Execution Version APPGATE CYBERSECURITY, INC. THE GUARANTORS SIGNATORY HERETO AND APPGATE FUNDING, LLC as Representative of the Holders and Collateral Agent NOTE ISSUANCE AGREEMENT Dated as of July 20, 2023 Convertible Senior Secured Notes due 2026
i TABLE OF CONTENTS PAGE ARTICLE 1 DEFINITIONS ............................................................................................................2 Section 1.01 Definitions ...............................................................................................2 Section 1.02 References to Interest ............................................................................29 Section 1.03 References to Knowledge. ....................................................................29 ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES .................................................................................30 Section 2.01 Designation and Amount.......................................................................30 Section 2.02 Form of Notes .......................................................................................30 Section 2.03 Date and Denomination of Notes; Payments of Interest and Defaulted Amounts ...............................................................................30 Section 2.04 Execution, Authentication and Delivery of Notes ................................34 Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions on Transfer .................................................................................................34 Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes ..........................................40 Section 2.07 [Intentionally Omitted]..........................................................................40 Section 2.08 Cancellation of Notes Paid, Converted, Etc ..........................................41 Section 2.09 Maturity Date ........................................................................................41 Section 2.10 Repurchases...........................................................................................41 ARTICLE 3 SATISFACTION AND DISCHARGE .....................................................................41 Section 3.01 Satisfaction and Discharge ....................................................................41 ARTICLE 4 PARTICULAR COVENANTS OF THE COMPANY, THE GUARANTORS AND THE RESTRICTED SUBSIDIARIES ........................41 Section 4.01 Payment of Principal and Interest .........................................................41 Section 4.02 Maintenance of Office or Agency .........................................................42 Section 4.03 [Intentionally Omitted]..........................................................................42 Section 4.04 Provisions as to Paying Agent...............................................................42 Section 4.05 Existence ...............................................................................................43 Section 4.06 Quarterly and Annual Reports; Rule 144A Information Requirement; Monthly Financial Information ......................................43 Section 4.07 Stay, Extension and Usury Laws ..........................................................45 Section 4.08 Compliance Certificate; Statements as to Defaults ...............................45 Section 4.09 [Intentionally Omitted]..........................................................................46 Section 4.10 [Intentionally Omitted]..........................................................................46 Section 4.11 Incurrence of Indebtedness and Issuance of Disqualified Stock ...........46 Section 4.12 Liquidity Covenant ...............................................................................46 Section 4.13 Limitation on Investments ....................................................................46 Section 4.14 Liens ......................................................................................................46
ii Section 4.15 Asset Sales; Insurance/Condemnation ..................................................46 Section 4.16 Limitation on Restricted Payments .......................................................47 Section 4.17 Intellectual Property ..............................................................................47 Section 4.18 Limitations on Transactions with Affiliates ..........................................47 Section 4.19 Addition of Guarantors .........................................................................48 Section 4.20 Tender Offer Participation Rights .........................................................48 Section 4.21 Restrictive Legend ................................................................................48 Section 4.22 Designation of Subsidiaries...................................................................48 Section 4.23 Payment of Taxes and Claims; Maintenance of Properties ..................49 Section 4.24 Notices; Information .............................................................................50 Section 4.25 Compliance with Laws and Contractual Obligations............................50 Section 4.26 Books and Records; Inspections ...........................................................51 Section 4.27 Mortgages ..............................................................................................51 Section 4.28 Limitations on Restrictive Agreements .................................................51 Section 4.29 Cash Management .................................................................................51 Section 4.30 Post-Closing Requirements ...................................................................52 Section 4.31 Further Assurances ................................................................................52 ARTICLE 5 [INTENTIONALLY OMITTED] .............................................................................52 ARTICLE 6 DEFAULTS AND REMEDIES................................................................................53 Section 6.01 Events of Default...................................................................................53 Section 6.02 Acceleration; Rescission and Annulment .............................................55 Section 6.03 Payments of Notes on Default; Suit Therefor .......................................55 Section 6.04 Remedies Cumulative and Continuing..................................................56 Section 6.05 Direction of Proceedings and Waiver of Defaults by Holders ..............57 Section 6.06 Application of Monies Collected by Collateral Agent ..........................57 Section 6.07 Proofs of Claim .....................................................................................58 ARTICLE 7 [INTENTIONALLY OMITTED] .............................................................................58 ARTICLE 8 CONCERNING THE HOLDERS ............................................................................59 Section 8.01 Who Are Deemed Absolute Owners .....................................................59 Section 8.02 Company-Owned Notes Disregarded ...................................................59 Section 8.03 Action by Holders .................................................................................59 Section 8.04 Proof of Execution by Holders ..............................................................59 ARTICLE 9 [INTENTIONALLY OMITTED] .............................................................................60 ARTICLE 10 SUPPLEMENTAL AGREEMENTS ......................................................................60 Section 10.01 Supplemental Agreements Without Consent of Holders ......................60 Section 10.02 Supplemental Agreements and Other Amendments with Consent of Holders ................................................................................61 Section 10.03 Effect of Amendments, Supplements or Waivers .................................62 Section 10.04 Certain Amendments .............................................................................63
iii Section 10.05 Evidence of Compliance of Amendment, Supplement or Waiver to Be Furnished Representative ............................................................63 ARTICLE 11 CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE .............63 Section 11.01 Company May Consolidate, Etc. on Certain Terms .............................63 Section 11.02 Successor Company to Be Substituted ..................................................64 Section 11.03 Reverse Merger .....................................................................................65 ARTICLE 12 [INTENTIONALLY OMITTED] ...........................................................................65 ARTICLE 13 OPTIONAL CHANGE OF CONTROL REDEMPTION ......................................65 Section 13.01 No Optional Redemption ......................................................................65 Section 13.02 Optional Change of Control Redemption .............................................65 Section 13.03 Notice of Change of Control Redemption; Selection of Notes .............65 Section 13.04 Payment of Notes Called for Change of Control Redemption ..............67 Section 13.05 Restrictions on Change of Control Redemption ...................................67 ARTICLE 14 CONVERSION OF NOTES ...................................................................................67 Section 14.01 Conversion upon Change of Control ....................................................67 Section 14.02 Conversion ............................................................................................68 Section 14.03 Conversion Procedure; Settlement Upon Conversion...........................68 Section 14.04 [Intentionally Omitted]..........................................................................72 Section 14.05 Adjustment of Conversion Rate ............................................................72 Section 14.06 Adjustments of Prices ...........................................................................80 Section 14.07 Shares to Be Reserved ...........................................................................80 Section 14.08 Effect of Recapitalizations, Reclassifications and Changes of the Common Stock ................................................................................80 Section 14.09 Certain Covenants .................................................................................83 Section 14.10 [Intentionally Omitted]..........................................................................83 Section 14.11 Notice to Holders Prior to Certain Actions ...........................................83 Section 14.12 Shareholder Rights Plans ......................................................................84 ARTICLE 15 REPURCHASE OF NOTES AT OPTION OF HOLDERS ...................................84 Section 15.01 Reserved ................................................................................................84 Section 15.02 Repurchase at Option of Holders Upon a Fundamental Change ..........84 Section 15.03 Repurchase at Option of Holders Upon a Change of Control ...............85 Section 15.04 Withdrawal of Fundamental Change Repurchase Notice or Change of Control Repurchase Notice ..................................................86 Section 15.05 Deposit of Fundamental Change Repurchase Price and Change of Control Repurchase Price .................................................................87 Section 15.06 Covenant to Comply with Applicable Laws Upon Repurchase of Notes .................................................................................................88 Section 15.07 Repurchase Procedures .........................................................................88
iv ARTICLE 16 GUARANTEE ........................................................................................................89 Section 16.01 Note Guarantee......................................................................................89 Section 16.02 Execution and Delivery of Note Guarantee ..........................................90 Section 16.03 Guarantors may Consolidate, etc., on Certain Terms ...........................91 Section 16.04 Release of Note Guarantees ..................................................................92 Section 16.05 Limitation on Guarantor Liability .........................................................92 Section 16.06 “Representative” to Include Paying Agent ...........................................93 ARTICLE 17 COLLATERAL AND SECURITY ........................................................................93 Section 17.01 Security Documents ..............................................................................93 Section 17.02 Recording and Opinions ........................................................................93 Section 17.03 Release of Collateral .............................................................................93 Section 17.04 Specified Releases of Collateral ...........................................................94 Section 17.05 Release upon Satisfaction and Discharge or Amendment ....................95 Section 17.06 Form and Sufficiency of Release and Subordination ............................95 Section 17.07 Purchaser Protected ...............................................................................96 Section 17.08 Authorization of Actions to be Taken by the Collateral Agent Under the Security Documents .............................................................96 Section 17.09 Authorization of Receipt of Funds by the Collateral Agent Under the Security Documents .............................................................98 Section 17.10 Action by the Collateral Agent .............................................................98 Section 17.11 Compensation and Indemnity ...............................................................99 Section 17.12 [Intentionally Omitted]........................................................................100 Section 17.13 Resignation of Collateral Agent ..........................................................100 Section 17.14 Succession by Merger .........................................................................101 ARTICLE 18 MISCELLANEOUS PROVISIONS .....................................................................101 Section 18.01 Provisions Binding on Company’s and Guarantor’s Successors ........101 Section 18.02 Official Acts by Successor Company .................................................101 Section 18.03 Addresses for Notices, Etc ..................................................................101 Section 18.04 Governing Law; Jurisdiction ...............................................................102 Section 18.05 Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Representative and Collateral Agent ..................................................................................102 Section 18.06 Legal Holidays ....................................................................................103 Section 18.07 [Intentionally Omitted]........................................................................103 Section 18.08 Benefits of Agreement ........................................................................103 Section 18.09 Table of Contents, Headings, Etc ........................................................103 Section 18.10 [Intentionally Omitted]........................................................................103 Section 18.11 Execution in Counterparts ...................................................................103 Section 18.12 Severability; Conflict ..........................................................................104 Section 18.13 Waiver of Jury Trial ............................................................................104 Section 18.14 Force Majeure .....................................................................................104 Section 18.15 Calculations .........................................................................................104
v Section 18.16 PATRIOT Act .....................................................................................104 Section 18.17 Electronic Signatures ..........................................................................105 EXHIBITS Exhibit A Form of Note ....................................................................................................... A-1 Exhibit B Form of Supplemental Agreement .......................................................................B-1 Exhibit C [Intentionally Omitted] ........................................................................................C-1 Exhibit D Form of Subordination Agreement ..................................................................... D-1 Exhibit E Form of Security Agreement ............................................................................... E-1 Exhibit F Form of Intercreditor Agreement ......................................................................... F-1 Exhibit G Excluded Accounts ............................................................................................. G-1
1 REFERENCE IS MADE TO (A) THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JULY 20, 2023 (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT FROM TIME TO TIME, THE “SENIOR INTERCREDITOR AGREEMENT”), AMONG U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, AS COLLATERAL AGENT FOR THE SECURED PARTIES REFERRED TO THEREIN (BY REFERENCE TO THE DEFINITION IN THE ORIGINAL SENIOR NIA AS DEFINED THEREIN); APPGATE FUNDING, LLC, AS ORIGINAL SECOND LIEN AGENT, SIS HOLDINGS, L.P., AS ORIGINAL THIRD LIEN AGENT; APPGATE, INC., A DELAWARE CORPORATION; AND CERTAIN SUBSIDIARIES PARTY THERETO, AND (B) THAT CERTAIN INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JULY 20, 2023 (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT FROM TIME TO TIME, THE “JUNIOR INTERCREDITOR AGREEMENT” AND, COLLECTIVELY WITH THE SENIOR INTERCREDITOR AGREEMENT, THE “INTERCREDITOR AGREEMENT”), AMONG APPGATE FUNDING, LLC, AS ORIGINAL SENIOR AGENT, SIS HOLDINGS, L.P., AS ORIGINAL SUBORDINATED AGENT; APPGATE, INC., A DELAWARE CORPORATION; AND CERTAIN SUBSIDIARIES PARTY THERETO. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THE LIENS CREATED HEREBY AND THE RIGHTS, REMEDIES, DUTIES AND OBLIGATIONS PROVIDED FOR HEREIN ARE SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE INTERCREDITOR AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE SENIOR INTERCREDITOR AGREEMENT AND THE JUNIOR INTERCREDITOR AGREEMENT, THE PROVISIONS OF THE SENIOR INTERCREDITOR AGREEMENT SHALL CONTROL. NOTE ISSUANCE AGREEMENT dated as of July 20, 2023, among APPGATE CYBERSECURITY, INC., a Delaware corporation, as issuer (the “Company,” as more fully set forth in Section 1.01), APPGATE, INC., a Delaware corporation (“Parent”), the other Guarantors signatory hereto and APPGATE FUNDING, LLC, as representative of the Holders (in such capacity, the “Representative”) and collateral agent (in such capacity, the “Collateral Agent”). W I T N E S S E T H: WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its Convertible Senior Notes due 2026 (the “Notes”), in an aggregate principal amount of up to $30,000,000, and in order to provide the terms and conditions upon which the Notes are to be issued and delivered; WHEREAS, the Company has duly authorized the execution and delivery of this Agreement; WHEREAS, the Form of Note, the Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice, the Form of Change of Control Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and
2 WHEREAS, all acts and things necessary to make the Notes, when executed and delivered by the Company, the valid, binding and legal obligations of the Company, and this Agreement a valid agreement according to its terms, have been done and performed, and the execution of this Agreement and the issuance hereunder of the Notes have in all respects been duly authorized. NOW, THEREFORE: That in order to declare the terms and conditions upon which the Notes are, and are to be, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company and the Guarantors covenant and agree with the Representative and the respective Holders from time to time of the Notes (except as otherwise provided below), as follows: ARTICLE 1 DEFINITIONS Section 1.01 Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Agreement and of any agreement supplemental hereto (except to the extent otherwise provided therein) shall have the respective meanings specified in this Section 1.01. The words “herein,” “hereof,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular. All accounting terms not otherwise defined herein have the meaning assigned to them in accordance with GAAP (as herein defined). All references to Articles, Sections, Exhibits and Appendices shall be construed to refer to Articles and Sections of, and Exhibits and Appendices to, this Agreement. As used herein “or” is not exclusive. As used herein “including” means including without limitation. “Acquiring Person” means any Person acquiring the Company, directly or indirectly, through a Reverse Merger. “Additional Notes” means additional Notes (other than the Initial Notes and any PIK Notes) issued under this Agreement in accordance with this Agreement as part of the same series as the Notes issued as Initial Notes. “Administrative Agent” shall have the meaning specified in Section 6.03(e). “Adverse Proceeding” means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of the Company or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign, whether pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries or any property of the Company or any of its Subsidiaries. “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such
3 Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Notwithstanding anything to the contrary herein, (i) the determination of whether a Person is an “Affiliate” of another Person for purposes of this Agreement shall be made based on the facts at the time such determination is made or required to be made, as the case may be, hereunder, (ii) no Holder of Notes shall be deemed an Affiliate of the Company for purposes of this Agreement solely by virtue of their ownership of Notes and (iii) none of Cyxtera Technologies, Inc. or any of its direct or indirect Subsidiaries shall be deemed an “Affiliate.” Any reference to an Affiliate of the Representative shall include any investment fund or account managed or advised by the Representative or any of its representatives or Affiliates and conversely any Affiliate of any investment fund or account managed or advised by the Representative or any of its representatives or Affiliates shall include the Representative. “Agreement” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented. “Agreement Documents” means this Agreement (including the Guarantees, if any, hereunder), the Notes, the Note Purchase Agreement, the Security Documents, together with any other agreements, instruments or other documents entered into in connection with the foregoing or evidencing any other Agreement Obligations, each as may be amended, restated, supplemented or otherwise modified from time to time. “Agreement Obligations” means all obligations (whether now existing or hereafter arising, absolute or contingent, joint, several or independent) of every nature of the Company and each Guarantor under this Agreement, the Notes and the other Agreement Documents, including obligations from time to time owed to the Representative, the Collateral Agent, the Holders or any of them, whether for principal, premium, interest (including interest and premium which, but for the filing of a petition in bankruptcy, would have accrued on any Agreement Obligation, whether or not a claim is allowed against for such interest or premium in the related bankruptcy proceeding), payments for fees, expenses, indemnification or otherwise. “Antitrust Laws” shall have the meaning specified in Section 14.03(b). “Anti-Corruption Laws” means all applicable laws, rules, regulations and orders relating to the prevention of corruption and bribery, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, and all national and international laws, rules, regulations and orders enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions. “Anti-Money Laundering Laws” means all laws, rules, regulations and orders relating to terrorism or money laundering, including Executive Order No. 13224, the PATRIOT Act and the laws, rules, regulations and orders comprising or implementing the Bank Secrecy Act. “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
4 “Bankruptcy Law” means the Bankruptcy Code and any other federal, state or foreign bankruptcy, insolvency, receivership or similar laws applicable to the Company or any of the Guarantors. “Board of Directors” means: (1) with respect to a corporation, the board of directors of the corporation or a duly authorized committee thereof; (2) with respect to a partnership, the board of directors of the general partner of the partnership; (3) with respect to a limited liability company managed by the member or members, the managing member or members or any controlling committee of managing members thereof; (4) with respect to a limited liability company managed by a manager or managers, the manager or managers and any controlling committee of managers; and (5) with respect to any other person, the board or committee of such person serving a similar function. “Business Day” means any day other than a Saturday, a Sunday or other day on which banking institutions in New York City or, with respect to any payment on a Note, the place of payment, are authorized or required by law, regulation or executive order to close or remain closed. “Capital Lease Obligation” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. “Capital Stock” with respect to any Person means any and all shares, interests, rights, participations or other equivalents of or interests in (however designated) stock, limited liability company interests or other equity interests (including partnership or membership interests) issued by such Person that confer the right to receive a share of the profits and losses of, or distributions of, such Person, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing, but “Capital Stock” shall not include any debt securities convertible into or exchangeable for any securities otherwise constituting Capital Stock pursuant to this definition, whether or not such debt securities include any right of participation with Capital Stock. “Cash Equivalents” means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition,
5 having one of the three highest ratings obtainable from either S&P or Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank or by a bank organized under the laws of any foreign country recognized by the United States of America, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000 (or the foreign currency equivalent thereof); (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above. “Cash Interest” shall have the meaning specified in Section 2.03(c)(i). “Change of Control” means (1) any Combination Transaction as a result of which holders of the Common Equity of the Company immediately prior to such Combination Transaction own, directly or indirectly, in the aggregate, less than 50% of the voting power of the Common Equity of the continuing, surviving, or succeeding entity or the parent thereof immediately after such Combination Transaction, unless such transaction results in a Permitted Holder owning, directly or indirectly, in the aggregate, 50% or more of the voting power of the Common Equity of the continuing, surviving, or succeeding entity or the parent thereof immediately after such Combination Transaction, (2) any transaction or series of related transactions in which in excess of 50% of the voting power of the Common Equity of the Company is transferred to any “person” or “group” within the meaning of Section 13(d) of the Exchange Act, or any such “person” or “group”, other than, in each case, a Permitted Holder, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 50% of the voting power of the Common Equity of the Company, or (3) any sale, lease, or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s direct or indirect Wholly-Owned Subsidiaries; provided with respect to clauses (1) and (2), the acquisition by the Holders of Common Equity shall not be deemed a Change of Control. “Change of Control Company Notice” shall have the meaning specified in Section 15.03(b). “Change of Control Conversion Obligation” shall have the meaning specified in Section 14.01. “Change of Control Conversion Rate” shall have the meaning specified in Section 14.08(a). “Change of Control Effective Date” shall have the meaning specified in Section 14.01. “Change of Control Redemption” shall have the meaning specified in Section 13.02.
6 “Change of Control Redemption Date” shall have the meaning specified in Section 13.03(a). “Change of Control Redemption Notice” shall have the meaning specified in Section 13.03(a). “Change of Control Redemption Price” shall have the meaning specified in Section 13.02. “Change of Control Repurchase Date” shall have the meaning specified in Section 15.03(a). “Change of Control Repurchase Expiration Time” shall have the meaning specified in Section 15.07(a) (i). “Change of Control Repurchase Notice” shall have the meaning specified in Section 15.07(a) (i). “Change of Control Repurchase Price” shall have the meaning specified in Section 15.03(a). “Clause A Distribution” shall have the meaning specified in Section 14.05(c). “Clause B Distribution” shall have the meaning specified in Section 14.05(c). “Clause C Distribution” shall have the meaning specified in Section 14.05(c). “close of business” means 5:00 p.m. (New York City time). “Code” means Title 26 of the United States Code entitled “Internal Revenue Code,” as now and hereafter in effect, or any successor statute. “Collateral” has the meaning ascribed to such term in the Security Documents. “Collateral Agent” has the meaning ascribed to such term in the first paragraph of this Agreement. “Combination Transaction” means with respect to a Person any consolidation or merger of such Person with or into any other corporation or other entity or person (including any acquisition, purchase or similar transaction of or involving such Person by another Person), or any other reorganization, in each case, excluding any transaction effected solely for the purpose of reincorporating into another jurisdiction. “Commission” means the U.S. Securities and Exchange Commission. “Common Equity” of any Person means Capital Stock of such Person that is generally entitled to vote in the election of members of the Board of Directors of such Person.
