (2) duly completed and executed copies of IRS Form W-8ECI;
c.in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) two (2) duly completed and executed copies of a certificate in form and substance satisfactory to Agent 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 Borrowers 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) two (2) duly completed and executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
d.to the extent a Foreign Lender is not the beneficial owner, two (2) duly completed and executed copies of IRS Form W-8IMY, accompanied by two (2) duly completed and executed copies of IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E (as applicable), two (2) duly completed and executed copies of a U.S. Tax Compliance Certificate in form and substance satisfactory to Agent, two (2) duly completed and executed copies of 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 two (2) duly completed and executed copies of a U.S. Tax Compliance Certificate in form and substance satisfactory to Agent on behalf of each such direct and indirect partner;
[Different first page setting changed from on in original to off in modified.].
76
159823.01008/130146990v.3
159823.01008/150720893v.5
[Different first page setting changed from on in original to off in modified.].
(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrowing Agent and 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 Payee under this Agreement (and from time to time thereafter upon the reasonable request of Borrowing Agent or Agent), executed copies 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 Borrowing Agent or Agent to determine the withholding or deduction required to be made;
(D)if a payment to a Payee under this Agreement or any Other Document would be subject to U.S. Federal withholding Taxes imposed by FATCA if such Payee 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 Payee shall deliver to Borrowing Agent and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrowing Agent or 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 Borrowing Agent or Agent as may be necessary for Credit Parties and Agent to comply with their obligations under FATCA and to determine that such Payee has complied with such Payee’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; and
(E)Any Agent that is not a U.S. Person shall, at the time such Agent becomes a party to this Agreement, provide to the Borrowing Agent two duly-signed properly completed copies of (1) IRS Form W-8ECI, or any successor thereto with respect to payments, if any, received by the Agent for its own account, and (2) with respect to payments received on account of any Payee, executed copies of IRS Form W-8IMY (or any successor form) certifying that the Agent is either (a) a “qualified intermediary” and that it assumes primary withholding responsibility under Chapters 3 and 4 of the Code and primary Form 1099 reporting and backup withholding responsibility for payments it receives for the account of others or (b) a “U.S. branch” and that payment it receives for others