7 “Common Stock” means the Parent’s common stock, par value $0.001 per share, subject to Section 14.08. “Company” shall have the meaning specified in the first paragraph of this Agreement, and from and after the date a Successor Company is substituted for the Company subject to and in accordance with the provisions of Article 11, the Successor Company. “Contractual Obligation” means, 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 Agreement” means a control agreement in form and substance reasonably satisfactory to Collateral Agent and the Representative that, subject to the exceptions set forth in Section 4.01(c) of the Security Agreement (i) is entered into, inter alios, among Collateral Agent, the securities intermediary or financial institution, as applicable, and (ii) is effective for the Collateral Agent to obtain “control” (within the meaning of Articles 8 and 9 of the UCC) of the relevant securities account and deposit account, as applicable. “Controlled Account” means any account of the Company, Parent or any Restricted Subsidiary that is subject to a Control Agreement. “Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) which, together with the Company and its Subsidiaries are treated as a single employer under Section 414 of the Code. “Conversion Agent” shall have the meaning specified in Section 4.02. “Conversion Date” shall have the meaning specified in Section 14.03(c). “Conversion Obligation” shall have the meaning specified in Section 14.02. “Conversion Rate” means, for each $1,000 principal amount of Notes, 585.74960. “Default” means any event that is, or after notice or passage of time, or both, would be, an Event of Default. “Default Rate” has the meaning specified in Section 2.03(c)(iv). “Defaulted Amounts” means any amounts (including, without limitation, the Fundamental Change Repurchase Price, Change of Control Repurchase Price, principal and interest) that are payable in respect of any Notes but are not punctually paid or duly provided for. “Designated Country” means each of the Cayman Islands, British Virgin Islands, and any country or state which is a member of the Organization for Economic Cooperation and Development.
8 “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division, an issuance of Capital Stock, or otherwise) of any property, businesses or assets of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including Capital Stock of any Subsidiary, by any Person (including any sale and leaseback transaction), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith (including, without limitation, any rights to any residual payment stream with respect thereto). For purposes of this definition, “Disposition” shall include (a) the sale or other disposition for value of any contracts or (b) any disposition of property through a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law, in each case by Company, Parent or any Restricted Subsidiary. “Disposition” shall not include the expiration of a lease by its terms or the non-renewal of a lease. Notwithstanding the preceding, each of the following items will be deemed not to be a Disposition: (1) Any Investment that is a Permitted Investment; (2) the sale, lease or other transfer of products, raw materials, feedstock, services or accounts receivable in the ordinary course of business; (3) the sale or other disposition of Cash Equivalents; (4) licensing and sub-licensing by the Company and/or Parent and/or any Guarantor and/or any Restricted Subsidiary of Intellectual Property permitted by Section 4.17 hereof; (5) any sale, abandonment or other disposition of damaged, worn-out, redundant or obsolete assets in the ordinary course of business; (6) the granting of Liens not prohibited by this Agreement; (7) a Restricted Payment that does not violate the terms of this Agreement; (8) any Permitted Equity Raise; and (9) any issuance of Permitted Disqualified Stock or awards exercisable for Common Stock pursuant to any equity incentive plan approved by the Board of Directors of the Company. “Dispute Notice” shall have the meaning specified in the definition of Transaction Price. “Disputing Holders” shall have the meaning specified in the definition of Transaction Price. “Disputing Holders’ Calculation” shall have the meaning specified in the definition of Transaction Price.
9 “Disqualified Stock” means any Capital Stock which, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Capital Stock that is not Disqualified Stock and/or cash in lieu of fractional shares), pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of the holder of the Capital Stock (other than solely for Capital Stock that is not Disqualified Stock and/or cash in lieu of fractional shares), in whole or in part, (c) requires the payment of any cash dividend or any other scheduled cash payment, or (d) is or becomes convertible into or exchangeable for Indebtedness (other than Indebtedness permitted to be incurred pursuant to Section 4.11 of this Agreement) or any other Capital Stock that would constitute Disqualified Stock, in each case, prior to the date that is 90 days after the date on which the Notes mature. Notwithstanding the preceding sentence, only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock. For the avoidance of doubt, the Common Stock as of the date hereof is not Disqualified Stock. “Distributed Property” shall have the meaning specified in Section 14.05(c). “Dividing Person” shall have the meaning specified in the definition of Division. “Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive. “Domestic Subsidiary” means a Subsidiary of the Company that is organized under the laws of the United States of America, any state thereof or the District of Columbia. “Effective Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable. “Effective Yield” means, as to any Indebtedness, the all-in yield on such Indebtedness, in each case as reasonably determined by the Company in consultation with the Representative, taking into account the applicable interest rate (including any interest rate margins and interest rate benchmark floors) and all upfront fees or original issue discount (amortized over four years following the date of incurrence thereof (e.g., 25 basis points of interest rate margin equals 100 basis points in upfront fees or original issue discount) or, if shorter, the remaining life to maturity) payable to lenders or holders of such Indebtedness. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto, and the rules and regulations promulgated thereunder. “ERISA Affiliate” means each member of the Controlled Group. “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30
10 day notice period is waived); (b) the failure of a Plan to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; or (f) the receipt by the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Company or any ERISA Affiliate of any notice, in either case, concerning the imposition upon the Company or any of its ERISA Affiliates of withdrawal liability or a determination that a Multiemployer Plan is, or is reasonably expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. “Event of Default” shall have the meaning specified in Section 6.01. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Excluded Accounts” means (i) any deposit account used solely for funding payroll or segregating payroll taxes or funding other employee wage or benefit, (ii) zero balance accounts the entire balance of which is swept each Business Day to a deposit account subject to a Control Agreement, (iii) any deposit account or securities account (other than those that are Excluded Accounts pursuant to (i), (ii) and/or (iv) of this definition) that does not have an average monthly cash or Cash Equivalent balance exceeding $250,000, provided that not more than an average monthly aggregate amount of $1,000,000 of cash and Cash Equivalents shall be maintained at such deposit accounts and securities accounts not subject to a Control Agreement, and (iv) the account(s) set forth on Exhibit G attached hereto so long as the aggregate amount in any such account does not at any time exceed the amount set forth across from such account on Exhibit G attached hereto and solely for so long as such account, in the case of an account of a Domestic Subsidiary, is used exclusively for the purpose described therein. “Excluded Subsidiary” means any Foreign Subsidiary and any Unrestricted Subsidiary. “Ex-Dividend Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market. “Existing Agreement Obligations” means contractual obligations pursuant to agreements executed prior to the Issue Date. “fair market value” means with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a sale of such asset or group of assets at such date of determination assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to
11 the nature and characteristics of such asset, as determined in good faith by the Board of Directors of the Parent or the Company. “Final Transaction Price Notice” shall have the meaning specified in the definition of Transaction Price. “Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief executive officer, chief financial officer or controller of the Parent that such financial statements fairly present, in all material respects, the financial condition of Parent and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments and certifying that no Default or Event of Default has occurred and is continuing. “Foreign Subsidiary” means any direct or indirect Subsidiary of the Company which is not a Domestic Subsidiary. “Form of Assignment and Transfer” means the “Form of Assignment and Transfer” attached as Attachment 4 to the Form of Note attached hereto as Exhibit A. “Form of Change of Control Repurchase Notice” means the “Form of Change of Control Repurchase Notice” attached as Attachment 3 to the Form of Note attached hereto as Exhibit A. “Form of Fundamental Change Repurchase Notice” means the “Form of Fundamental Change Repurchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A. “Form of Note” means the “Form of Note” attached hereto as Exhibit A. “Form of Security Agreement” means the “Form of Security Agreement” attached hereto as Exhibit E. “Form of Notice of Conversion” means the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Note attached hereto as Exhibit A. “Fundamental Change” shall be deemed to have occurred if any of the following occurs prior to the Maturity Date: (a) the consummation of (i) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets; or (ii) any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or assets; provided, however, that a transaction described in clause (i) or (ii) in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof
12 immediately after such transaction in substantially the same proportions (relative to each other) as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (a); (b) the holders of Capital Stock of the Company approve any plan for the liquidation or dissolution of the Company; or (c) the Common Stock (or other common stock underlying the Notes) ceases to be listed or quoted on any Permitted Exchange (following such Common Stock or other common stock underlying the Notes first being listed or quoted on a Permitted Exchange); provided, however, that a transaction or transactions described in clause (a) above shall not constitute a Fundamental Change, if at least 90% of the consideration received or to be received by holders of the Common Stock of the Company, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any Permitted Exchange or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions such consideration becomes Reference Property for the Notes, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ statutory appraisal rights (subject to the provisions set forth under Section 14.03). For the avoidance of doubt, the Specified Transaction shall be deemed not to constitute a Fundamental Change for the purposes of this Agreement. If any transaction occurs in which the Common Stock is converted into, or exchanged for, Reference Property consisting of Capital Stock of another entity, references to the Company in the definition of “Fundamental Change” above shall instead be references to such other entity. If, under the terms of this Agreement, the Notes become convertible into Capital Stock of any other entity other than the Company, references to the Company in the definition of “Fundamental Change” above shall instead be references to such other entity, as applicable. “Fundamental Change Company Notice” shall have the meaning specified in Section 15.02(b). “Fundamental Change Repurchase Date” shall have the meaning specified in Section 15.02(a). “Fundamental Change Repurchase Expiration Time” shall have the meaning specified in Section 15.07(a)(i). “Fundamental Change Repurchase Notice” shall have the meaning specified in Section 15.07(a)(i). “Fundamental Change Repurchase Price” shall have the meaning specified in Section 15.02(a). “GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including, without limitation, those set forth in the opinions and
13 pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. “Global Intercompany Note” means that certain global intercompany note, dated as of February 8, 2021, originally executed and delivered by the Company and certain of its Subsidiaries as such global intercompany note may be amended, supplemented or otherwise modified from time to time. “Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or any other obligation of any other Person: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning. “Guarantor” means each Person that is required to and executes a supplemental agreement with the Company and the Collateral Agent or the Representative, as applicable, substantially in the form of Exhibit B attached hereto and delivers it to the Representative or the Collateral Agent, as applicable, pursuant to which such Person unconditionally Guarantees all of the Agreement Obligations until the Note Guarantee of such Person has been released in accordance with the provisions of this Agreement. “Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity, officer or examiner exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government, any court, any securities exchange or any self-regulatory organization, in each case whether associated with a state of the United States, the United States, or a foreign entity or government (including any supra-national body exercising such powers or functions, such as the European Union or the European Central Bank). “Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under: (a) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;
14 (b) other agreements or arrangements designed to manage interest rates or interest rate risk; and (c) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices. “Holder,” as applied to any Note, or other similar terms (but excluding the term “beneficial holder”), means any Person in whose name a particular Note is registered on the Note Register at the applicable time. “Holder Representatives” shall have the meaning specified in Section 4.06(b). “HSR Act” shall have the meaning specified in Section 14.03(b). “incur” shall have the meaning specified in Section 4.11. “Indebtedness” means, with respect to any Person on any date of determination (without duplication): (a) the principal (or, with respect to such Indebtedness issued with original issue discount, the accreted value) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable; (b) all Capital Lease Obligations of such Person; (c) all obligations of such Person for the deferred purchase price of property or services due more than six months after such property or services are acquired or taken, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement to the extent of the value of such property (but excluding any accounts payable or other liability to trade creditors arising in the ordinary course of business); (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, surety bonds, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the 30th day following payment on the letter of credit); (e) to the extent not otherwise included in this definition, net payment obligations under any Hedging Obligations of such Person; and
15 (f) all obligations of the type referred to in clauses (a) through (e) of other Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; if, and to the extent, with respect to clauses (a), (b), (c) and (e) only, any of the preceding items referred to in clauses (a), (b), (c) and (e) would appear as a liability upon the balance sheet of the specified Person in accordance with GAAP. “Initial Notes” the first $2,500,000 aggregate principal amount of Notes issued under this Agreement on the Issue Date. “Intellectual Property” means, with respect to any Person, all patents, patent applications and like protections, including improvements divisions, continuation, renewals, reissues, extensions and continuations in part of the same, trademarks, trade names, trade styles, trade dress, service marks, logos and other business identifiers and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of such Person connected with and symbolized thereby, copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative works, whether published or unpublished, technology, know-how and processes, operating manuals, trade secrets, computer hardware and software, rights to unpatented inventions and all applications and licenses therefor, used in or necessary for the conduct of business by such Person and all claims for damages by way of any past, present or future infringement of any of the foregoing. “Interest Payment Date” means each February 1 and August 1 of each year, beginning on February 1, 2024. “Interest Period” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period shall commence on and include the Issue Date (the Interest Payment Date for any Interest Period shall be the immediately succeeding Interest Payment Date following the last day of such Interest Period). “Interest Rate” has the meaning set forth in the Form of Note attached hereto as Exhibit A. “Investment” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates of such Person) in the form of loans (including Guarantees) and advances, or other extension of credit, capital contributions (including by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Capital Stock, Indebtedness or other similar instruments or other securities (other than advances or extensions of credit to customers in the ordinary course of business that are in conformity with GAAP recorded as accounts receivable on the balance sheet of Parent, the Company or its Subsidiaries). The amount of all Investments (other than cash) will be the fair market value (as determined in good faith by the Board of Directors of Parent) on the date of the Investment. “Issue Date” means July 20, 2023.
16 “Last Reported Sale Price” of the Common Stock or any other security on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the Relevant Stock Exchange on which the Common Stock (or such other security) is then listed or admitted for trading. If the Common Stock or such other security is not listed for trading on a Relevant Stock Exchange on the relevant date, the “Last Reported Sale Price” shall be the average of the last quoted bid and ask prices for the Common Stock or such other security in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock or such other security is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock or such other security on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose. The “Last Reported Sale Price” shall be determined without regard to after-hours trading or any other trading outside of regular trading session hours. “Lien” means, with respect to any asset or right, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge, security assignment or security interest in or on such asset or right, and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset or right. “Liquidity” means unrestricted cash and Cash Equivalents owned by the Parent as would, in conformity with GAAP, be reflected on a consolidated balance sheet of the Parent and its Subsidiaries. “Magnetar Obligations” means the Agreement Obligations as defined in the Magnetar Note Issuance Agreement. “Magnetar Note Issuance Agreement” means the Amended and Restated Note Issuance Agreement dated as of June 9, 2023 by and among the Company, the guarantors signatory thereto, Magnetar Financial, LLC, as the representative of the holders, and U.S. Bank Trust Company, National Association, in its capacity as collateral agent. “Magnetar Note Purchase Agreement” means the Amended and Restated Note Purchase Agreement dated as of June 9, 2023 by and among the Company, Parent and the lenders named on the schedule of lenders attached thereto. “Magnetar Notes” means those Convertible Senior Notes issued under the Magnetar Note Purchase Agreement and governed by the Magnetar Note Issuance Agreement, in each case as amended, amended and restated, supplemented or otherwise modified from time to time. “Material Adverse Effect” means a material adverse effect on and/or material adverse developments with respect to (i) the business, operations, properties, assets or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole; (ii) the ability of the Company or any Guarantor to fully and timely perform its Agreement Obligations; (iii) the legality, validity, binding effect or enforceability against Company or a Guarantor of an Agreement Document to
17 which it is a party; (iv) the Collateral or the Collateral Agent’s Liens (on behalf of the Secured Parties) on the Collateral or the priority of such Liens; or (v) the rights, remedies and benefits available to, or conferred upon, any Secured Party under any Agreement Document. “Material Indebtedness” means (i) the Subordinated Indebtedness and (ii) Indebtedness incurred pursuant to clause (l) in the definition of Permitted Indebtedness. “Material Intellectual Property” means Intellectual Property owned by, or exclusively licensed to, the Company, Parent or any Restricted Subsidiary that is material to the business of the Company and/or its Restricted Subsidiaries. “Maturity Date” for any Note, PIK Note or Additional Note means May 9, 2026, or, in the event either (a) the Representative elects to extend the Maturity Date in accordance with Section 2.09 or (b) to the extent that the option to extend the maturity of any Magnetar Notes (as set forth in the Magnetar Note Issuance Agreement) is exercised, May 9, 2028. “Maximum Percentage” shall have the meaning specified in Section 14.03(k). “Maximum Percentage Period” shall have the meaning specified in Section 14.03(k). “Minimum Conversion Amount” shall have the meaning specified in Section 14.01. “Minimum Principal Amount” means a majority in aggregate principal amount of the Notes then outstanding. “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. “Note” or “Notes” shall have the meaning specified in the first paragraph of the recitals of this Agreement. Any Initial Notes, any PIK Notes and any Additional Notes shall be treated as a single class for all purposes under this Agreement, including, without limitation, waivers, amendments and offers to purchase. Unless the context otherwise requires, (a) all references to the “Notes” include any Initial Notes, any PIK Notes and any Additional Notes and (b) all references to “principal amount” of Notes include any increase in the principal amount of outstanding Notes (including PIK Notes and any Additional Notes) as a result of a PIK Payment and references to “payment of principal” shall include, to the extent applicable, the payment of the Fundamental Change Repurchase Price, the Change of Control Repurchase Price, or the redemption price in respect of a Change of Control Redemption. Unless the context otherwise requires, any express mention of Additional Notes or PIK Notes, as applicable, in any provision hereof shall not be construed as excluding Additional Notes or PIK Notes, as applicable, in those provisions hereof where such express mention is not made. “Note Guarantee” shall have the meaning specified in Section 16.01. “Note Purchase Agreement” means that certain Note Purchase Agreement, dated as of July 20, 2023, by and among the Company, Parent and Appgate Funding, LLC, as lender, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms.
18 “Note Register” shall have the meaning specified in Section 2.05(a). “Note Registrar” shall have the meaning specified in Section 2.05(a). “Notice of Conversion” shall have the meaning specified in Section 14.03(b). “Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. “Officer” means, with respect to the Company, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Commercial Officer, the Chief Integration Officer, the Chief Accounting Officer, the Controller, the Treasurer, the Secretary, any Executive or Senior Vice President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”). “Officer’s Certificate,” when used with respect to the Company or a Guarantor, if any, means a certificate that is signed by any Officer of the Company or a Guarantor, if any, as the case may be. Each such certificate shall include the statements provided for in Section 18.05 if and to the extent required by the provisions of such Section. The Officer giving an Officer’s Certificate pursuant to Section 4.08 shall be the principal executive, financial or accounting officer of the Company. “open of business” means 9:00 a.m. (New York City time). “Opinion of Counsel” means an opinion reasonably acceptable to the Collateral Agent, the Representative, or other party receiving such legal opinion hereunder, in writing and signed by legal counsel, which opinion may contain customary exceptions and qualifications as to the matters set forth therein. Each such opinion shall include the statements provided for in Section 18.05 if and to the extent required by the provisions of such Section. “outstanding,” when used with reference to Notes, shall mean, as of any particular time, all Notes then outstanding, except: (a) Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited with any Paying Agent (other than the Company) or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent); (b) Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.08; and (c) Notes repurchased by the Company. “Parent” shall have the meaning specified in the first paragraph of this Agreement. “Partial PIK Interest” shall have the meaning specified in Section 2.03(c)(i).
19 “PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)). “Paying Agent” shall have the meaning specified in Section 4.02. “PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA. “Permitted Disqualified Stock” means any Disqualified Stock issued pursuant to any Existing Agreement Obligation. “Permitted Equity Raise” means the sale and issuance by the Company of Capital Stock (other than Disqualified Stock) of the Company in one or a series of transactions, which transactions are subject to the Holders’ rights under Section 3.8 of the Note Purchase Agreement, subject to the terms thereof. “Permitted Exchange” means any of The New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq Global Market or The Nasdaq Capital Market (or any of their respective successors). “Permitted Holder” means (i) Manuel D. Medina, Medina Capital Partners, LP or any of their respective Affiliates, (ii) SIS Holdings L.P. or any of its Affiliates or equityholders as of the date hereof, and (iii) Appgate Funding, LLC or any of its Affiliates. “Permitted Indebtedness” means: (a) Indebtedness of the Company existing on the Issue Date and disclosed on Schedule II hereto, and any Permitted Refinancing Indebtedness in respect thereof; (b) Indebtedness represented by the Notes, the Guarantees of the Notes or the Agreement Obligations or the Magnetar Notes, the guarantees of the Magnetar Notes or the Magnetar Obligations; (c) Indebtedness represented by PIK Interest or Partial PIK Interest; (d) Hedging Obligations in the ordinary course of business; (e) Indebtedness represented by (x) Capital Lease Obligations or (y) Purchase Money Obligations, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (e), not to exceed at any time outstanding $20,000,000; (f) intercompany Indebtedness among the Company, the Guarantors and/or the Restricted Subsidiaries, in each case to the extent such Persons and the relevant Indebtedness is subject to the Global Intercompany Note;
20 (g) Guarantees by the Company or any Guarantor or Restricted Subsidiary of Indebtedness that is permitted to be incurred by Section 4.11, provided that if the Indebtedness being guaranteed is subordinated in right of payment to the Notes, such Guarantee is subordinated in right of payment to the Notes to the same extent as the Indebtedness so guaranteed; (h) Indebtedness arising from (i) netting services, overdraft protections and similar arrangements in respect of deposit accounts and (ii) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, in each case, so long as such Indebtedness is covered within five Business Days of receiving notice thereof; (i) obligations consisting of take-or-pay obligations contained in supply arrangements incurred in the ordinary course of business; (j) Indebtedness in respect of (A) workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance obligations, reclamation and statutory obligations, (B) the financing of insurance premiums or self-insurance obligations, (C) indemnity, bid, performance, warranty, release, appeal, surety, customs and similar bonds, letters of credit and banker’s acceptances for operating purposes, and (D) letters of credit issued or incurred to support the purchase of supplies, raw materials and equipment in the ordinary course of business; (k) [Intentionally Omitted.]; (l) working capital lines of the Company and its Subsidiaries in an amount not to exceed $5,000,000 in the aggregate at any one time outstanding; (m) unsecured Subordinated Indebtedness, which notwithstanding Section 4.18 of this Agreement or any other provision herein to the contrary, may be issuable or payable to an Affiliate of the Company, of a Guarantor or of a Restricted Subsidiary; provided, that, (i) if such Subordinated Indebtedness is issuable or payable to an Affiliate of the Company, of a Guarantor or of a Restricted Subsidiary, it be on commercially reasonable terms that are no less favorable to the Company, such Guarantor or such Restricted Subsidiary than would be obtained at the time in a comparable, arm’s length transaction with a non- affiliated Person, (ii) such Subordinated Indebtedness does not (x) have an Effective Yield in excess of 15% per annum or (y) mature earlier than, or require any payments (other than interest payments) prior to, the date that is ninety days after the Maturity Date, and (iii) the terms of such Subordinated Indebtedness may not be materially more favorable to the holders or lenders thereunder than the terms of this Agreement; and (n) additional secured Subordinated Indebtedness under the SIS Documents in an aggregate principal amount not to exceed $5,000,000 and Permitted Refinancing Indebtedness in respect thereof. “Permitted Investments” means:
21 (a) any Investment in the Company or any Guarantor or Restricted Subsidiary; (b) Investments represented by Hedging Obligations; (c) repurchases or redemptions of Notes required by this Agreement; (d) any Guarantee of Indebtedness permitted to be incurred pursuant to Section 4.11 of this Agreement; (e) any Investment in an Unrestricted Subsidiary of the Company in an aggregate amount not to exceed $1,000,000; and (f) repurchases or redemptions of Magnetar Notes required by the Magnetar Note Issuance Agreement. “Permitted Liens” means: (a) Liens in favor of the Company or any Guarantor or Restricted Subsidiary; (b) Liens to secure Capital Lease Obligations and Purchase Money Obligations incurred pursuant to clause (e) of Permitted Indebtedness, provided that, in each case, any such Lien may not extend to any property of the Company, other than the property acquired, constructed, improved or leased with the proceeds of such Indebtedness and any additions, parts, attachments, fixtures, leasehold improvements, proceeds, improvements or accessions related thereto; (c) Liens for taxes, assessments or governmental charges or levies if the same shall not at the time be delinquent for more than 30 days or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings, provided that any reserve or other appropriate provision required in accordance with GAAP shall have been made therefor; (d) Liens imposed by law or arising by operation of law, including without limitation, landlords’, materialmen’s, repairmen’s, mailmen’s, suppliers’, vendors’, carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, Liens for master’s and crew’s wages and other similar laws, arising in the ordinary course of business and for payment obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings; (e) pledges, deposits or Liens in connection with workers’ compensation, professional liability insurance, unemployment insurance and other social security and other similar legislation and or other insurance-related obligations (including, without limitation, pledges or deposits securing liability to insurance carriers under insurance or self-insurance arrangements); (f) Liens incurred in the ordinary course of business to secure performance of obligations with respect to letters of credit, bank guarantees, statutory or regulatory requirements, performance or completion bonds, performance of return-of-money bonds,
22 surety or appeal bonds, or other obligations of a like nature and incurred in connection with port authority facilities projects or otherwise in the ordinary course of business; (g) Liens incurred or pledges or deposits made under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which the Company or any Subsidiary is party, or deposits to secure public or statutory obligations, or deposits for the payment of rent, in each case incurred in the ordinary course of business; (h) easements, building restrictions, zoning restrictions, survey exceptions, encumbrances, title deficiencies, easements or reservations of rights of others for licenses, rights of way and similar purposes and such other encumbrances or charges against real property as do not materially interfere with the Company’s use of the real property; (i) Liens granted by the Company, any Guarantor or any Restricted Subsidiary and existing on the date of this Agreement or additional Liens granted by any of such parties under the SIS Documents (provided that any such Liens granted under the SIS Documents are subject to an intercreditor and subordination agreement in substantially the form attached hereto as Exhibit F) or Agreement Documents (as defined in the Magnetar Note Issuance Agreement); (j) judgment Liens with respect to judgments, decrees or orders not giving rise to an Event of Default so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been initiated for the review of such judgments, decrees or orders shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (k) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of letters of credit, bank guarantees or banker’s acceptances issued or credited for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods; (l) Liens securing obligations of the Company or any Guarantor or Restricted Subsidiary under Hedging Obligations incurred in the ordinary course of business; (m) Liens arising under conditional sale, title retention, consignment or similar arrangements for the sale of goods in the ordinary course of business; (n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (o) Liens securing the Agreement Obligations in respect of the Notes and Notes Guarantees; (p) (i) leases, subleases, licenses or sublicenses granted to others in the ordinary course of business which do not materially interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries, (ii) any interest or title of a lessor under
23 any leases or subleases entered into by the Company or any of its Subsidiaries in the ordinary course of business, and (iii) any interest of co-sponsors, co-owners or co- developers of Intellectual Property; (q) (i) Liens of a collection bank on items in the course of collection, (ii) Liens attaching to commodity trading accounts or other brokerage accounts in the ordinary course of business, (iii) bankers’ Liens and other Liens in favor of banking institutions by law or contract encumbering deposits which are customary in the banking industry and (iv) Liens securing cash management obligations arising in the ordinary course of business; (r) Liens arising from UCC financing statements regarding operating leases, joint venture agreements, transfers of accounts or transfers of chattel paper entered into in the ordinary course of business; (s) Liens arising by law or contract on insurance policies and the proceeds thereof to secure premiums thereunder; (t) deposits as security and liens securing surety and appeal bonds, letters of credit and similar obligations in connection with contested taxes or contested import or customs duties; (u) Liens existing on the Issue Date and disclosed on Schedule II hereto; and (v) Liens securing Indebtedness permitted pursuant to clause (l) of the definition of Permitted Indebtedness which liens rank junior to the Liens securing the Agreement Obligations; provided such Indebtedness is subject to an intercreditor agreement satisfactory to the Representative and the Collateral Agent. “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any Guarantor or Restricted Subsidiary issued in exchange for, or the net proceeds of which are used to renew, refund, replace, defease or discharge other Indebtedness of the Company or any Guarantor or Restricted Subsidiary (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has (a) a final maturity date not earlier than the final maturity date of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged and (b) a weighted average life to maturity (i) equal to or greater than the weighted average life to maturity of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged or (ii) at least more than 90 days after the final maturity date of the Notes; and (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing
24 Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; (4) is not secured by a Lien on any assets other than the collateral securing the Indebtedness being refinanced or extended, except to the extent that such additional assets or collateral is also pledged to the Holders; (5) the obligors of which are the same as the obligors of the Indebtedness being refinanced or extended, except to the extent that such additional obligors also become Guarantors or Restricted Subsidiaries hereunder; and (6) is otherwise on terms no less favorable to the Company and its Subsidiaries, taken as a whole, than those of the Indebtedness being refinanced or extended, in each case unless (1) the Holders also receive the benefit of such more restrictive terms, (2) any such provisions apply after the Maturity Date at the time of such refinancing, or (3) such terms shall be reasonably satisfactory to the Holders; provided that a certificate of the Company or the applicable Guarantor or Restricted Subsidiary delivered to the Holders at least ten Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Company or applicable Guarantor or Restricted Subsidiary has determined in good faith that such terms and conditions satisfy the foregoing requirements, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Holders notify the Company within such ten Business Days period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees). “Person” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof. “Physical Notes” means certificated Notes in registered form. “Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 or Section 430 of the Code that either (a) is maintained by the Company or an ERISA Affiliate for employees of the Company or an ERISA Affiliate or (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and, in the case of either (a) or (b), to which the Company or an ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions or has had any liability. “PIK Interest” shall have the meaning specified in Section 2.03(c)(i) (and shall include, as the context so requires, any Partial PIK Interest). “PIK Notes” shall have the meaning specified in Section 2.03(c)(i).
25 “PIK Payment” shall have the meaning specified in Section 2.03(c)(i). “Purchase Money Obligations” means any Indebtedness incurred to finance or refinance the acquisition, design, leasing, construction, installation or improvement of property (real or personal), plant, equipment or other assets, and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise, in each case, within 180 days of such acquisition, design, leasing, construction, installation or improvement. “Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock of the applicable Person (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock of the applicable Person (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock of the applicable Person (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors of such Person, by statute, by contract or otherwise). “Reference Property” shall have the meaning specified in Section 14.08(a). “Regular Record Date,” with respect to any Interest Payment Date, means the January 15 and July 15 (whether or not such day is a Business Day) immediately preceding the Interest Payment Date. “Relevant Stock Exchange” with respect to the Common Stock (or any other security for which a closing sale price must be determined) means The New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq Global Market or The Nasdaq Capital Market, or if the Common Stock (or such other security) is not then listed or admitted for trading on any of The New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq Global Market or The Nasdaq Capital Market, the principal other U.S. national or regional securities exchange on which the Common Stock (or such other security) is then listed or admitted for trading. “Representative” shall have the meaning specified in the first paragraph of this Agreement. “Resale Restriction Termination Date” shall have the meaning specified in Section 2.05(c). “Restricted Investment” means any Investment, directly or indirectly, in any Person, other than a Permitted Investment. “Restricted Payments” shall have the meaning specified in Section 4.16. “Restricted Securities” shall have the meaning specified in Section 2.05(c). “Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary. As of the date hereof, each Subsidiary of the Company is a Restricted Subsidiary.
26 “Reverse Merger” means a merger, consolidation or other business combination transaction, upon the consummation of which the Company becomes a direct or indirect subsidiary of the Acquiring Person. “Rule 144” means Rule 144 as promulgated under the Securities Act. “Rule 144A” means Rule 144A as promulgated under the Securities Act. “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by any of: (a) the U.S. government, including OFAC and the U.S. Department of State; (b) the United Nations Security Council; (c) the European Union and each of its member states; (d) the United Kingdom, including the Office of Financial Sanctions Implementation of His Majesty’s Treasury; or (e) any other relevant national or supra-national Governmental Authority. “Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the Relevant Stock Exchange on which the Common Stock is then listed or admitted for trading. If the Common Stock is not listed or admitted for trading on a Relevant Stock Exchange, “Scheduled Trading Day” means a Business Day. “Secured Parties” means the Collateral Agent, the Representative, the Holders and any other holder from time to time of any of the Agreement Obligations and, in each case, their respective successors and assigns. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means that certain security agreement entered into in accordance with Section 17.01(b) by and among the Company, the other grantors from time to time party thereto and the Collateral Agent, as amended, supplemented, modified or replaced in accordance with this Agreement and its terms. “Security Documents” means all security agreements (including the Security Agreement), intercreditor agreements, pledge agreements, collateral assignments, mortgages, collateral agency agreements, debentures, Control Agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral for the benefit of the Holders to secure the Agreement Obligations, in each case, as amended, supplemented, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the terms of this Agreement. “Significant Subsidiary” means a Subsidiary of the Company that meets the definition of “significant subsidiary” in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act. “SIS Documents” means, collectively, (i) that certain Amended and Restated Revolving Credit Agreement dated as of June 9, 2023 by and among the Company, Parent, the guarantors party thereto and SIS Holdings, L.P. as lender (as amended by the Amendment to Amended and Restated Revolving Credit Agreement and Pledge and Security Agreement, dated as of the date
27 hereof, the “SIS Credit Agreement”), (ii) the Security Agreement (as defined in the SIS Credit Agreement) and (iii) the other Loan Documents (as defined in the SIS Credit Agreement). “Specified Corporate Event” shall have the meaning specified in Section 14.08(a). “Specified Transaction” shall mean the transaction identified on Schedule 13.02. The Specified Transaction occurred on October 12, 2021. “Spin-Off” shall have the meaning specified in Section 14.05(c). “Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the fixed date on which the payment of interest or principal is due and payable in the documentation governing such, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally fixed for the payment thereof. “Subordinated Indebtedness” means, with respect to the Agreement Obligations, any Indebtedness of the Company which is contractually subordinated to the Agreement Obligations subject to a subordination agreement in substantially the form attached hereto as Exhibit D or otherwise reasonably satisfactory to the Representative. “Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person. “Successive Conversion Period” means the period beginning upon receipt by the Holders of a Change of Control Company Notice or Fundamental Change Company Notice, as applicable, and ending on the one-year anniversary of the effective date of the Change of Control or Fundamental Change. “Successor Company” shall have the meaning specified in Section 11.01(a)(ii). “Successor Guarantor” shall have the meaning specified in Section 16.03(a)(ii). “Successor Major Transaction” means either a Change of Control or a Fundamental Change that constitutes a Specified Corporate Event in which the shares of Common Stock are converted into the right to receive cash, securities of another entity and/or other assets. “Successor Transaction” shall have the meaning specified in Section 11.02. “Trading Day” means a day on which (i) trading in the Common Stock (or any other security for which a closing sale price must be determined) generally occurs on a Relevant Stock Exchange and (ii) a Last Reported Sale Price for the Common Stock (or closing sale price for such other security) is available on such securities exchange or market; provided that if the Common Stock (or such other security) is not so listed or traded, “Trading Day” means a Business Day.
28 “Transaction Price” means the per share amount of consideration received by the holders of Common Stock in a Change of Control. If the consideration is paid in property other than in cash, the value of such consideration, on a per share basis, shall be the fair market value of such property, determined as follows: (a) for securities not subject to investment letters or similar restrictions on free marketability, (1) if traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange or market over the 30-day period ending three days prior to the Change of Control Effective Date; (2) if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30- day period ending three days prior to the Change of Control Effective Date; or (3) if there is no active public market, the value shall be the fair market value thereof, as reasonably determined in good faith by the Board of Directors of the Company; (b) for securities subject to investment letters or other similar restrictions on free marketability (other than restrictions arising solely by virtue of an equityholder’s status as an Affiliate or former Affiliate), the valuation methodology shall take into account an appropriate discount (as determined in good faith by the Board of Directors of the Company) from the market value as determined pursuant to clause (a) above so as to reflect the approximate fair market value thereof. Within two Business Days after the Change of Control Effective Date, the Company shall deliver to the Representative and the Conversion Agent (if other than the Company) the Transaction Price and a schedule and reasonable explanation of the calculation thereof (the “Transaction Price Notice”). On or before the 10th Business Day following the Change of Control Effective Date, the Holders of at least the Minimum Principal Amount of the Notes then outstanding (such holders, the “Disputing Holders”) may, by notice in writing to the Company (which shall include proof of beneficial ownership of Notes in a manner reasonably acceptable to the Company) dispute the Transaction Price calculation (the “Dispute Notice”). Such Dispute Notice shall include a calculation detailing the Disputing Holders’ determination of the Transaction Price (the “Disputing Holders’ Calculation”). The Company shall deliver to Holders, the Representative and the Conversion Agent (if other than the Company) a final notice of the Transaction Price (the “Final Transaction Price Notice”) (x) if no Dispute Notice is delivered, on the 11th Business Day following the Change of Control Effective Date, which Final Transaction Price Notice shall confirm the Transaction Price that was reflected in the original Transaction Price Notice or (y) if a Dispute Notice was timely received, no later than the 25th Business Day following the Change of Control Effective Date, which Final Transaction Price Notice shall either (i) adopt the Disputing Holders’ Calculation or (ii) set forth the Transaction Price, as determined by an independent nationally recognized investment bank selected by the Board of Directors of the Company. In the event a Holder previously converted all or a portion of a Note in connection with such Change of Control and the Final Transaction Price Notice indicates
29 a Transaction Price that would result in a higher Conversion Rate than the Conversion Rate at which the Holder previously converted such Note in the same Change of Control, the Holder shall be entitled to the same consideration it would have received in connection with such Change of Control had it converted at such higher Conversion Rate immediately prior to the Change of Control Effective Date. “Transaction Price Notice” shall have the meaning specified in the definition of Transaction Price. “transfer” shall have the meaning specified in Section 2.05(c). “Trigger Event” shall have the meaning specified in Section 14.05(c). “unit of Reference Property” shall have the meaning specified in Section 14.08(a). “UCC” means the Uniform Commercial Code (or any similar or equivalent statute or law) as in effect in any applicable jurisdiction. “Unrestricted Subsidiary” means any Subsidiary which the Company has designated as an Unrestricted Subsidiary in accordance with Section 4.22. “Valuation Period” shall have the meaning specified in Section 14.05(c). “Vice President” shall have the meaning specified in the definition of Officer. “Wholly-Owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person, 100% of the Capital Stock of which is owned by such Person (other than directors’ qualifying shares or shares required by applicable law to be held by third persons). Section 1.02 References to Interest. Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Agreement shall be deemed to include PIK Interest and Partial PIK Interest if, in such context, PIK Interest or Partial PIK Interest is, was or would be payable pursuant to Section 2.03(c). Unless the context otherwise requires, any express mention of PIK Interest or Partial PIK Interest in any provision hereof shall not be construed as excluding PIK Interest or Partial PIK Interest in those provisions hereof where such express mention is not made. Section 1.03 References to Knowledge. Whenever a statement in this Agreement (including, without limitation, schedules hereto) or any other Agreement Document is made with respect to a party’s “knowledge,” such statement refers to the knowledge of any of the Chief Executive Officer, President, Chief Financial Officer, Chief Revenue Officer, Chief Accounting Officer, Controller, Treasurer, Secretary, Executive Vice President, Senior Vice President or any other analogous title, after reasonable inquiry, of such party’s employees or agents who were or are responsible for or involved with the indicated matter.
30 ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES Section 2.01 Designation and Amount. The Notes shall be designated as the “Convertible Senior Notes due 2026.” The aggregate principal amount of Notes that may be delivered under this Agreement is initially limited to $30,000,000, subject to any PIK Payments permitted by this Agreement that are made pursuant to Section 2.03(c)(i), and except for (i) Notes delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes to the extent expressly permitted hereunder and (ii) Additional Notes issued in accordance with the terms of this Agreement. Section 2.02 Form of Notes. The Notes shall be substantially in the form set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Agreement. To the extent applicable, the Company, the Guarantors, if any, and the Representative, by their execution and delivery of this Agreement (or, with respect to the Guarantors, if any, a supplemental agreement to this Agreement substantially in the form of Exhibit B hereto), expressly agree to such terms and provisions and to be bound thereby. Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as any Officer executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject pursuant to this Agreement or any applicable law. Payment of principal of, and accrued and unpaid Cash Interest on, a Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein. Section 2.03 Date and Denomination of Notes; Payments of Interest and Defaulted Amounts. (a) The Notes shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples in excess thereof; provided that after any initial PIK Payment, the Notes shall be in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. Each Note shall be issued as a Physical Note and be dated the date of its issuance and shall bear interest from the date specified on the face of such Note; provided that any PIK Notes or Additional Notes shall bear interest only from their respective dates of issue. Accrued interest on the Notes shall be computed on the basis of a 360- day year composed of twelve 30-day months or, in the case of a partial month, the actual number of days elapsed over a 30-day month and shall be compounded semi-annually. The Company shall pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may require a Holder to pay a sum sufficient
31 to cover any documentary, stamp or similar issue or transfer tax required in connection with the issuance of any PIK Notes. (b) The Person in whose name any Note is registered on the Note Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date. The Company, through the Paying Agent, shall pay any Cash Interest by wire transfer in immediately available funds to that Holder’s account within the United States as specified in writing by such Holder to the Company. All payments or prepayments required to be made by it hereunder (whether of principal, interest, fees or otherwise) shall be made prior to 1:00 p.m., New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without setoff, recoupment or counterclaim. Any amounts received after such time on any date shall be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. (c) (i) Interest will be payable, at the Company’s election (made by delivering a notice to the Representative and the Holders prior to the beginning of the related Interest Period), either (1) entirely in cash (“Cash Interest”), (2) entirely in kind (“PIK Interest”), or (3) such percentage in Cash Interest and such remainder percentage in PIK Interest such that the total of the percentage of Cash Interest and PIK Interest paid equals 100% of the interest due on such Interest Payment Date (“Partial PIK Interest”), in each of case (2) or (3), by issuing additional Notes under this Agreement (the “PIK Notes”) on the same terms and conditions as the Notes, except interest will accrue on such additional principal amount or PIK Notes, as applicable, from the applicable Interest Payment Date that such additional principal amount or PIK Notes, as applicable, are required to be issued under this Agreement (each payment of PIK Interest or Partial PIK Interest pursuant to clause (2) or (3) of this Section 2.03(c)(i), a “PIK Payment”); provided, that, subject to Section 2.03(c)(iii), the Company shall not make any Cash Interest payments prior to the first Interest Payment Date to occur following the first anniversary of the Issue Date. In the absence of an interest payment election as set forth in the immediately preceding sentence, interest on the Notes will be payable in PIK Interest. (ii) At all times, PIK Interest and Partial PIK Interest on the Notes will be payable by issuing PIK Notes in certificated form in an aggregate principal amount equal to the amount of PIK Interest or Partial PIK Interest, as applicable, for the applicable Interest Period (rounded to the nearest whole dollar, with amounts of $0.50 or more being rounded up), and the Company shall deliver such PIK Notes in certificated form for original issuance to the Holders on the relevant Regular Record Date, as shown in the register of the Note Registrar. Any PIK Notes issued in certificated form will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All PIK Notes issued pursuant to a PIK Payment will be governed by, and subject to the terms, provisions and conditions of, this Agreement and will have the same rights and benefits as the Initial Notes. Any certificated PIK Note will be issued with the description “PIK” on the face of such PIK Note.
32 (iii) Notwithstanding anything to the contrary in this Section 2.03(c), the payment of accrued interest shall be made solely in cash, (A) in connection with any redemption or repurchase of Notes as described under Section 13.02, Section 15.02 and Section 15.03, (1) with respect to all Notes, if the related Change of Control Redemption Date, Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, is after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the date on which the corresponding interest payment is made or (2) solely with respect to the Notes to be redeemed or repurchased, if the related Change of Control Redemption Date, Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, is on any other date, and (B) on the final Interest Payment Date. (iv) The then-applicable Interest Rate shall be subject to adjustment in connection with any Event of Default. If an Event of Default occurs, the then-applicable Interest Rate on the Notes will increase by 1.5% per annum (the “Default Rate”). The Default Rate shall take effect from, and including, the next succeeding Interest Payment Date following the date on which an Event of Default occurs, provided that the Default Rate shall not take effect if all Events of Default have been cured prior to such next succeeding Interest Payment Date. If all continuing Events of Default are cured after the Default Rate has taken effect, the Default Rate shall cease to be in effect from, and including, the next succeeding Interest Payment Date as of which no Event of Default is continuing. As such, interest will not begin to accrue at such increased or decreased Interest Rate until the next Interest Payment Date following the date on which an Event of Default or the curing of all continuing Events of Default occurs. In no event shall the Interest Rate on the Notes exceed 1.5% above the then-applicable Interest Rate on the Notes as a result of the application of the Default Rate. In this section, the term “then- applicable Interest Rate” on the Notes means the Interest Rate determined in accordance with the Agreement without giving effect to any adjustment as described in this clause (iv). The Company shall notify the Holders and the Representative on any Interest Payment Date on which interest will increase or decrease for the next succeeding Interest Period in accordance with this clause (iv). Any election by the Company pursuant to Section 2.03(c)(i) shall apply with respect to the Interest Rate, as increased by the Default Rate, if applicable. (d) Any Defaulted Amounts shall accrue interest per annum at the applicable interest rate then borne by the Notes, subject to the enforceability thereof under applicable law, from, and including, such relevant payment date. (e) (i) Each party hereby agrees to the following U.S. federal income tax treatment and covenants that it will not take a different position thereon unless required by a Governmental Authority pursuant to a “determination” as defined in section 1313 of the Code, (provided, however, that, in the case of a determination as defined in section 1313(a)(2), the Company may enter into a an agreement with the applicable Governmental Authority as described in section 1313(a)(2) only with the prior written consent of the majority in interest of Holders (such consent not to be unreasonably
33 withheld, conditioned or delayed)): interest payments on the Notes to a Holder, or any amount received upon the redemption, conversion or other reacquisition by the Company of a Note, are not subject to withholding tax by the Company and such interest payments or amounts will be made without reduction for any such tax, provided that (a) such applicable Holder timely provides a valid IRS Form W-8 or IRS Form W-9 (or successor forms thereto) and such other information as is required to certify such person’s compliance with sections 1471 through 1474 of the Code; (b) such beneficial owner of such Note is not (i) a 10% shareholder of the Company as described in sections 871(h)(3) and 881(c)(3)(B) of the Code, (ii) a controlled foreign corporation to which the Company is related as described in section 881(c)(3)(C) of the Code, or (iii) a bank extending credit to the Company in the ordinary course of its trade or business as described in section 881(c)(3)(A) of the Code (and upon request provides certification to such effect); and (c) no change of U.S. federal income tax law has occurred subsequent to the issuance of the Notes that results in the application of such withholding tax. The Company agrees to provide upon reasonable request by a Holder information existing and readily available to the Company that is reasonably necessary for the Holder to determine whether it is a 10% shareholder of the Company as described in sections 871(h)(3) and 881(c)(3)(B) of the Code. (ii) Each party hereby agrees that each Note (a) shall be treated as debt for U.S. federal, state and local income tax purposes and (b) shall not be treated as a “contingent payment debt instrument” under Treasury Regulations section 1.1275- 4. In the case of (a) and (b) of the foregoing sentence, and each party covenants that it will not take a different position unless required by a Governmental Authority pursuant to a “determination” as defined in section 1313 of the Code; provided, however, that, in the case of a determination as defined in section 1313(a)(2), the Company may enter into an agreement with the applicable Governmental Authority as described in section 1313(a)(2) only with the prior written consent of the majority in interest of Holders (such consent not to be unreasonably withheld, conditioned or delayed). Each Holder and beneficial owner of a Note shall be deemed, by the Holder’s acquisition of such Note (or an interest therein), to have agreed to treat, and shall treat, the Notes as debt for all United States federal income tax purposes and shall take no action inconsistent with such treatment unless required by a Governmental Authority pursuant to a “determination” as defined in section 1313 of the Code; provided, however, that, in the case of a determination as defined in section 1313(a)(2), the Holder may enter into an agreement with the applicable Governmental Authority as described in section 1313(a)(2) only with the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed). (iii) The Company will use commercially reasonable efforts to provide any certificate and/or information necessary for an exemption from withholding tax under section 1445 of the Code in connection with any conversion, redemption or other exchange of a Note with the Company. The Company shall use commercially reasonable efforts to provide notice to each Holder in the event that the Company itself could be treated as a U.S. real property holding corporation as defined in Section 897(c)(2) of the Code. On a quarterly basis (or upon any reasonable request by a Holder), the Company shall use commercially reasonable efforts to inform the Representative of the approximate percentage of U.S. real property interests (as defined in section 897(c)(1) of the Code) held
34 directly and indirectly, by the Company, or, as applicable, its owner that is an entity treated as a corporation for U.S. federal tax purposes, if such approximate percentage exceeds thirty percent (30%). Section 2.04 Execution, Authentication and Delivery of Notes. The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of any Officer. Notes bearing the manual or facsimile signatures of an individual who was at any time a proper Officer shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the delivery of such Notes or did not hold such office as of the date of such Notes. Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions on Transfer. (a) The Company shall cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The Company is appointed the “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for registration of transfer of any Note to the Note Registrar or any co- Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such “PIK” designations or restrictive legends as may be required by this Agreement. All Notes presented or surrendered for registration of transfer or for exchange, redemption, repurchase or conversion shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing. No service charge shall be imposed on the Holder by the Company, the Note Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer. None of the Company or the Note Registrar shall be required to exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion, (ii) any Notes, or a portion of any Note, surrendered for repurchase (and not validly withdrawn) in accordance with Article 15 or (iii) any Notes selected for redemption in accordance with Article 13, except the unredeemed portion thereof. All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Agreement shall be the valid obligations of the Company, evidencing the same debt, and
35 entitled to the same benefits under this Agreement as the Notes surrendered upon such registration of transfer or exchange. (b) [Intentionally omitted] (c) Every Note that bears or is required under this Section 2.05(c) to bear the legend set forth in this Section 2.05(c) (together with any Common Stock issued upon conversion of the Notes that is required to bear the legend set forth in Section 2.05(d), collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this Section 2.05(c) (including those contained in the legend set forth below), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company; and the Holder of each such Restricted Security, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.05(c) and Section 2.05(d), the term “transfer” encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security. Until the date (the “Resale Restriction Termination Date”) that is the later of (1) the date that is one year after the last date of original issuance of the Notes, (2) the expiration of any applicable holding period with respect to the Notes pursuant to Rule 144 or any successor provision thereto, and (3) the date on which the Notes constitute “Covered Securities” under clause (1), (2) or (3) of the definition of “Covered Securities” under Section 18 of the Securities Act, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.05(d), if applicable) shall bear a legend in substantially the following form, unless such Notes have been (i) transferred (x) pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, or (ii) transferred (x) pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, and for which the Holder has provided customary certifications and, if requested by the Company, an Opinion of Counsel to Holder in form and substance reasonably satisfactory to the Company, or (iii) unless otherwise agreed by the Company in writing, with notice thereof to the Representative: THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS NOTE MAY NOT BE OFFERED, PLEDGED, RESOLD OR OTHERWISE TRANSFERRED, EXCEPT: (A) TO APPGATE CYBERSECURITY, INC. (THE “COMPANY”) OR ANY SUBSIDIARY THEREOF; (B) PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER;
36 (C) TO A PERSON THAT (1) YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (2) IS AN ACCREDITED INSTITUTIONAL INVESTOR, WITHIN THE MEANING OF CLAUSES (1), (2), (3), (7), (8), (9) AND (12) OF RULE 501(A) OF REGULATION D UNDER THE SECURITIES ACT; OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT), IN EACH CASE, SUBJECT TO COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. THE “RESALE RESTRICTION TERMINATION DATE” MEANS THE LATER OF (1) THE DATE THAT IS ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES, (2) THE EXPIRATION OF ANY APPLICABLE HOLDING PERIOD WITH RESPECT TO THE NOTES PURSUANT TO RULE 144 OR ANY SUCCESSOR PROVISION THERETO, AND (3) THE DATE ON WHICH THE NOTES CONSTITUTE “COVERED SECURITIES” UNDER CLAUSE (1), (2) OR (3) OF THE DEFINITION OF “COVERED SECURITIES” UNDER SECTION 18 OF THE SECURITIES ACT. WITH RESPECT TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE (C) AND CLAUSE (D), THE COMPANY AND THE NOTE REGISTRAR SHALL BE ENTITLED TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, OPINIONS OF COUNSEL OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND MAY RELY UPON FOR THE COMPANY TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. No transfer of any Note prior to the Resale Restriction Termination Date will be registered by the Note Registrar unless the applicable box on the Form of Assignment and Transfer has been checked. Any Note (or security issued in exchange or substitution therefor) (i) as to which such restrictions on transfer shall have expired in accordance with their terms such that they may be transferred (x) without volume or manner of sale limits or availability of current public information requirements under Rule 144 and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, (ii) that has been transferred (x) pursuant to, and in accordance with, a registration statement that has become effective or been declared effective under the Securities Act and that continues to be effective at the time of such transfer and (y) as to which subsequent transfers are not subject to restrictions under applicable state securities laws, or (iii) that has been sold (x) pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, and such that such Note is no longer a “restricted security” as defined under Rule 144 and (y) as to which subsequent transfers are not subject to restrictions under applicable state securities laws, and for which the Holder has provided
37 customary certifications and, if requested by the Company, an Opinion of Counsel to Holder in form and substance reasonably satisfactory to the Company, may, upon surrender of such Note for exchange to the Note Registrar in accordance with the provisions of this Section 2.05, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.05(c). If the Holder of a Physical Note that bears such a restrictive legend and is no longer required to bear such restrictive legend under this Section 2.05(c) surrenders such Note to the Note Registrar for exchange, with any required certifications and, if requested by the Company, an Opinion of Counsel to Holder in form and substance reasonably satisfactory to the Company, the Note Registrar shall promptly so notify the Company in writing, and the Company shall promptly execute a Physical Note in the name of such Holder that does not bear such a restrictive legend, of like tenor and aggregate principal amount, and shall promptly deliver such executed Physical Note to such Holder. The Company shall promptly notify the Representative after a registration statement, if any, with respect to the Notes or any Common Stock issued upon conversion of the Notes has been declared effective under the Securities Act. The Company shall complete any exchange process for the removal of a restrictive legend required by this Section 2.05(c) in accordance with the terms of this Agreement and applicable securities laws. Following the Resale Restriction Termination Date, the Notes shall bear a legend in substantially the following form: THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, SUCH SHARES MAY BE “RESTRICTED SECURITIES” THAT MAY NOT BE OFFERED, PLEDGED, RESOLD OR OTHERWISE TRANSFERRED EXCEPT TO THE ISSUER OF SUCH SECURITIES (OR ANY SUBSIDIARY THEREOF), PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. Notwithstanding any other provisions of this Agreement (other than the provisions set forth in this Section 2.05(c)), when Physical Notes are presented to the Note Registrar with a written request: (x) to register the transfer of such Physical Notes; or (y) to exchange such Physical Notes for an equal principal amount of Physical Notes of other authorized denominations, the Note Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Physical Notes surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Note Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and (ii) so long as such Notes bear a restrictive legend, such Notes may only be transferred or exchanged in accordance with such restrictive legend and the Form of Assignment and Transfer, and if such Physical Notes are being transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, (1) a certification to that effect (in the Form of Assignment and Transfer, if applicable) and (2) if the Company so requests, an Opinion of Counsel of Holder in form and
38 substance reasonably satisfactory to the Company as to the compliance with the restrictions set forth in the legend thereon. (d) Legends on the Common Stock: (i) Until the date that is the later of (1) the date that is one year after the date of issuance of the applicable share of Common Stock issued upon a conversion of a Note, (2) the first day on which, following the expiration of any applicable holding period under Rule 144 or any successor provision with respect to the Notes being converted into the applicable share of Common Stock, the Common Stock becomes eligible for resale pursuant to Rule 144, and (3) the date on which such share of Common Stock constitutes a “Covered Security” under clause (1), (2) or (3) of the definition of “Covered Security” under Section 18 of the Securities Act, any stock certificate or book entry record representing Common Stock issued upon conversion of a Note shall bear a legend in substantially the following form (unless such Common Stock has been (i) transferred (x) pursuant to, and in accordance with, a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, or (ii) transferred (x) pursuant to the exemption from registration provided by Rule 144, to the extent that Rule 144 is available with respect to such share of Common Stock, or any similar provision then in force under the Securities Act and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, and for which the Holder has provided customary certifications and, if requested by the Company, an Opinion of Counsel to Holder in form and substance reasonably satisfactory to the Company, or unless otherwise agreed by the Company in writing, with notice thereof to the Representative and the transfer agent for the Common Stock): THE SALE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, PRIOR TO THE COMMON STOCK RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS SECURITY MAY NOT BE OFFERED, PLEDGED, RESOLD, OR OTHERWISE TRANSFERRED, EXCEPT: (A) TO APPGATE CYBERSECURITY, INC. (THE “COMPANY”), ANY SUBSIDIARY THEREOF, OR ANY PARENT THEREOF IF IT IS THE ISSUER OF THE SECURITY; (B) PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER; OR (C) UNDER ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT),
39 IN EACH CASE, SUBJECT TO COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. THE “COMMON STOCK RESALE RESTRICTION TERMINATION DATE” MEANS THE LATER OF (1) THE DATE THAT IS ONE YEAR AFTER THE DATE OF ISSUANCE OF THE APPLICABLE SHARE OF COMMON STOCK ISSUED UPON A CONVERSION OF A NOTE, (2) THE FIRST DAY ON WHICH, FOLLOWING THE EXPIRATION OF ANY APPLICABLE HOLDING PERIOD UNDER RULE 144 OR ANY SUCCESSOR PROVISION WITH RESPECT TO THE NOTES BEING CONVERTED INTO THE APPLICABLE SHARE OF COMMON STOCK, THE COMMON STOCK BECOMES ELIGIBLE FOR RESALE PURSUANT TO RULE 144 WITHOUT VOLUME OR MANNER OF SALE LIMITS OR AVAILABILITY OF CURRENT PUBLIC INFORMATION REQUIREMENTS, AND (3) THE DATE ON WHICH SUCH SHARE OF COMMON STOCK CONSTITUTES A “COVERED SECURITY” UNDER CLAUSE (1), (2) OR (3) OF THE DEFINITION OF “COVERED SECURITY” UNDER SECTION 18 OF THE SECURITIES ACT. WITH RESPECT TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE (C), PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, THE COMPANY AND THE COMPANY’S TRANSFER AGENT SHALL BE ENTITLED TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, OPINIONS OF COUNSEL OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE, AND MAY RELY UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. (ii) Any such Common Stock (i) as to which such restrictions on transfer shall have expired in accordance with their terms, (ii) that has been transferred (x) pursuant to, and in accordance with, a registration statement that has become effective or been declared effective under the Securities Act and that continues to be effective at the time of such transfer and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, or (iii) that has been sold (x) pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act and (y) subsequent transfers are not subject to restrictions under applicable state securities laws, may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.05(d); provided that, if such Common Stock is being transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, the Holder shall provide customary certifications with respect to such transfer and, if the Company so requests, an Opinion of Counsel in form and substance reasonably satisfactory to the Company as to the compliance with the restrictions set forth in the legend thereon.
40 (e) Any Note or Common Stock issued upon the conversion or exchange of a Note that is redeemed, repurchased or owned by any Affiliate of the Company (or any Person who was an Affiliate of the Company at any time during the three months preceding) may not be resold by such Affiliate (or such Person, as the case may be) unless such Note (i) is eligible for resale pursuant to Rule 144 (if available) without any limitations thereunder as to volume, manner of sale, availability of current public information or notice, (ii) is sold or otherwise transferred pursuant to an effective registration statement under the Securities Act or (iii) is resold or otherwise transferred pursuant to another exemption from the registration requirements of the Securities Act or in a transaction not subject to, the Securities Act, in each case, subject to compliance with any applicable state securities laws and in a transaction that results in such Note or Common Stock, as the case may be, no longer being a “restricted security” (as defined under Rule 144) or any corresponding classification under applicable state securities laws. The Company shall cause any Note that is redeemed, repurchased or owned by it to be surrendered for cancellation in accordance with Section 2.08. Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become mutilated or be destroyed, lost or stolen, the Company shall (subject to compliance with the next sentence by the applicant for a substituted Note) execute and deliver a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company such security or indemnity as may be required by them to hold each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof. No service charge shall be imposed on the Holder by the Company, the Note Registrar, or the Paying Agent upon the issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen. Every substitute Note issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Agreement equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement, payment, conversion, redemption or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment, conversion, redemption or repurchase of negotiable instruments or other securities without their surrender. Section 2.07 [Intentionally Omitted]
41 Section 2.08 Cancellation of Notes Paid, Converted, Etc. The Holders shall surrender to the Company, to be canceled promptly by the Company in accordance with its customary procedures, all Notes requested by the Company to be surrendered for the purpose of payment, redemption, repurchase, registration of transfer or exchange or conversion. Section 2.09 Maturity Date. At the Representative’s election (made by delivering a written notice to the Company at least ten Business Days prior to May 9, 2026), the Maturity Date may be extended to May 9, 2028. In the event the Representative makes such an election or if the option to extend the maturity of any Magnetar Notes (as set forth in the Magnetar Note Issuance Agreement) is exercised, each reference to the phrase “due 2026” that appears in this Agreement (including, without limitation, the Exhibits hereto) or in any Note shall automatically be deleted and replaced with the phrase “due 2028”. Section 2.10 Repurchases. The Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives. The Company shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other derivatives) to be cancelled in accordance with Section 2.08, and such Notes shall no longer be considered outstanding hereunder upon their repurchase. ARTICLE 3 SATISFACTION AND DISCHARGE Section 3.01 Satisfaction and Discharge. This Agreement and the Notes and the Note Guarantees, if any, shall upon request of the Company contained in an Officer’s Certificate cease to be of further effect, when (a) the Company has delivered to Holders after the Notes have become due and payable, whether on the Maturity Date, any Change of Control Redemption Date, any Fundamental Change Repurchase Date, any Change of Control Repurchase Date, upon conversion or otherwise, cash or, solely to satisfy the Company’s Conversion Obligation or Change of Control Conversion Obligation, as the case may be, shares of Common Stock and cash in lieu of fractional shares sufficient to pay all of the outstanding Notes or satisfy all outstanding conversions, as the case may be, and pay all other sums due and payable under this Agreement by the Company (for the avoidance of doubt, the Company will deliver any shares of Common Stock to be paid with respect to satisfying outstanding conversions directly to the applicable Holders); (b) the Company has paid all other Agreement Obligations; and (c) the Company has delivered to the Representative and the Collateral Agent an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Representative), each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Agreement have been complied with. ARTICLE 4 PARTICULAR COVENANTS OF THE COMPANY, THE GUARANTORS AND THE RESTRICTED SUBSIDIARIES Section 4.01 Payment of Principal and Interest. The Company covenants and agrees that it will pay or cause to be paid the principal of, and accrued and unpaid interest (whether Cash
42 Interest, PIK Interest or Partial PIK Interest) on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes. PIK Interest and Partial PIK Interest will be considered paid on the date due if on such date PIK Notes in certificated form have been issued in accordance with the terms of this Agreement. Section 4.02 Maintenance of Office or Agency. The Company will maintain in the United States of America an office or agency where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment, redemption or repurchase (“Paying Agent”) or for conversion (“Conversion Agent”) and where notices and demands to or upon the Company in respect of the Notes and this Agreement may be delivered. The Company will give prompt written notice to the Representative of the location, and any change in the location, of such office or agency. The Company hereby initially designates itself as the Paying Agent, Note Registrar and Conversion Agent and its office located at 2 Alhambra Plaza, Suite PH-1-B, Coral Gables, Florida 33134 as the office or agency in the United States of America where Notes may be surrendered for registration of transfer or exchange or for presentation for payment, redemption or repurchase or for conversion and where notices and demands to or upon the Company in respect of the Notes and this Agreement may be delivered. Section 4.03 [Intentionally Omitted] Section 4.04 Provisions as to Paying Agent. (a) If the Company shall appoint a Paying Agent, the Company will cause such Paying Agent to execute and deliver to the Representative an instrument in which such agent shall agree with the Representative, subject to the provisions of this Section 4.04(a): (i) that it will hold all sums held by it as such agent for the payment of the principal of, and accrued and unpaid Cash Interest on, the Notes in trust for the benefit of the Holders of the Notes; (ii) that it will give the Representative prompt written notice of any failure by the Company to make any payment of the principal of, and accrued and unpaid Cash Interest on, the Notes when the same shall be due and payable; and (iii) that at any time during the continuance of an Event of Default, upon request of the Representative, it will forthwith pay to the Representative all sums so held in trust. The Company shall, on or before each due date of the principal of, or accrued and unpaid Cash Interest on, the Notes, deposit with the Paying Agent a sum sufficient to pay such principal or accrued and unpaid Cash Interest, and (unless such Paying Agent is the Representative) the Company will promptly notify the Representative in writing of any failure to take such action; provided that if such deposit is made on the due date, such deposit must be received by the Paying Agent by 11:00 a.m., New York City time, on such date.
43 (b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal of, and accrued and unpaid Cash Interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal and accrued and unpaid Cash Interest so becoming due and will promptly notify the Representative in writing of any failure to take such action and of any failure by the Company to make any payment of the principal of, or accrued and unpaid Cash Interest on, the Notes when the same shall become due and payable. (c) Anything in Section 4.04(a) to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Agreement, or for any other reason, pay, cause to be paid or deliver to the Representative all sums or amounts held in trust by the Company or any Paying Agent hereunder as required by Section 4.04(a), such sums or amounts to be held by the Representative upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Representative, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts. (d) Any money or property deposited with any Paying Agent, or then held by the Company, in trust for the payment of the principal of, accrued and unpaid Cash Interest on and the consideration due upon conversion of any Note and remaining unclaimed for two years after such principal, Cash Interest or consideration due upon conversion has become due and payable shall, subject to applicable abandoned property laws, be paid to the Company on request of the Company contained in an Officer’s Certificate, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Representative or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. Section 4.05 Existence. (a) Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence and all statutory rights and franchises, licenses and permits material to its business. (b) Subject to Article 16, each Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its and the Company’s corporate existence and all statutory rights and franchises, licenses and permits material to its business. Section 4.06 Quarterly and Annual Reports; Rule 144A Information Requirement; Monthly Financial Information. (a) The Company shall prepare and deliver to the Representative (for distribution to each Holder) the following information: (i) within 120 days after the end of each fiscal year of the Company beginning with the fiscal year ending December 31, 2023, annual consolidated financial statements and the notes thereto (which shall be audited and include the report of the
44 independent public accountants thereon) of the Company and its Subsidiaries in respect of its most recently completed fiscal year, which annual consolidated financial statements and notes thereto will include the Company’s and its Subsidiaries’ consolidated balance sheet as of the end of such fiscal year and its consolidated statements of operations, members’ equity (or analogous financial statement if the Company is not a limited liability company) and changes in cash flow of the Company and its Subsidiaries or such fiscal year, prepared in accordance with GAAP consistently applied, together with a Financial Officer Certification; and (ii) within 45 days after the end of the second and third fiscal quarters of the fiscal year ending December 31, 2023, and the end of the first three fiscal quarters of the Company’s fiscal years thereafter, unaudited consolidated financial statements and the notes thereto of the Company and its Subsidiaries in respect of its most recently completed fiscal quarter, which consolidated financial statements and notes thereto will include an unaudited consolidated balance sheet as of the end of such fiscal quarter and unaudited consolidated statements of operation and changes in cash flow of the Company and its Subsidiaries for such fiscal quarter, each prepared in accordance with GAAP consistently applied, together with a Financial Officer Certification. The delivery requirements set forth in Section 4.06(a)(i) and this Section 4.06(a)(ii) shall also be deemed to be satisfied, with respect to a particular fiscal year or fiscal quarter of the Company, upon the timely filing by Parent of the applicable required information in an annual report on Form 10-K or a quarterly report on Form 10-Q, respectively, filed with the Commission in compliance with the requirements of the Exchange Act, and, for the avoidance of doubt, items so delivered shall not require the submission of a corresponding Financial Officer Certification. (b) Each Holder acknowledges and agrees that information provided under this Section 4.06 (excepting information filed with the Commission via the Commission’s EDGAR system (or any successor thereto)) is confidential and shall be deemed to agree that as a condition to receiving such information that such information may not be used, reproduced, disclosed or disseminated to any other Person (other than such Holder’s directors, members, partners, officers, employees, accountants, attorneys (“Holder Representatives”) who have been informed by Holder of the confidential nature of such information and for whose compliance with the confidentiality requirements of this paragraph Holder shall be responsible) unless such information (1) has been made available to the public generally by the Company, (2) is or becomes a matter of public knowledge through no action or inaction of such Holder in violation of any confidentiality obligations of Holder (including pursuant to this paragraph), (3) is required to be disclosed by such Holder (or a Holder Representative) under compulsion of law or by order or request of any court or governmental or regulatory body to whose supervisory authority such Holder or Holder Representatives, as the case may be, is subject; provided that, to the extent Holder is lawfully permitted to do so, prior to providing such information, such Holder promptly provides the Company with written notice and, if the Company fails to obtain a protective order or other appropriate remedy with respect to the disclosure of such information, such Holder will furnish only that portion of the information that is so required to be disclosed, (4) is disclosed to a court, tribunal or any other applicable administrative agency or judicial authority of competent jurisdiction in connection with the enforcement of such Holder’s rights under this Agreement or (5) is disclosed by such Holder with the Company’s prior written consent. Notwithstanding the
45 foregoing, Holders of Notes shall be permitted to share any information that the Company delivers pursuant to this Section 4.06 with prospective purchasers of the Notes so long as any such prospective purchaser executes a non-disclosure or similar agreement with the Company or otherwise agrees in writing to the Company, in a form reasonably satisfactory to the Company, to abide by the confidentiality provisions described in this Section 4.06. (c) The Company or, if and as applicable, the Successor Company, shall file with the Representative, within 15 calendar days after the same are required to be filed with the Commission (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act or any successor rule under the Exchange Act (whether or not the same are filed with the Commission within such grace period)), copies of any documents or reports that the Company or the Guarantors, as applicable, are required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (excluding, for the avoidance of doubt, any information, documents or reports (or portions thereof) that are subject to confidential treatment and any correspondence with the Commission). Any such document or report that the Company or the Guarantor, as applicable files with the Commission via the Commission’s EDGAR system (or any successor thereto) shall be deemed to be delivered and filed with the Representative for purposes of this Section 4.06(c) at the time such documents are filed via the EDGAR system (or any successor thereto); provided, however, that the Representative shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to EDGAR (or its successor). (d) Delivery of reports, information and documents to the Representative under this Agreement is for informational purposes only and the Representative’s receipt of the foregoing shall not constitute constructive notice of any information contained therein, or determinable from information contained therein including the Company’s compliance with any of its covenants thereunder (as to which the Representative is entitled to rely exclusively on an Officer’s Certificate). Section 4.07 Stay, Extension and Usury Laws. Each of the Company and the Guarantors, if any, covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company or the Guarantor from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Agreement; and each of the Company and the Guarantors, if any, to the extent it may lawfully do so, hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Representative or the Collateral Agent, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 4.08 Compliance Certificate; Statements as to Defaults. The Company shall deliver to the Representative within 120 calendar days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2023) an Officer’s Certificate stating whether the signer thereof knows of any Default or Event of Default that occurred during the previous fiscal year and, if so, specifying each such Default or Event of Default, its status and what actions the Company is taking or proposing to take with respect thereto.
46 Section 4.09 [Intentionally Omitted]. Section 4.10 [Intentionally Omitted]. Section 4.11 Incurrence of Indebtedness and Issuance of Disqualified Stock. The Company and any Guarantor or Restricted Subsidiary shall not, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, and the Company and any Guarantor or Restricted Subsidiary shall not issue any Disqualified Stock; provided however, that the Company and any Guarantor or Restricted Subsidiary may incur Permitted Indebtedness or issue Permitted Disqualified Stock. Section 4.12 Liquidity Covenant. The Company covenants and agrees that it will not permit Liquidity to be less than $5,000,000 as of the last day of any fiscal quarter (measured on March 31, June 30, September 30 and December 31 of each year). Section 4.13 Limitation on Investments. Neither the Company or any Guarantor or Restricted Subsidiary shall, directly or indirectly, make any Restricted Investment. Section 4.14 Liens. The Company and any Guarantor or Restricted Subsidiary will not, directly or indirectly, create, incur or assume any Lien of any kind on any asset now owned or hereafter acquired by the Company or such Guarantor or Restricted Subsidiary; provided that the Company and any Guarantor or Restricted Subsidiary may incur or assume any Permitted Liens. Section 4.15 Asset Sales; Insurance/Condemnation. (a) The Company and any Guarantor or Restricted Subsidiary will not Dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased (as lessee), or licensed (as licensee), including any Capital Stock owned by it, except Dispositions (i) of property with a fair market value of less than $2,500,000 in the aggregate during the term of this Agreement, (ii) of inventory in the ordinary course of business, (iii) of non-exclusive licenses and similar arrangements for the use of the property of the Company or any Subsidiary in the ordinary course of business, (iv) of worn- out, obsolete or damaged inventory or equipment, (v) of inventory subject to write-off on the Company’s financial statements, (vi) for fair market value, provided that no Default or Event of Default exists or would result therefrom, and provided, further, that if the Disposition (or series of related Dispositions) is of property with a fair market value in excess of $500,000, then the party making the Disposition (or series of related Dispositions) must receive not less than 75.0% of the consideration therefor in the form of cash or Cash Equivalents, and (vii) constituting Permitted Investments; provided that the Capital Stock of a direct, Wholly-Owned Subsidiary of the Company shall not be Disposed of to another Subsidiary of the Company unless such receiving Subsidiary of the Company is a direct or indirect Wholly-Owned Subsidiary of the Company and the Collateral Agent’s, for the benefit of the Secured Parties, rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such Disposition.
47 Section 4.16 Limitation on Restricted Payments. The Company and any Guarantor or Restricted Subsidiary will not directly or indirectly, without the prior written consent of the Holders of a Minimum Principal Amount, (a) declare or pay any dividend or make any payment, distribution or return of capital (whether in cash, securities or other property) with respect to any Capital Stock of the Company, any Guarantor or any Restricted Subsidiary, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Capital Stock, or on account of any return of capital to the holders of any such Capital Stock, or (b) purchase, redeem, defease, otherwise acquire or retire for value, or make any payment with respect to, any Subordinated Indebtedness (it being understood that regularly scheduled interest payments with respect to Subordinated Indebtedness (other than Indebtedness under the SIS Documents) shall be permitted so long as not prohibited by the subordination terms thereof and no Default or Event of Default has occurred and is continuing) or Capital Stock of the Company or any Guarantor or Restricted Subsidiary held by Persons (such payments as described in parts (a) and (b) hereof, “Restricted Payments”); provided that (i) repurchases of stock from former employees, officers, directors, consultants or other persons performing services for the Company or any Guarantor or Restricted Subsidiary pursuant to the terms of stock repurchase plans, employee restricted stock agreements or similar agreements under which the Company or any Guarantor or Restricted Subsidiary has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal in an amount not to exceed 5% of the Capital Stock of the Company or Guarantor or Restricted Subsidiary then-outstanding in any fiscal year, (ii) Subsidiaries of the Company may declare and pay dividends ratably with respect to their Capital Stock and (iii) the Company may declare and pay dividends to Parent. Section 4.17 Intellectual Property. The Company and any Guarantor or Restricted Subsidiary will not permit any (i) Material Intellectual Property of the Company or any Guarantor as of or after the Issue Date (by way of Disposition, Investment, Restricted Payment or otherwise) to be owned by any Person other than the Company or any Guarantor or Restricted Subsidiary or (ii) Material Intellectual Property of any Restricted Subsidiary that is not a Guarantor as of or after the Issue Date (by way of Disposition, Investment, Restricted Payment or otherwise) to be owned by any Person other than the Company or any Guarantor or Restricted Subsidiary, except that the Company and any Guarantor or Restricted Subsidiary shall be permitted to license and sub-license Intellectual Property in the ordinary course of business. For the avoidance of doubt, this Section 4.17 shall not prohibit the sale or issuance of any Capital Stock of the Company that is permitted under this Agreement. Section 4.18 Limitations on Transactions with Affiliates. The Company and any Guarantor or Restricted Subsidiary will not directly or indirectly enter into or permit to exist any material transaction with any Affiliate of the Company or any Guarantor or Restricted Subsidiary, except for (a) transactions that are in the ordinary course of business, upon commercially reasonable terms that are no less favorable to the Company or applicable Guarantor or Restricted Subsidiary than would be obtained at the time in a comparable, arm’s length transaction with a non-affiliated Person, (b) transactions between or among the Company and/or any Guarantor and/or Restricted Subsidiary and that are not otherwise prohibited by this Agreement, (c) licenses and sublicenses in the ordinary course of business, (d) any Restricted Payment to the extent permitted by Section 4.16, (e) reasonable and customary director, officer and employee compensation, including bonuses, and other benefits, including retirement, health, stock option,
48 other equity and other benefit plans and indemnification arrangements and any issuance of securities, or other payments, awards or grants in cash, securities or otherwise in connection therewith, and (f) the existence of, and the performance of obligations of the Company or any of its Subsidiaries under the terms of any agreement to which the Company or any of its Subsidiaries is a party as of or on the Issue Date and disclosed on Schedule II hereto, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date shall be permitted solely to the extent that its terms are not more disadvantageous in any material respect to the Holders of the Notes than the terms of the agreements in effect on the Issue Date. Section 4.19 Addition of Guarantors. The Company shall cause each Restricted Subsidiary (other than an Excluded Subsidiary) on the date hereof to enter into this Agreement as a guarantor and enter into the applicable Security Document(s). Furthermore, upon the acquisition, formation or designation of any Restricted Subsidiary (other than an Excluded Subsidiary) or an Excluded Subsidiary no longer constituting an Excluded Subsidiary, within 30 days of such event, any such Subsidiary (other than an Excluded Subsidiary), shall execute and deliver to the Representative and the Collateral Agent (i) a supplemental agreement substantially in the form of Exhibit B attached hereto pursuant to which such Person shall unconditionally Guarantee all of the Agreement Obligations until the Note Guarantee of such Person has been released in accordance with the provisions of this Agreement, (ii) to the extent applicable, a joinder to the applicable Security Document(s) in form and substance reasonably satisfactory to the Representative and the Collateral Agent, (iii) a customary secretary’s certificate in form and substance reasonably satisfactory to the Representative, and (iv) to the extent requested by the Representative or the Collateral Agent, a customary Opinion of Counsel in form and substance reasonably satisfactory to the Representative and the Collateral Agent. Section 4.20 Tender Offer Participation Rights. If the Company or any of its Subsidiaries launches a tender or exchange offer for the Common Stock, other than an odd lot tender offer, each Holder shall be entitled to be eligible to be a participating seller in such tender or exchange offer if the shares of Common Stock such Holder would hold if such Holder had converted all of the Notes it then holds in full immediately prior to the launch of such tender or exchange offer would be eligible for sale in such tender or exchange offer based on the participation and eligibility criteria in such tender or exchange offer, and such Holder shall be entitled to convert all or any such portion of such Holder’s Notes into Common Stock in accordance with the terms of this Agreement in order to participate in the applicable tender or exchange offer, as provided for by the terms of the applicable tender or exchange offer, as of the date as of which the record holders of shares of Common Stock are to be determined for such transaction. Section 4.21 Restrictive Legend. Promptly following the later to occur of (a) the registration of the Notes pursuant to a registration statement that has become or been declared effective under the Securities Act and (b) the Resale Restriction Termination Date, the Company shall use its commercially reasonable efforts to remove the restrictive legend on the Notes. Section 4.22 Designation of Subsidiaries. The Company may, at any time after the Issue Date, designate any Subsidiary as an Unrestricted Subsidiary (other than a Subsidiary that is a Guarantor) or as a Restricted Subsidiary by providing written notice to Representative; provided
49 that (i) immediately before and after such designation, no Default or Event of Default shall have occurred and be continuing and (ii) no Unrestricted Subsidiary shall own any equity interests in any Restricted Subsidiary. The designation of any Subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Company therein at the date of designation in an amount equal to the fair market value of the greater of (x) the Company or the Guarantors investment therein or (y) the assets of such Restricted Subsidiary and no Subsidiary may be designated as an Unrestricted Subsidiary unless it is in compliance with Section 4.13 on a pro forma basis after giving effect to such designation; provided that in the case of the preceding clause (y), if the Restricted Subsidiary is a joint venture that is not 100% owned directly or indirectly by the Company or any Guarantor, then the value attributed to clause (y) shall be determined based on the ownership percentage of the Company or Guarantor in such Restricted Subsidiary. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Indebtedness or Liens of such Subsidiary existing at such time. No Subsidiary may be designated as an Unrestricted Subsidiary if it owns or licenses on an exclusive basis any Material Intellectual Property at the date of designation. None of the Company nor any of the Restricted Subsidiaries may transfer legal title to, or license on an exclusive basis any Material Intellectual Property, to any Unrestricted Subsidiary. Section 4.23 Payment of Taxes and Claims; Maintenance of Properties. (a) Company and each Guarantor will, and will cause each Restricted Subsidiary to, pay all material taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for material sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as adequate reserve or other appropriate provision, as shall be required in conformity with GAAP, shall have been made therefor. (b) Company and each Guarantor will, and will cause each Restricted Subsidiary to, maintain or cause to be maintained in good repair, working order and condition (ordinary wear and tear excepted) all properties used or useful in the business of the Company and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof except to the extent that, in the reasonable judgement of the Company, any such property is no longer necessary or useful for the proper conduct of the business of the Company or its Subsidiaries. (c) Company will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Company and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Each such policy of insurance shall (i) name the Collateral
50 Agent, for the benefit of the Secured Parties, as an additional insured thereunder as its interests may appear, (ii) in the case of each casualty insurance policy, contain a lender’s loss payable endorsement, satisfactory in form and substance to the Collateral Agent and the Representative, that names the Collateral Agent, for the benefit of the Holders, as lender loss payee thereunder and provide for at least 30 days’ prior notice to the Collateral Agent of any modification or cancellation of such policy. Section 4.24 Notices; Information. (a) The Company and the Guarantors shall deliver to each Holder promptly, but in any event within three Business Days after, any officer thereof obtains knowledge (i) of any condition or event that constitutes a Default or an Event of Default under any Agreement Document; (ii) that any Person has given any notice with respect to any event or condition set forth in Section 6.01(g); or (iii) of the occurrence of any event or change that could reasonably be expected to cause or evidence, either in any case or in the aggregate, a Material Adverse Effect, an Officer’s Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action the Company has taken, is taking and proposes to take with respect thereto. (b) The Company and the Guarantors shall deliver to each Holder promptly upon any officer thereof obtaining knowledge of any Adverse Proceeding not previously disclosed in writing to the Holders, if adversely determined could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, notice thereof together with such other information as may be reasonably available to Company or any Guarantor (including delivery of copies of notices received by them) to enable the Holders and their counsel to evaluate such matters. (c) The Company and the Guarantors shall deliver to each Holder and the Collateral Agent within three Business Days (i) any default notice received with respect to any Material Indebtedness and (ii) notice of any event of default (or analogous term) under any Material Indebtedness or any default under any Indebtedness satisfying the parameters of Section 6.01(g) of which any officer thereof has knowledge. Section 4.25 Compliance with Laws and Contractual Obligations. (a) The Company and the Guarantors shall, and shall cause their respective Subsidiaries and each of their respective directors, officers and employees to, comply (i) with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (excluding, solely for purposes of this Section 4.25(a), Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions) and (ii) Contractual Obligations, in the case of each of (i) and (ii) above, only to the extent any noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (b) The Company and the Guarantors shall, and shall cause their respective Subsidiaries and each of their respective directors, officers and employees to, comply in all
51 material respects with the requirements of all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions. The Company and the Guarantors shall continue to maintain in effect and enforce, and shall procure that each of their respective Subsidiaries continues to maintain in effect and enforce, policies and procedures designed to promote and achieve compliance by them and their respective directors, officers and employees with applicable Anti- Corruption Laws, Anti-Money Laundering Laws and Sanctions. Section 4.26 Books and Records; Inspections. The Company and each Guarantor will, and will cause the Restricted Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities, and with respect to Parent, all such entries shall be in conformity in all material respects with GAAP. Company and each Guarantor will, and will cause the Restricted Subsidiaries to, permit any authorized agents designated by any Holder (including the right to appoint third party agents), for so long as no Event of Default has occurred and is continuing, and not more than once per fiscal quarter, to visit and inspect any of the properties of the Company, Guarantors or any Restricted Subsidiary, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested. Section 4.27 Mortgages. [Intentionally Omitted]. Section 4.28 Limitations on Restrictive Agreements. The Company and any Guarantor will not, nor permit any Restricted Subsidiary to, directly or indirectly (i) enter into or assume any agreement, document, license, instrument or other arrangement (other than the Agreement Documents) prohibiting (or having the effect of prohibiting) the creation or assumption of any Lien on Collateral or (ii) create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind (except as provided by the Agreement Documents) on the ability of any Subsidiary to: (A) pay or make Restricted Payments to the Company, any Guarantor or any Subsidiary; (B) pay any Indebtedness owed to the Company, any Guarantor or any Subsidiary; (C) make loans or advances to the Company, any Guarantor or any other Subsidiary; (D) transfer any of its property or assets to the Company, any Guarantor or any Subsidiary or (E) limit the ability of any Person required to Guarantee the Agreement Obligations to so Guarantee; provided that the foregoing clause (ii) shall not apply to (1) restrictions or conditions imposed by law, by this Agreement or any other Agreement Document, (2) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions and conditions apply only to the property or assets securing such Indebtedness, and (3) any agreement in connection with an asset sale permitted by Section 4.15 pending consummation of such asset sale solely to the extent it relates only to property being sold in such permitted asset sale. Section 4.29 Cash Management. Neither Company nor any Guarantor will establish or maintain any account (including deposit accounts and securities accounts) that is not a Controlled Account, deposit proceeds in any account that is not a Controlled Account or deposit, acquire, or otherwise carry any security entitlement or commodity contract in an account that is not a Controlled Account, unless, in each case, such account constitutes a Controlled Account on or before the date that is 60 days after the establishment of such account, or such later date as to which
52 Representative shall agree in writing in its sole discretion; provided, that, the foregoing shall not apply to (i) Excluded Accounts and (ii) accounts (that are not Excluded Accounts) in existence on the date hereof until the two month anniversary of the date hereof. Section 4.30 Post-Closing Requirements. The Company or the applicable Guarantor will deliver to the Collateral Agent and the Representative each of the following agreements, documents, instruments and other items, in each case within the time periods set forth below (which time periods may, in each case, be extended by the Representative in its sole discretion, which extension may be provided in the form of an email from the Representative or its special U.S. counsel, Greenberg Traurig, P.A., on the Representative’s behalf), in each case in form and substance reasonably satisfactory to the Representative and the Collateral Agent: (a) Within 30 days of the date hereof, the insurance policy endorsements and certificates of insurance set forth in Section 4.23(c); (b) Within 45 days of the date hereof, certificates, agreements or instruments representing or evidencing the Pledged Shares issued by Foreign Subsidiaries, in a suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank; (c) Within 60 days of the date hereof, Control Agreements over all accounts of the Company and Guarantors (other than Excluded Accounts), which Control Agreements, subject to Section 4.01(c) of the Security Agreement, shall be entered into in favor of the Original Senior Agent (as defined in the Security Agreement). Section 4.31 Further Assurances. Subject to the limitations set forth herein and in the Security Documents, the Company and the Guarantors shall execute and deliver such further instruments and do such further acts as may be reasonably necessary, desirable or proper, or that the Collateral Agent or the Representative may reasonably request, to carry out more effectively the provisions of this Agreement or any other Agreement Document. The Company shall, and shall cause each Guarantor to, at their sole cost and expense, (i) execute and deliver all such agreements and instruments as shall be necessary or as the Collateral Agent or the Representative shall reasonably request to more fully or accurately describe the property intended to be Collateral or the Agreement Obligations intended to be secured by the Security Documents and (ii) file any such notice filings, financing statements or other agreements or instruments as may be necessary, proper or desirable, or that the Collateral Agent or the Representative may reasonably request, to attach and perfect (and maintain the attachment, perfection and priority) the Liens created by the Security Documents, subject to Permitted Liens, in each case subject to the terms of, and to the extent required by, the Security Documents. ARTICLE 5 [INTENTIONALLY OMITTED]
53 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01 Events of Default. Each of the following events shall be an “Event of Default” with respect to the Notes: (a) default in any payment of interest on any Note when due and payable, and the default continues for a period of 5 days; (b) default in the payment of principal of any Note when due and payable on the Maturity Date, upon any Fundamental Change Repurchase Date, upon any Change of Control Repurchase Date, upon the date of redemption for a Change of Control Redemption, upon declaration of acceleration or otherwise; (c) failure by the Company to comply with its obligation to convert the Notes in accordance with this Agreement upon exercise of a Holder’s conversion right, and such failure continues for a period of three Business Days; (d) failure by the Company to issue a notice of a Change of Control in accordance with Section 14.01 or a Fundamental Change Company Notice or a Change of Control Company Notice in accordance with Section 15.02(b) or Section 15.03(b), in each case, when due, and such failure continues for a period of five Business Days; (e) failure by the Company, or any Guarantor or Restricted Subsidiary, as applicable, to comply with its obligations under (i) Section 4.24(a)(i), (ii) Sections 4.05(a), 4.07, 4.11, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.22, 4.24 (other than Section 4.24(a)(i)), 4.27, 4.28, 4.29 and 4.30 and such failure in the case of this clause (ii), if capable of being remedied, remains unremedied for a period of five Business Days, (iii) Section 4.12 and such failure, in the case of this clause (iii), remains unremedied for fourteen calendar days after the occurrence thereof and (iv) Sections 4.05(b), 4.06, 4.08, 4.23, 4.25, 4.26 or 16.03 or Article 11 and such failure, in the case of this clause (iv), remains unremedied for thirty calendar days after the occurrence thereof; (f) failure by the Company, or any Guarantor or Restricted Subsidiary, as applicable to perform or observe any other covenant or agreement (not specified in Section 6.01(d) or (e) above) in any Agreement Document, for 60 calendar days after the earlier of (x) knowledge of the Company, any Guarantor or Restricted Subsidiary or (y) written notice from the Representative or the Holders of at least 25% in principal amount of the Notes then outstanding determined in accordance with Section 8.01 and Section 8.02 has been received by the Company; (g) default by the Company, any Guarantor, if any, or solely with respect to clause (g)(i) hereunder, any Subsidiary, with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any Indebtedness for money borrowed of $5,000,000 (or the foreign currency equivalent thereof) or more in the aggregate of the Company and any Guarantors, whether such Indebtedness now exists or shall hereafter be created, or any Material Indebtedness, in each case (i) resulting in such Indebtedness becoming or being declared immediately due and payable or would permit the holder thereof to accelerate such Indebtedness prior to its stated maturity or enforce any Liens (in each case, without giving effect to any intercreditor or subordination arrangements), (ii) constituting a
54 failure to pay the principal of or interest on any such Indebtedness when due and payable at its Stated Maturity, upon required repurchase, upon declaration of acceleration or otherwise; (h) the Company, any Guarantor, if any, or any Significant Subsidiary of the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or any such Guarantor or Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Guarantor, if any, or Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors; (i) an involuntary case or other proceeding shall be commenced against the Company or any Guarantor, if any, or any Significant Subsidiary of the Company seeking liquidation, reorganization or other relief with respect to the Company or any such Guarantor or Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Guarantor or Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive calendar days; (j) a final judgment or judgments for the payment of $5,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any Guarantor, if any, which judgment is not discharged, paid, bonded, waived or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished; (k) the Guarantee by any Guarantor, if any, ceases to be in full force and effect or such Guarantee is declared by a court of competent jurisdiction to be null and void and unenforceable or the Guarantee is found by a court of competent jurisdiction to be invalid or such Guarantor denies its liability under its Guarantee; (l) (A) any of the Security Documents shall cease for any reason to be in full force and effect (other than in accordance with its terms), or the Company, a Guarantor or Restricted Subsidiary, shall so assert in writing, or (B) the Lien created by any of the Security Documents, shall cease to be, or shall be asserted in writing by the Company, any Guarantor or Restricted Subsidiary not to be, perfected (to the extent required by this Agreement or the applicable Security Document(s)) and enforceable in accordance with its terms or of the same effect as to perfection and priority purported to be created thereby with respect to any material portion of the Collateral (other than in connection with any termination of such Lien in respect of any Collateral as permitted by this Agreement or by any of the Security Documents, or the non- perfection of any Lien to the extent that the Company and the Representative reasonably agree that the burden or cost of perfecting such Lien would be excessive in relation to the practical benefit to the Secured Parties obtained thereby);
55 (m) any representation, warranty, certification or other statement made or deemed made by the Company, Guarantor or any Restricted Subsidiary in any Agreement Document or in any certificate at any time given by the Company, any Guarantor or any Restricted Subsidiary pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; (n) any Subordinated Indebtedness permitted hereunder or the guarantee thereof shall cease, for any reason, to be validly subordinated to the Agreement Obligations, as provided in the subordination agreement applicable thereto; or (o) (i) there shall occur one or more ERISA Events which individually or in the aggregate results in or would reasonably be expected to result in a Material Adverse Effect or (ii) there exists, with respect to a Plan, any fact or circumstance that reasonably would be expected to result in the imposition of a Lien or security interest pursuant to Section 430(k) of the Code, other than such Liens or security interests as would not be individually or in the aggregate be material. Section 6.02 Acceleration; Rescission and Annulment. If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.01(g) or Section 6.01(h) with respect to the Company, unless the principal of all of the Notes shall have already become due and payable), either the Representative or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.01 and Section 8.02, in each case, by notice in writing to the Company (and to the Representative if given by Holders), may declare 100% of the principal amount of, and accrued and unpaid interest, if any, on all the Notes (as well as all other Agreement Obligations) to be due and payable in cash immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything contained in this Agreement or in the Notes to the contrary notwithstanding. If an Event of Default specified in Section 6.01(g) or Section 6.01(h) with respect to the Company occurs and is continuing, 100% of the principal amount of, and accrued and unpaid interest, if any, on, all Notes (as well as all other Agreement Obligations) shall automatically become and be immediately due and payable in cash without any declaration or other act on the part of the Representative or any Holder. Section 6.03 Payments of Notes on Default; Suit Therefor. (a) If an Event of Default occurs and is continuing, the Collateral Agent and/or the Holders of the Minimum Principal Amount, may pursue any available remedy to collect the payment of all Agreement Obligations (including, principal, premium, if any, and interest on the Notes), or to enforce the performance of any provision of the Notes, the Guarantees or this Agreement. A delay or omission by any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
56 (b) Subject to Section 6.03(c), unless consented to by the Holders of not less than a Minimum Principal Amount, no Holder may pursue any remedy with respect to this Agreement or the Notes unless: (i) such Holder has previously given the Collateral Agent and Holders of a Minimum Principal Amount written notice that an Event of Default is continuing; (ii) such Holder has requested the Collateral Agent and/or Holders of a Minimum Principal Amount to pursue a remedy; (iii) such Holder has offered and, if requested, provided to the Collateral Agent and/or Holders of a Minimum Principal Amount indemnity or security satisfactory to the Holders of a Minimum Principal Amount against any loss, liability or expense; (iv) the Holders of a Minimum Principal Amount have not complied with such request within 90 calendar days after the receipt thereof and the offer of security or indemnity; and (v) the Holders of a Minimum Principal Amount have not otherwise commenced exercising any rights or remedies within such 90 day period. (c) If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Collateral Agent and/or Holders of a Minimum Principal Amount (or its designee) are authorized to recover judgment in their own name and as trustee of an express trust against the Company or the Guarantors for the whole amount of the outstanding Agreement Obligations (including principal of, premium (including the Prepayment Premium), if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements of the Holders of a Minimum Principal Amount, its agents and counsel). (d) If any Holder has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceedings, the Company and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Holders shall continue as though no such proceeding has been instituted. (e) Notwithstanding the foregoing, the Holders of a Minimum Principal Amount may assign any of their rights under Article 6 to the Representative or any other agent (the “Administrative Agent”). Section 6.04 Remedies Cumulative and Continuing. All powers and remedies given by this Article 6 to the Collateral Agent and/or Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Collateral Agent, the Representative or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Agreement, and no delay or omission of the Collateral Agent, the Representative or any
57 Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and every power and remedy given by this Article 6 or by law to the Collateral Agent, the Representative or the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Representative or the Holders. Section 6.05 Direction of Proceedings and Waiver of Defaults by Holders. The Holders of at least 25% in principal amount of the Notes then outstanding determined in accordance with Section 8.01 and Section 8.02, by notice to the Company, may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (1) a default in the payment of accrued and unpaid interest, if any, on, or the principal (including any Fundamental Change Repurchase Price and Change of Control Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.01, (2) a failure by the Company to pay or deliver, as the case may be, the consideration due upon conversion of the Notes, (3) a failure by the Company to repurchase any Notes when required under this Agreement or (4) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected thereby. Upon any such waiver the Company, the Representative and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.05, said Default or Event of Default shall for all purposes of the Notes and this Agreement be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 6.06 Application of Monies Collected by Collateral Agent. Any monies or property collected by the Collateral Agent pursuant to the Security Documents, or any money or other property distributable in respect of the obligations of the Company and the Guarantors, if any, under the Agreement Documents after an Event of Default shall be applied in the following order: First, to the payment of all amounts due the Collateral Agent and its agents under the Agreement Documents; Second, to the payment of all amounts due the Representative and the Administrative Agent (if any) and their respective agents under the Agreement Documents; Third, to the full extent thereof to payment of that portion of the Agreement Obligations constituting fees, costs, premiums, indemnities and expenses payable to the Holders; Fourth, to the payment of any accrued and unpaid interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts) at the Default Rate; Fifth, to repay principal in respect of the Notes (in accordance with the respective outstanding principal amounts thereof);
58 Sixth, to any other Agreement Obligations not otherwise referred to in this Section 6.06; and Seventh, to the payment of the remainder, if any, to the Company or the Guarantors, if any, as the case may be. In carrying out the foregoing, (x) amounts received shall be applied in the numerical order provided until exhausted prior to the application to the next succeeding category and (y) each of the Persons entitled to receive a payment in any particular category shall receive an amount equal to its pro rata share of amounts available to be applied pursuant thereto for such category. Section 6.07 Proofs of Claim. Each of the Holders of a Minimum Principal Amount (or its agent) and the Collateral Agent are authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Holders and the Collateral Agent, as applicable, (including any claim for the reasonable compensation, expenses, disbursements and advances of their agents and counsel) allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes including the Guarantors), its creditors or its property and shall be entitled and empowered to participate as a member in any official committee of creditors appointed in such matter and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Collateral Agent and Holders of a Minimum Principal Amount, and in the event that the Holders of a Minimum Principal Amount shall consent to the making of such payments directly to the Holders, to pay any amount due to the Holders of a Minimum Principal Amount or the Collateral Agent, as applicable, for the reasonable compensation, expenses, disbursements and advances of their agents and counsel, and any other amounts due the Holders of a Minimum Principal Amount or the Collateral Agent under this Agreement or any other Agreement Documents. To the extent that the payment of any such compensation, expenses, disbursements and advances of their agents and counsel, and any other amounts due under this Agreement or any other Agreement Documents out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Collateral Agent or the Holders of a Minimum Principal Amount to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize Holders of a Minimum Principal Amount to vote in respect of the claim of any Holder in any such proceeding. ARTICLE 7 [INTENTIONALLY OMITTED]
59 ARTICLE 8 CONCERNING THE HOLDERS Section 8.01 Who Are Deemed Absolute Owners. The Company, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to Section 2.03) accrued and unpaid interest on such Note, for conversion of such Note and for all other purposes; and neither the Company nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or shares of Common Stock so paid or delivered, effectual to satisfy and discharge the liability for monies payable or shares deliverable upon any such Note. Section 8.02 Company-Owned Notes Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Agreement, Notes that are owned by the Company, the Guarantors, if any, by any Subsidiary thereof or by any Affiliate of the Company or the Guarantors, if any, or any Subsidiary thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.02 if the pledgee shall establish to the satisfaction of the Company the pledgee’s right to so act with respect to such Notes and that the pledgee is not the Company, the Guarantors, if any, a Subsidiary thereof or an Affiliate of the Company or a Subsidiary thereof. Section 8.03 Action by Holders. Whenever in this Agreement it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing. Whenever the Company solicits the taking of any action by the Holders of the Notes, the Company may, but shall not be required to, fix in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date, if one is selected, shall be not more than fifteen (15) calendar days prior to the date of commencement of solicitation of such action. Section 8.04 Proof of Execution by Holders. Proof of the execution of any instrument by a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Representative or Collateral Agent. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar.
60 ARTICLE 9 [INTENTIONALLY OMITTED] ARTICLE 10 SUPPLEMENTAL AGREEMENTS Section 10.01 Supplemental Agreements Without Consent of Holders. The Company, at its own expense, may from time to time and at any time amend, supplement or waive any provision of the Agreement Documents or enter into a new Agreement Document, without prior notice to or the consent of any Holder (but subject to the requirements of the next paragraph), for one or more of the following purposes: (a) to cure any ambiguity, mistake, omission, defect or inconsistency, provided that such amendment, supplement or waiver shall require the prior written consent of the Representative; (b) to provide for the assumption by a Successor Company of the obligations of the Company under this Agreement and the Notes pursuant to Article 11 or to provide for the assumption by a successor entity of the obligations of the Guarantors, if any, under this Agreement and its Note Guarantee pursuant to Article 16; (c) to add guarantees with respect to the Notes; (d) [Intentionally Omitted]; (e) to allow the Guarantors, if any, to execute a supplemental agreement and/or a Note Guarantee with respect to the Notes as may be required pursuant to this Agreement; (f) to add to the covenants or Events of Default of the Company for the benefit of the Holders or surrender any right or power conferred upon the Company under the Agreement; (g) to make any change that does not adversely affect the rights of any Holder, provided that such amendment, supplement or waiver shall require the prior written consent of the Representative; (h) to adjust the Conversion Rate pursuant to and to the extent provided by Article 14; (i) to provide for the issuance of Additional Notes, PIK Notes, and PIK Payments in accordance with the limitations set forth in this Agreement insofar as the Company determined that a supplemental agreement is necessary or advisable for such purpose; (j) [Intentionally Omitted]; (k) [Intentionally Omitted]; or
61 (l) in connection with any Specified Corporate Event, to provide that the Notes are convertible into Reference Property, and make such related changes to the terms of the Notes to the extent expressly required by Section 14.08, Upon the written request of the Company and the Representative, the Collateral Agent is hereby authorized to, and shall join with the Company in the execution of any such document reflecting the amendment, supplement or waiver to the applicable Agreement Document or new Agreement Documents, to make any further appropriate agreements and stipulations that may be therein contained, except that the Collateral Agent shall not be obligated to, but may in its discretion enter into any such amendment, supplement or waiver that affects the Collateral Agent’s own rights, duties or immunities under this Agreement or otherwise. In entering into any such amendment, supplemental or waiver to an Agreement Document, new Agreement Document, or into an intercreditor agreement, the Collateral Agent may conclusively rely on an Officer’s Certificate and Opinion of Counsel, and shall have no obligation to determine or verify whether the terms and conditions of the Note Purchase Agreement or any other agreement have been satisfied. Any such document reflecting the amendment, supplement or waiver to the applicable Agreement Document authorized by the provisions of this Section 10.01 (other than under clause (a) or clause (g) of this Section 10.01) may be executed by the Company without the consent of the Representative or of the Holders of any of the Notes at the time outstanding, provided, that, prior to executing any such document, the Company shall provide at least five Business Days’ advance written notice to the Representative of the proposed amendment, supplement or waiver and shall consult in good faith with the Representative to ensure that any such amendment, supplement or waiver is in conformity with the requirements of this Agreement; and, to the extent the Representative objects in writing to the Company no later than five Business Days following receipt by the Representative of notice of such proposed amendment, supplement or waiver, then the effectiveness of such proposed amendment, supplement or waiver shall be conditioned upon the prior written consent of the Representative. Section 10.02 Supplemental Agreements and Other Amendments with Consent of Holders. With the prior written consent of the Holders of at least the Minimum Principal Amount of the Notes then outstanding, the Company and the Representative and/or the Collateral Agent (to the extent such amendment, supplement or waiver is related to the Security Documents or Collateral), as the case may be, at the Company’s expense, may from time to time and at any time enter into amendments, supplements or waivers to the Agreement Documents or new Agreement Documents for the purpose of adding any provisions to or changing in any manner, waiving or eliminating any of the provisions of the Agreement Documents or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder of an outstanding Note affected thereby, no such amendment, supplement or waiver shall: (a) except for as expressly required or permitted by Section 14.05 (with respect to adjustments to the Conversion Rate) or Section 14.08 (with respect to Reference Property) of this Agreement, reduce the consideration due upon conversion of the Notes; (b) reduce the rate of or extend the stated time for payment of interest on any Note;
62 (c) reduce the principal of or change the Maturity Date of any Note; (d) except as expressly required or permitted by this Agreement, make any change that adversely affects the conversion rights of any Notes; (e) reduce the Change of Control Redemption Price, Fundamental Change Repurchase Price or Change of Control Repurchase Price of any Note or amend or modify in any manner adverse to the Holders the Company’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise; (f) make any Note payable in currency other than that stated in the Notes and in this Agreement; (g) change the ranking of the Notes in a manner adverse to Holders; (h) make any change in the provisions of this Agreement relating to the rights of Holders of Notes to receive payments of principal of, premium on, if any, or interest, if any, on the Notes or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes; (i) to release the Guarantors, if any, from any of their obligations under the Note Guarantees or this Agreement, except in accordance with the terms of this Agreement; or (j) release all or substantially all of the Collateral; (k) make any change in this Article 10 that requires each Holder’s consent or in the waiver provisions in Section 6.02 or Section 6.05. Upon the written request of the Company, and upon receipt of evidence of the consent of Holders as aforesaid and subject to Section 10.05, the Representative and/or the Collateral Agent (to the extent such amendment, supplement or waiver is related to the Security Documents or the Collateral) shall join with the Company in the execution of such amendment, supplement or waiver to the Agreement Documents unless such amendment, supplement or waiver affects the Collateral Agent’s own rights, duties or immunities under this Agreement or otherwise, in which case the Collateral Agent may, but shall not be obligated to, enter into such amendment, supplement or waiver. Holders do not need under this Section 10.02 to approve the particular form of any proposed amendment, supplement or waiver. It shall be sufficient if such Holders approve the substance thereof. After any such amendment, supplement or waiver becomes effective, the Company shall promptly deliver to the Holders (with a copy to the Representative) a notice briefly describing such amendment, supplement or waiver. Section 10.03 Effect of Amendments, Supplements or Waivers. Upon the execution of any amendment, supplement or waiver pursuant to the provisions of this Article 10, the applicable Agreement Document shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under the Agreement Documents of the Representative, the Company, the Guarantors, if any, and the
63 Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such amendment, supplement or waiver shall be and be deemed to be part of the terms and conditions of the applicable Agreement Document for any and all purposes. Section 10.04 Certain Amendments. No amendment to any Agreement Document that is materially adverse in any respect to the rights of the lender under the SIS Documents shall be effective without the written consent of SIS Holdings, L.P.; provided, that any amendment to the prohibition on Cash Interest payments set forth in Section 2.03(c)(i) of this Agreement shall be deemed materially adverse to the rights of the lender under the SIS Documents. Section 10.05 Evidence of Compliance of Amendment, Supplement or Waiver to Be Furnished Representative. In addition to the documents required by Section 18.05, the Representative and the Collateral Agent (if a party to the applicable amendment, supplement or waiver) shall receive an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Representative or the Collateral Agent) each stating that such amendment, supplement or waiver or new Agreement Document executed pursuant hereto complies with the requirements of this Article 10, is permitted or authorized by this Agreement and is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. ARTICLE 11 CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE Section 11.01 Company May Consolidate, Etc. on Certain Terms. Subject to the provisions of Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, assign, transfer, lease or otherwise Dispose of all or substantially all of the consolidated properties and assets of (i) the Company and its Subsidiaries, taken as a whole, and (ii) the Company and the Guarantors, taken as whole, in one transaction or any series of transactions, to another Person, other than in a connection with a Change of Control in which the Company has elected to effect, and not revoked such election, a Change of Control Redemption with respect to all of the outstanding Notes, unless: (a) (i) such resulting, surviving or transferee Person is the Company; or (ii) if not the Company, such resulting, surviving or transferee Person (the “Successor Company”) shall be a corporation, limited liability company, partnership or other entity organized and existing under the laws of the United States of America, any State thereof, the District of Columbia or any Designated Country; (b) in any such transaction where the Company is not the resulting, surviving or transferee Person, the Successor Company unconditionally assumes all of the Company’s obligations under the Notes and this Agreement pursuant to a supplemental agreement in a form reasonably satisfactory to the Representative; (c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Agreement; and
64 (d) in any transaction where the Company is not the surviving or transferee Person, the Company shall have delivered to the Representative and Collateral Agent an Officer’s Certificate and Opinion of Counsel (to the extent requested by Representative or Collateral Agent), each stating that the consolidation, merger, sale, conveyance, assignment, transfer, lease or other Disposition and such supplemental agreement complies with this Agreement and all conditions precedent provided for in this Agreement relating to such transaction have been complied with. For purposes of this Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Company to another Person that is not the Company or a Subsidiary of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the consolidated properties and assets of the Company and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease by the Company of all or substantially all of its consolidated properties and assets to another Person. Section 11.02 Successor Company to Be Substituted. In case of any such consolidation, merger, sale, conveyance, assignment, transfer, lease or other Disposition contemplated by Section 11.01, other than in a connection with a Change of Control in which the Company has elected to effect, and not revoked such election, a Change of Control Redemption with respect to all of the outstanding Notes, where the Company is not the resulting, surviving or transferee Person (a “Successor Transaction”) and upon the assumption by the Successor Company, by supplemental agreement, executed and delivered to the Representative and Collateral Agent, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of this Agreement to be performed by the Company, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the consolidated properties or assets of the Company and its Subsidiaries, taken as a whole, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part, and the Company (except in the case of a lease of all or substantially all of the consolidated properties or assets of the Company and its Subsidiaries, taken as a whole) shall be discharged from the obligations of the Company under the Notes and this Agreement. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company. All the Notes so issued shall in all respects have the same legal rank and benefit under this Agreement as the Notes theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Notes had been issued at the Issue Date. In the event of any such Successor Transaction (but not in the case of a lease), upon compliance with this Article 11 the Person named as the “Company” in the first paragraph of this Agreement (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may, if still in existence, be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Agreement and the Notes. In case of any such Successor Transaction, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.
65 Section 11.03 Reverse Merger. The Company shall not consummate any Reverse Merger unless, as a condition to such Reverse Merger, the Acquiring Person unconditionally Guarantees all of the Agreement Obligations and assumes all of the Company’s Conversion Obligations and Change of Control Conversion Obligations under the Agreement Documents, and agrees to perform the obligations applicable to the “Company Group” under Section 3.2(c) and Section 3.8 of the Note Purchase Agreement and the obligations of the Company under the Registration Rights Agreement (as defined in the Note Purchase Agreement), pursuant to a supplemental agreement in a form reasonably satisfactory to the Representative and references in such applicable sections of this Agreement relating to the Conversion Obligations and Change of Control Conversion Obligations (including for purposes of clause (ii)(B)(2) of the definition of Conversion Rate and the proviso thereto) to “the Company” shall refer to “the Acquiring Person”, mutatis mutandis, and any references to the “Common Stock” shall instead be references to the Reference Property into which the Common Stock is converted into, or exchanged for in such Reverse Merger (which shall be the common stock of the Acquiring Person in the Specified Transaction). For the avoidance of doubt, the Specified Transaction shall be deemed to have been in full compliance with this Section 11.03. ARTICLE 12 [INTENTIONALLY OMITTED] ARTICLE 13 OPTIONAL CHANGE OF CONTROL REDEMPTION Section 13.01 No Optional Redemption. Except as set forth in Section 13.02, the Notes shall not be redeemable by the Company prior to the Maturity Date. Section 13.02 Optional Change of Control Redemption. If a Change of Control (other than the Specified Transaction set forth on Schedule 13.02) occurs, the Company may redeem (an “Change of Control Redemption”), at the Company’s option, all of the Notes, or any portion of the principal amount thereof that is equal to $1,000 (or if a PIK Payment has been made, $1.00) or an integral multiple in excess thereof, on the Change of Control Redemption Date at a repurchase price (the “Change of Control Redemption Price”) equal to the greater of (i) 115% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Change of Control Redemption Date, payable in cash, and (ii) the product of (x) the number of shares of Common Stock issuable upon conversion of the Note to be redeemed as of immediately prior to the Change of Control Effective Date and (y) the Transaction Price in such Change of Control, payable in cash, unless, in the case of clause (i), the Change of Control Redemption Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Change of Control Redemption Price shall be paid in cash in an amount equal to 115% of the principal amount of Notes to be redeemed pursuant to this Section 13.02. Section 13.03 Notice of Change of Control Redemption; Selection of Notes. (a) If the Company wishes to exercise its right to redeem all or, as the case may be, any part of the Notes pursuant to Section 13.02, it shall fix a date for the Change of Control
66 Redemption which shall be the Change of Control Effective Date (the “Change of Control Redemption Date”), and it shall provide notice of such Change of Control Redemption (a “Change of Control Redemption Notice”) not less than ten nor more than 30 calendar days prior to the expected Change of Control Redemption Date to each Holder of Notes to be redeemed as a whole or in part at its last address as the same appears on the Note Register; provided that, the Holder shall be entitled to elect to convert all or any portion of the specified Notes in connection with, and conditioned upon the consummation of the anticipated Change of Control, in which case such conversion shall occur immediately prior to such anticipated Change of Control. For the avoidance of doubt, the Change of Control Redemption Date must be a Business Day. (b) The Change of Control Redemption Notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, failure to give such Change of Control Redemption Notice by mail to the Holder of any Note designated for Change of Control Redemption as a whole or in part, or any defect in the Change of Control Redemption Notice, shall not affect the validity of the proceedings for the redemption of any other Note. (c) Each Change of Control Redemption Notice shall specify: (i) the events causing the Change of Control; (ii) the expected date of the Change of Control; (iii) the expected Change of Control Redemption Date; (iv) the Change of Control Redemption Price; (v) the name and address of the Paying Agent and the Conversion Agent, if applicable; (vi) the Change of Control Conversion Rate and that Holders may surrender their Notes for conversion at any time not less than 3 calendar days prior to the expected Change of Control Redemption Date; (vii) that on the Change of Control Redemption Date, the Change of Control Redemption Price will be paid upon each Note to be redeemed, and that, unless the Company defaults in the payment of the Change of Control Redemption Price, interest thereon, if any, shall cease to accrue on and after the Change of Control Redemption Date; (viii) the place or places where such Notes are to be surrendered for payment of the Change of Control Redemption Price; and (ix) in case any Note is redeemed in part only, the portion of the principal amount thereof to be redeemed, which principal amount must be $1,000 or an integral multiple in excess thereof, and that on and after the Change of Control Redemption Date, upon surrender of such Note, a new Note in principal amount equal to the unredeemed portion thereof shall be issued.
67 (d) If fewer than all of the outstanding Notes are to be redeemed, the Notes shall be selected for Change of Control Redemption (in principal amounts of $1,000 or integral multiples in excess thereof) by lot. (e) If a Holder converts a Note a portion of which has been selected for Change of Control Redemption, the converted portion will be deemed to be from the portion selected for Change of Control Redemption. (f) In the event of any Change of Control Redemption in part, the Company shall not be required to register the transfer of or exchange any Note so selected for Change of Control Redemption, in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 13.04 Payment of Notes Called for Change of Control Redemption. (a) If any Change of Control Redemption Notice has been given in respect of the Notes in accordance with Section 13.03, the Notes shall become due and payable on the Change of Control Redemption Date at the place or places stated in the Change of Control Redemption Notice and at the Change of Control Redemption Price. On presentation and surrender of the Notes at the place or places stated in the Change of Control Redemption Notice, the Notes shall be paid and redeemed by the Company at the applicable Change of Control Redemption Price. (b) Prior to the open of business on the Change of Control Redemption Date, the Company shall deposit with the Paying Agent an amount of cash (in immediately available funds if deposited on the Change of Control Redemption Date), sufficient to pay the Change of Control Redemption Price of all of the Notes to be redeemed on such Change of Control Redemption Date. Subject to receipt of funds by the Paying Agent, payment for the Notes to be redeemed (including the payment of any non-cash consideration, which shall be paid directly by the Company or its designee, rather than the Paying Agent) shall be made on the Change of Control Redemption Date for such Notes. The Paying Agent shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the cash portion of the Change of Control Redemption Price. If any portion of the Change of Control Redemption Price is payable in a form other than cash, such non-cash consideration shall be delivered by the Company or its designee directly to the Holders. Section 13.05 Restrictions on Change of Control Redemption. The Company may not redeem any Notes on any date if the principal amount of the Notes has been accelerated in accordance with the terms of the Agreement, and such acceleration has not been rescinded, on or prior to the Change of Control Redemption Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Change of Control Redemption Price with respect to such Notes). ARTICLE 14 CONVERSION OF NOTES Section 14.01 Conversion upon Change of Control. Subject to and upon compliance with the provisions of this Article 14, including without limitation Section 14.03(i), in connection with any Change of Control (other than the Specified Transaction), each Holder of a Note shall have
68 the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple in excess thereof (or, if a PIK Payment has been made, if the portion to be converted is $1.00 principal amount or an integral multiple in excess thereof )) of such Note on or after the time that is ten Business Days prior to the anticipated effective date of such Change of Control until the close of business on the day that is three calendar days prior to the actual date such Change of Control becomes effective (the “Change of Control Effective Date”), into Common Stock (or such Reference Property pursuant to Section 14.08 in lieu of such Common Stock), subject to, and in accordance with, the settlement provisions of Section 14.03 (the “Change of Control Conversion Obligation”); provided, however, such conversion shall be allowed only if the Common Stock, or Reference Property as applicable, is issued in the conversion transaction by the Company, its successor for U.S. federal tax purposes (including Company’s sole regarded owner if Company is treated as disregarded for U.S. federal tax purposes), or a corporation that is related to the Company or its successor under Section 267(b) or Section 707(b)(1) of the Code. The Company shall notify the Holders and the Representative in writing of any Change of Control no later than 15 Business Days prior to the anticipated effective date of a Change of Control (or if such anticipated effective date is not known prior to such date, promptly following knowledge of such anticipated effective date but in any event no later than two Business Days after the Change of Control Effective Date). In the case of Physical Notes, such notice shall be by first class mail. No failure of the Company to give the foregoing notice and no defect therein shall limit the Holders’ conversion rights or affect the validity of the proceedings for the conversion of the Notes pursuant to this Section 14.01. Notwithstanding the foregoing, no Holder may convert any portion of such Holder’s Notes unless the Notes delivered for conversion represent (1) at least $250,000 in aggregate principal amount of Notes (the “Minimum Conversion Amount”) or (2) if less than the Minimum Conversion Amount, all of the Notes held at such time by Holder. Section 14.02 Conversion. Other than upon a Change of Control pursuant to Section 14.01, and subject to and upon compliance with the other provisions of this Article 14, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple in excess thereof (or, if a PIK Payment has been made, if the portion to be converted is $1.00 or an integral multiple in excess thereof)) of such Note, until the close of business on the third Business Day immediately preceding the Maturity Date, into a number of shares of Common Stock equal to (a), if no PIK Payment has been made, the applicable Conversion Rate per $1,000 principal amount of Notes or (b), if a PIK Payment has been made, the quotient of (i) the applicable Conversion Rate and (ii) $1,000, per $1.00 principal amount of Notes (subject, in each case, to, and in accordance with, the settlement provisions of Section 14.03, the “Conversion Obligation”); provided, however, such conversion shall be allowed only if the Common Stock, or Reference Property as applicable, is issued in the conversion transaction by the Company, its successor for U.S. federal tax purposes (including Company’s sole regarded owner if Company is treated as disregarded for U.S. federal tax purposes), or a corporation that is related to the Company or its successor under Section 267(b) or Section 707(b)(1) of the Code. Notwithstanding the foregoing, no Holder may convert any portion of such Holder’s Notes unless the Notes delivered for conversion represent (1) at least the Minimum Conversion Amount or (2) if less than the Minimum Conversion Amount, all of the Notes held at such time by Holder. Section 14.03 Conversion Procedure; Settlement Upon Conversion.
69 (a) Subject to Section 14.01, Section 14.02, this Section 14.03 and Section 14.08(a), upon conversion of any Note pursuant to (i) Section 14.01, the Company shall deliver to the converting Holder shares of Common Stock, together with a cash payment in lieu of delivering any fractional share as set forth below under Section 14.03(c) (or such Reference Property pursuant to Section 14.08 in lieu of such Common Stock), at the Change of Control Conversion Rate; or (ii) Section 14.02, the Company shall deliver to the converting Holder shares of Common Stock, together with a cash payment in lieu of delivering any fractional share as set forth below under Section 14.03(c), at a Conversion Rate in accordance with Section 14.02 (as adjusted pursuant to Section 14.05, as applicable), in each case (i) and (ii), on the second Business Day following the relevant Conversion Date (or such other date that may be applicable pursuant to a conversion in accordance with Section 14.03(c) or Section 14.03(k)). A Holder may convert fewer than all of such Holder’s Notes. (b) Before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) if such Holder would have a filing and waiting period or approval requirement in advance of such conversion under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) or any other antitrust, merger control, or competition law (collectively with the HSR Act, the “Antitrust Laws”) make or cause to be made by its ultimate parent entity as that term is defined in the HSR Act any such required filings under the Antitrust Laws and obtain any required waiting period expirations or terminations or approvals; (ii) (1) complete, manually sign and deliver an irrevocable (except as set forth in clause (c)) notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a “Notice of Conversion”) at the office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon settlement of the Conversion Obligation or the Change of Control Conversion Obligation, as the case may be, to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if required, furnish appropriate endorsements and transfer documents that the Company or the Conversion Agent may reasonably require, (4) if required, pay all transfer, stamp and similar taxes as set forth in Section 14.03(d) and Section 14.03(e) and (5) if required, pay funds to the Conversion Agent equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.03(h). The Representative (and if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion. No Notice of Conversion with respect to any Notes may be surrendered by a Holder thereof if such Holder has also delivered a Fundamental Change Repurchase Notice or a Change of Control Repurchase Notice to the Company in respect of such Notes and has not validly withdrawn such Fundamental Change Repurchase Notice or Change of Control Repurchase Notice in accordance with Section 15.04. If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation or the Change of Control Conversion Obligation, as the case may be, with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered. (c) A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “Conversion Date”) that the Holder has complied with the
70 requirements set forth in subsection (b) above except in the case of subsection (b)(i) above in which case a Note shall be deemed to have been converted the day following the expiration or termination of any applicable waiting period or the receipt of approval under any Antitrust Law; provided that, in any Notice of Conversion, a Holder that has complied with the requirements set forth in subsection (b) above shall be entitled to elect to convert all or any portion, subject to the Minimum Conversion Amount, of its Notes in connection with, and conditioned upon, the consummation of an anticipated Specified Corporate Event, in which case the Conversion Date shall be the date of the consummation of such Specified Corporate Event, and such Notes will be converted into the Common Stock immediately following the consummation of such Specified Corporate Event unless the Holder designates in its Notice of Conversion that such conversion shall occur immediately prior to such Specified Corporate Event, provided that, if the Company notifies Holders or otherwise announces that it will not complete such Specified Corporate Event, such Holder shall be entitled to revoke its Notice of Conversion at any time thereafter. In connection with a Reverse Merger, the Company agrees to provide written notice to the Holders, the Representative and the Conversion Agent of the date on which the Notes shall be convertible into the applicable Reference Property. The Company shall issue or cause to be issued, and deliver to such Holder, or such Holder’s nominee or nominees, the full number of shares of Common Stock to which such Holder shall be entitled, in certificate form (or, at the election of the Holder, in book- entry form) and by updating the stockholder register of the Company, in satisfaction of the Company’s Conversion Obligation or the Change of Control Conversion Obligation, as the case may be. (d) In case any Physical Note shall be surrendered for partial conversion, the Company shall execute and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company, with payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion. (e) If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon conversion, unless the tax is due because the Holder requests any such shares to be issued in a name other than the Holder’s name, in which case the Holder must pay that tax. The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Company receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence. (f) Except as provided in Section 14.05, no adjustment shall be made for dividends on any shares of Common Stock issued upon the conversion of any Note as provided in this Article 14. (g) [Intentionally Omitted]
71 (h) Subject to Section 14.01 and 14.02, upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below. The Company’s settlement of the full Conversion Obligation or Change of Control Conversion Obligation, as applicable, shall be deemed to satisfy in full its obligation to pay the principal amount of the Notes and accrued and unpaid interest, if any, to, but excluding, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but excluding, the relevant Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date and prior to open of business on the corresponding Interest Payment Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes in cash on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for conversion during the period beginning after the close of business on any Regular Record Date and ending at the open of business on the immediately following Interest Payment Date must be accompanied by cash funds equal to the amount of interest payable on the Notes so converted (regardless of whether the converting Holder was the holder of record on such Regular Record Date); provided that no such payment shall be required (1) for Notes surrendered for conversion after the close of business on the Regular Record Date immediately preceding the Maturity Date; (2) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the corresponding Interest Payment Date; (3) if the Company has specified a Change of Control Repurchase Date that is after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the corresponding Interest Payment Date; or (4) to the extent of any Defaulted Amounts, if any Defaulted Amounts exists at the time of conversion with respect to such Note. Therefore, for the avoidance of doubt, all Holders of record on the Regular Record Date immediately preceding the Maturity Date, any Fundamental Change Repurchase Date described in clause (2) or any Change of Control Repurchase Date described in clause (3) of the immediately preceding sentence shall receive the full interest payment due on the Maturity Date or other applicable Interest Payment Date in cash regardless of whether their Notes have been converted or repurchased, as applicable, following such Regular Record Date. (i) The Person in whose name the shares of Common Stock shall be issuable upon a conversion of Notes shall be become the equityholder of record as of the close of business on the relevant Conversion Date. Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion. (j) The Company, through the Paying Agent, shall pay cash in lieu of delivering any fractional share of Common Stock issuable upon a conversion of the Notes in respect of any Conversion Obligation to Holders by wire transfer in immediately available funds to that Holder’s account within the United States as designated in writing by such Holder. (k) Notwithstanding anything to the contrary contained herein, the Company shall not issue to any Holder, and no Holder may acquire, a number of shares of Common Stock upon any conversion of Notes hereunder, to the extent that, upon such conversion, the number of shares of Common Stock then “beneficially owned” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) by such Holder and its Affiliates and any other persons or entities whose beneficial ownership of Common Stock would be aggregated with such Holder’s for purposes of
72 Section 13(d) of the Exchange Act (including shares held by any “group” of which such Holder is a member, but excluding shares beneficially owned by virtue of the ownership of warrants and other securities or rights to acquire securities, in each case, that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) would exceed 9.99% of the total number of shares of Common Stock then issued and outstanding (the “Maximum Percentage”) prior to the 70th day following the date on which the applicable Holder elects to convert Notes into Common Stock (any period during which the Maximum Percentage applies, a “Maximum Percentage Period”); provided, however, that the Maximum Percentage shall only apply to the extent that the Common Stock is deemed to constitute an “equity security” pursuant to Rule 13d-1(i) promulgated under the Exchange Act; provided, further that, other than in connection with a Successor Major Transaction, any Holder shall be permitted to include in its Notice of Conversion delivered in connection with a Change of Control or Fundamental Change that it is electing to make successive conversions, which conversions shall occur (in each case by written notice from such Holder to the Company) from time to time as determined by such Holder at any time prior to the end of the Successive Conversion Period (each such conversion being subject to the Maximum Percentage). Furthermore, and for greater clarity, solely during any Maximum Percentage Period, to the extent that the applicable Holder would otherwise be entitled to receive additional shares of Common Stock that would cause such Holder to cease being in compliance with the Maximum Percentage, such additional shares of Common Stock shall be held in abeyance and not issued until the expiration of such Maximum Percentage Period, at which time such additional shares of Common Stock shall be issued to the applicable Holder (irrespective of whether such latter issuance of shares of Common Stock results in such Holder, either alone or as part of a “group” (within the meaning of Section 13(d)(3) of the Exchange Act), beneficially owning in excess of 9.99% of the then-outstanding shares of Common Stock). For purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and applicable regulations of the Commission, and the percentage held by any Holder shall be determined in a manner consistent with the provisions of Section 13(d) of the Exchange Act. For purposes hereof, in determining the number of outstanding shares of Common Stock, the Holders may rely on the number of outstanding shares of Common Stock as stated in the Company’s most recent quarterly or annual report filed with the Commission, or any current report filed by the Company with the Commission subsequent thereto. Upon the written request of any Holder, the Company shall, within two Trading Days, confirm orally and in writing to such Holders the number of shares of Common Stock then outstanding, and such Holder shall be entitled to rely upon such confirmation for purposes hereof. Neither the Representative nor the Conversion Agent shall have any obligation to monitor whether any conversion pursuant to this Agreement is in compliance with the foregoing provisions or the requirements of the Exchange Act, and shall have no obligation to monitor the shares of Common Stock held or to be held by any Holder. Section 14.04 [Intentionally Omitted]. Section 14.05 Adjustment of Conversion Rate. The Conversion Rate (other than the Change of Control Conversion Rate) shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this Section 14.05, without having to convert their Notes, as if they held a number of
73 shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder. (a) If the Company exclusively issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula: where, CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable; CR’ = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date or Effective Date; OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date (before giving effect to any such dividend, distribution, share split or share combination); and OS’ = the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination. Any adjustment made under this Section 14.05(a) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 14.05(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors of the Company determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. (b) If the Company issues to all or substantially all holders of the Common Stock any rights, options or warrants (other than pursuant to a shareholder rights plan) entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula: where, 0 0 OS OS'CRCR' ×= YOS XOSCRCR' 0 0 0 + + ×=
74 CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such issuance; CR’ = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date; OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date; X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants. Any increase made under this Section 14.05(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance. To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, or if no such rights, options or warrants are exercised prior to their expiration, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex- Dividend Date for such issuance had not occurred. For purposes of this Section 14.05(b), in determining whether any rights, options or warrants entitle the holders of Common Stock to subscribe for or purchase shares of the Common Stock at a price per share that is less than such average of the Last Reported Sale Prices for the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance or such average of the fair market value on each applicable Trading Day of one share of Common Stock over the 10 consecutive Trading Day period ending on, and including the Trading Day immediately preceding the date of announcement for such issuance, as the case may be, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company. (c) If the Company distributes shares of its Capital Stock, evidences of its Indebtedness, other assets or property of the Company or rights, options or warrants to acquire shares of its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 14.05(a) or Section 14.05(b), (ii) dividends or distributions paid exclusively in
75 cash as to which the provisions set for in Section 14.05(d) shall apply, (iii) any dividends or distributions of Reference Property in exchange for Common Stock in connection with any transaction described in Section 14.08, (iv) except as otherwise provided in Section 14.12, rights issued pursuant to a shareholder rights plan adopted by the Company and (v) Spin-Offs as to which the provisions set forth below in this Section 14.05(c) shall apply (any of such shares of Capital Stock, evidences of Indebtedness, other assets or property or rights, options or warrants to acquire shares of Capital Stock or other securities, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula: where, CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; CR’ = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date; SP0 = (i) the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and FMV = the fair market value (as determined in good faith by the Board of Directors of the Company) of the Distributed Property distributed with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution. Any increase made under the portion of this Section 14.05(c) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such distribution had not been declared. Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each $1,000 (or if a PIK Payment has been made, $1.00) principal amount thereof, at the same time and upon the same terms as holders of the Common Stock receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution. If the Board of Directors of the Company determines the “FMV” (as defined above) of any distribution for purposes of this Section 14.05(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution. FMVSP SPCRCR' 0 0 0 − ×=
76 With respect to an adjustment pursuant to this Section 14.05(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate shall be increased based on the following formula: where, CR0 = the Conversion Rate in effect immediately prior to the end of the Valuation Period; CR’ = the Conversion Rate in effect immediately after the end of the Valuation Period; FMV0 = the average of the Last Reported Sale Prices of the shares of Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and MP0 = (i) the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period. The increase to the Conversion Rate under the preceding paragraph shall be determined by the Company on, and shall occur at, the last Trading Day of the Valuation Period provided that in respect of any conversion of Notes with a Conversion Date occurring during the Valuation Period, references in the portion of this Section 14.05(c) related to Spin-Offs with respect to 10 consecutive Trading Days shall be deemed to be replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, but excluding, the Conversion Date in determining the Conversion Rate. If such Spin-Off does not occur, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such dividend distribution had not been declared, effective as of the date on which the Board of Directors of the Company determines not to consummate such Spin-Off. For purposes of this Section 14.05(c) (and subject in all respect to Section 14.12), rights, options or warrants distributed by the Company to all holders of the Common Stock entitling them to subscribe for or purchase shares of the Company’s Capital Stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this Section 14.05(c) (and no adjustment to the Conversion Rate under this Section 14.05(c) will 0 00 0 MP MPFMVCRCR' + ×=
77 be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.05(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the Issue Date, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of Indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Ex-Dividend Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.05(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated (or deemed to have expired or been terminated pursuant to the immediately preceding sentence) without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued (to the extent any adjustment to the Conversion Rate was made in connection with such issuance). For purposes of Section 14.05(a), Section 14.05(b) and this Section 14.05(c), if any dividend or distribution to which this Section 14.05(c) is applicable also includes one or both of: (A) a dividend or distribution of shares of Common Stock to which Section 14.05(a) is applicable (the “Clause A Distribution”); or (B) a dividend or distribution of rights, options or warrants to which Section 14.05(b) is applicable (the “Clause B Distribution”), then, in either case, (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.05(c) is applicable (the “Clause C Distribution”) and any Conversion Rate adjustment required by this Section 14.05(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.05(a) and Section 14.05(b) with respect thereto shall then be made, except that, if determined by the Company (I) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the close of business on such Record Date or open of
78 business on such Ex-Dividend Date or Effective Date” within the meaning of Section 14.05(a) or “outstanding immediately prior to the close of business on such Ex-Dividend Date” within the meaning of Section 14.05(b). (d) If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate shall be adjusted based on the following formula: where, CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution; CR’ = the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution; SP0 = (i) the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and C = the amount in cash per share the Company distributes to all or substantially all holders of the Common Stock. Any increase made under this Section 14.05(d) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors of the Company determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1,000 (or if a PIK Payment has been made, $1.00) principal amount of Notes, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution. (e) [Intentionally Omitted] (f) [Intentionally Omitted] (g) [Intentionally Omitted] (h) Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities. CSP SP CRCR' 0 0 0 − ×=
79 (i) In addition to those adjustments required by clauses (a), (b), (c), and (d), of this Section 14.05, and to the extent permitted by applicable law and subject to the applicable listing standards of the Relevant Stock Exchange on which the Common Stock is then listed or admitted for trading, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors of the Company determines that such increase would be in the Company’s best interest. In addition, to the extent permitted by applicable law and subject to the applicable listing standards of the Relevant Stock Exchange on which the Common Stock is then listed or admitted for trading, the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event. Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Company shall deliver to the Holder of each Note a notice of the increase at least 15 calendar days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect. (j) Notwithstanding anything to the contrary in this Article 14, the Conversion Rate shall not be adjusted pursuant to this Article 14: (i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan; (ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Company’s Subsidiaries; (iii) except as set forth in Section 14.05(b) or Section 14.05(c), upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection; (iv) solely for a change in the par value (or lack of par value) of the Common Stock; (v) upon the repurchase of any shares of the Common Stock pursuant to an open-market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer of the kind described in Section 4.20; or (vi) for accrued and unpaid interest, if any. All calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000th) of a share. (k) Notwithstanding anything in this Article 14 to the contrary, the Company shall not be required to adjust the Conversion Rate unless the adjustment would result in a change
80 of at least 1% in the then effective Conversion Rate. However, the Company shall carry forward any adjustments to the Conversion Rate that are less than 1% of the Conversion Rate and make all such carried-forward adjustments (i) when the cumulative net effect of all adjustments not yet made will result in a change of at least 1% of the Conversion Rate or (ii) regardless of whether the adjustment (or such cumulative net effect) is less than 1%, (a) on the Conversion Date for any Notes or (b) upon the occurrence of any Fundamental Change. (l) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Representative (and the Conversion Agent if not the Representative) an Officer’s Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until the Representative shall have received such Officer’s Certificate, the Representative shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall deliver such notice of such adjustment of the Conversion Rate to each Holder. Failure to deliver such notice shall not affect the legality or validity of any such adjustment. (m) For purposes of this Section 14.05, the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares of Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. Section 14.06 Adjustments of Prices. Whenever any provision of this Agreement requires the Company to calculate the Last Reported Sale Prices or the Transaction Price over a span of multiple days, the Board of Directors of the Company shall make appropriate adjustments (to the extent no corresponding adjustment is otherwise made pursuant to Section 14.05) to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date, or expiration date, as the case may be, of the event occurs, at any time during the period when the Last Reported Sale Prices or the Transaction Price are to be calculated. Section 14.07 Shares to Be Reserved. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock, and shall at all times (including immediately following any event that causes an adjustment to the Conversion Rate hereunder) maintain a sufficient number of authorized but unissued shares of Common Stock, to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of shares, all such Notes would be converted by a single Holder, and without giving effect to any limitation that may be imposed by the Maximum Percentage). Section 14.08 Effect of Recapitalizations, Reclassifications and Changes of the Common Stock. (a) In the case of:
81 (i) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination or a change of par value or to no par value), (ii) any consolidation, merger, combination or similar transaction involving the Company, (iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety, or (iv) any statutory share exchange, in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (each, a “Specified Corporate Event”), then the Company, the Successor Company (if applicable) and the acquiring Person (including, if the Specified Corporate Event is a Reverse Merger, the Acquiring Person), as applicable, shall execute, at or prior to the effective time of the Specified Corporate Event, with the Representative a supplemental agreement permitted under Section 10.01(l) without the consent of the Holders (which, if applicable, shall also comply with the requirements of Section 11.03) providing that, at and after the effective time of such Specified Corporate Event, the Holders’ right to convert Notes at the Conversion Rate into Common Stock shall (i) in the case of a Specified Corporate Event (other than the Specified Transaction), be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Specified Corporate Event would have owned or been entitled to receive upon the occurrence of such Specified Corporate Event (for the avoidance of doubt, without giving effect to Section 14.03(k)) or (ii) in the case of a Specified Corporate Event that is the Specified Transaction, into Common Stock of the Acquiring Person equal to the Conversion Rate set forth in clause (ii)(B)(2) of the definition thereof (such property, the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive). If the Specified Corporate Event (other than the Specified Transaction) causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of equityholder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of Common Stock, and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one share of Common Stock. If the holders of the Common Stock receive only cash in such Specified Corporate Event, then for all conversions for which the relevant Conversion Date occurs after the Effective Date of such Specified Corporate Event (A) the consideration due upon conversion of each $1,000 principal amount of Notes (or if a PIK Payment has been made, the consideration due upon conversion of each $1.00 principal amount of Notes) shall be solely cash in an amount equal to (1) if no PIK Payment has been made, the Conversion Rate in effect on the Conversion Date (which will be the applicable Change of Control Conversion Rate if such Specified Corporate Event is also a Change
82 of Control) or (2) if a PIK Payment has been made, the quotient of (a) the Conversion Rate in effect on the Conversion Date (which will be the applicable Change of Control Conversion Rate if such Specified Corporate Event is also a Change of Control) (any such Change of Control Conversion Rate described in clause (1) or (2) above, the “Change of Control Conversion Rate”) and (b) 1,000, in each case, multiplied by the price paid per share of Common Stock in such Specified Corporate Event and (B) the Company shall satisfy the Conversion Obligation by paying such cash amount to converting Holders on the second Business Day immediately following the relevant Conversion Date. The Company shall notify Holders, the Representative and the Conversion Agent (if other than the Representative) of such weighted average as soon as practicable after such determination is made. If the Reference Property in respect of any such Specified Corporate Event includes Capital Stock, such supplemental agreement described in the second immediately preceding paragraph providing that the Notes will be convertible into Reference Property shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as practicable to the adjustments provided for in this Article 14. If, in the case of any Specified Corporate Event, the Reference Property includes shares of stock, securities or other property or assets (other than cash and/or Cash Equivalents) of a Person that is a party to the transaction other than the Company or the Successor Company (including the Acquiring Person in the case of a Reverse Merger), as the case may be, in such Specified Corporate Event, then such supplemental agreement shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing, including the provisions providing for the conversion rights set forth in this Article 14, the redemption rights set forth in Article 13, and the repurchase rights set forth in Article 15. (b) When the Company executes a supplemental agreement pursuant to subsection (a) of this Section 14.08, the Company shall promptly file with the Representative an Officer’s Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a unit of Reference Property after any such Specified Corporate Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with and an Opinion of Counsel (to the extent requested by Representative) stating that all conditions precedent to the execution and delivery of such supplemental agreement have been complied with, and shall promptly deliver notice thereof to all Holders. The Company shall cause notice of the execution of such supplemental agreement to be delivered to each Holder within 20 calendar days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental agreement. (c) The Company shall not become a party to any Specified Corporate Event unless its terms are consistent with this Section 14.08. None of the foregoing provisions shall affect the right of a Holder to convert its Notes into shares of Common Stock, as set forth in Section 14.01, Section 14.02 and Section 14.03, prior to the Effective Date of such Specified Corporate Event. (d) The above provisions of this Section 14.08 shall similarly apply to successive Specified Corporate Events.
83 Section 14.09 Certain Covenants. (a) The Company covenants that all shares of Common Stock issued upon conversion of Notes will be fully paid and non-assessable by the Company and free from all taxes, Liens and charges with respect to the issue thereof. (b) The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any Governmental Authority under any federal or state law before such shares of Common Stock may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be. (c) The Company further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system, the Company shall list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes. (d) Each Holder hereby agrees that it will assess in advance whether its acquisition, sale, or transfer of any voting shares of the Company would be subject to advance reporting and waiting period requirements under any Antitrust Law and if so it will not acquire, sell, or transfer any voting shares of the Company until the required filings have been made under the Antitrust Laws and the required waiting period expirations or terminations and the required approvals under the Antitrust Laws have been obtained. Section 14.10 [Intentionally Omitted]. Section 14.11 Notice to Holders Prior to Certain Actions. In case of any: (a) action by the Company or one of its Subsidiaries that would require an adjustment in the Conversion Rate pursuant to Section 14.05 or Section 14.12; (b) Specified Corporate Event; or (c) voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in each case (unless notice of such event is otherwise required pursuant to another provision of this Agreement) and to the extent applicable, the Company shall cause to be filed with the Representative and the Conversion Agent (if other than the Representative) and to be delivered to each Holder at its address appearing on the Note Register, as promptly as practicable but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action by the Company or, if a record is not to be taken, the date as of which the holders of Common Stock of record are to be determined for the purposes of such action by the Company or (ii) the date on which such Specified Corporate Event, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Specified Corporate Event, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein,
84 shall not affect the legality or validity of such action by the Company or one of its Subsidiaries, Specified Corporate Event, dissolution, liquidation or winding-up. Section 14.12 Shareholder Rights Plans. If the Company has a shareholder rights plan in effect upon conversion of the Notes, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such shareholder rights plan, as the same may be amended from time to time. However, if, prior to any conversion of Notes, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable shareholder rights plan, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Common Stock Distributed Property as provided in Section 14.05(c), subject to readjustment in the event of the expiration, termination or redemption of such rights. ARTICLE 15 REPURCHASE OF NOTES AT OPTION OF HOLDERS Section 15.01 Reserved. Section 15.02 Repurchase at Option of Holders Upon a Fundamental Change. (a) If a Fundamental Change occurs at any time prior to the Maturity Date, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion of the principal amount thereof that is equal to $1,000 (or if a PIK Payment has been made, $1.00) or an integral multiple in excess thereof, on the date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20 Business Days or more than 35 Business Days following the date of the Fundamental Change Company Notice, at a repurchase price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be paid in cash in an amount equal to 100% of the principal amount of Notes to be repurchased pursuant to this Section 15.02; provided, that each Holder’s right under this Section 15.02 shall be subject, for so long as the Magnetar Obligations are outstanding, to the restrictions on the Company’s repurchase contained in the Magnetar Note Issuance Agreement. The Fundamental Change Repurchase Date shall be subject to postponement, without penalty to the Company, in order to allow the Company to comply with applicable law as a result of any changes to such applicable law occurring after the date hereof. (b) On or before the 20th calendar day after the occurrence of the Effective Date of a Fundamental Change, the Company shall provide to all Holders of Notes and the Representative and the Paying Agent (in the case of a Paying Agent other than the Company) a notice (the “Fundamental Change Company Notice”) of the occurrence of the Fundamental
85 Change and of the repurchase right at the option of the Holders arising as a result thereof. Such notice shall be by first class mail. Each Fundamental Change Company Notice shall specify: (i) the events causing the Fundamental Change; (ii) the date of the Fundamental Change; (iii) the last date on which a Holder may exercise the repurchase right pursuant to this Article 15; (iv) the Fundamental Change Repurchase Price; (v) the Fundamental Change Repurchase Date; (vi) the name and address of the Paying Agent and the Conversion Agent, if applicable; (vii) if applicable, the Conversion Rate and any adjustments to the Conversion Rate; (viii) that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder validly withdraws the Fundamental Change Repurchase Notice and any Change of Control Repurchase Notice, in accordance with the terms of this Agreement; and (ix) the procedures that Holders must follow to require the Company to repurchase their Notes. No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.02. Section 15.03 Repurchase at Option of Holders Upon a Change of Control. (a) If a Change of Control (other than the Specified Transaction) occurs, each Holder shall have the right, at such Holder’s option pursuant to the procedures provided in Section 15.07, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion of the principal amount thereof that is equal to $1,000 (or if a PIK Payment has been made, $1.00) or an integral multiple in excess thereof, on the date (the “Change of Control Repurchase Date”) of the effectiveness of such Change of Control at a repurchase price in cash in an amount equal to 110% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Change of Control Repurchase Date (the “Change of Control Repurchase Price”), unless the Change of Control Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Change of Control Repurchase Price shall be paid in cash in an amount equal to 110% of the principal amount of Notes to be repurchased pursuant to this Section 15.03; provided, that each Holder’s right under this Section 15.03 shall be subject, for so
86 long as the Magnetar Obligations are outstanding, to the restrictions on the Company’s repurchase contained in the Magnetar Note Issuance Agreement. The Change of Control Repurchase Date shall be subject to postponement, without penalty to the Company, in order to allow the Company to comply with applicable law as a result of any changes to such applicable law occurring after the date hereof. (b) Not less than ten nor more than 30 calendar days prior to the expected effectiveness of a Change of Control, the Company shall provide to all Holders of Notes, the Representative and the Paying Agent (in the case of a Paying Agent other than the Company) a notice (the “Change of Control Company Notice”) of the occurrence of the Change of Control and of the repurchase right at the option of the Holders arising as a result thereof. Such notice shall be by first class mail. Each Change of Control Company Notice shall specify: (i) the events causing the Change of Control; (ii) the expected date of the Change of Control; (iii) the last date on which a Holder may exercise the repurchase right pursuant to this Article 15; (iv) the Change of Control Repurchase Price; (v) the expected Change of Control Repurchase Date; (vi) the name and address of the Paying Agent and the Conversion Agent, if applicable; (vii) the Change of Control Conversion Rate and the date until which Holders may convert their Notes pursuant to Section 14.01; (viii) the Transaction Price Notice; (ix) that the Notes with respect to which a Change of Control Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Change of Control Repurchase Notice in accordance with the terms of this Agreement; and (x) the procedures that Holders must follow to require the Company to repurchase their Notes. No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.03. Section 15.04 Withdrawal of Fundamental Change Repurchase Notice or Change of Control Repurchase Notice. Holders of Physical Notes may withdraw (in whole or in part) a Fundamental Change Repurchase Notice or Change of Control Repurchase Notice by means of a written notice of withdrawal delivered to the Paying Agent in accordance with this Section 15.04 at any time prior to the close of business on the Business Day immediately preceding the
87 Fundamental Change Repurchase Expiration Time or prior to the close of business on the third calendar day immediately preceding the expected Change of Control Repurchase Expiration Time, as applicable, specifying: (i) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted, (ii) the certificate number(s) of the Note(s) in respect of which such notice of withdrawal is being submitted, and (iii) the principal amount, if any, of such Note that remains subject to the original Fundamental Change Repurchase Notice or the Change of Control Repurchase Notice, as the case may be, which portion must be in principal amounts of $1,000 (or if a PIK Payment has been made, $1.00) or an integral multiple in excess thereof; Section 15.05 Deposit of Fundamental Change Repurchase Price and Change of Control Repurchase Price. (a) The Company will deposit with the Paying Agent (or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 4.04(a)) on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change Repurchase Price or Change of Control Repurchase Price, as applicable. Payment for Notes surrendered for repurchase (and not validly withdrawn in accordance with Section 15.04) will be made on the later of (i) the Fundamental Change Repurchase Date (provided the Holder has satisfied the conditions in Section 15.02) or the Change of Control Repurchase Date (provided the Holder has satisfied the conditions in Section 15.03), as applicable, and (ii) the delivery of such Notes to the Representative (or other Paying Agent appointed by the Company) by the Holder thereof or the time of book- entry transfer, in the manner required by Section 15.07 by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register. (b) If by 11:00 a.m. New York City time, on the Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, the Paying Agent holds money sufficient to make payment on all the Notes or portions thereof that are to be repurchased on such Fundamental Change Repurchase Date or such Change of Control Repurchase Date, as applicable, then, with respect to the Notes that have been properly surrendered for repurchase and not validly withdrawn in accordance with Section 15.04, (i) such Notes will cease to be outstanding, (ii) interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Paying Agent) and (iii) all other rights of the Holders of such Notes will terminate (other than the right to receive the Fundamental Change Repurchase Price and the Change of Control Repurchase Price (and default interest specified in this Agreement on overdue amounts, if any), as the case may be, and, if the Fundamental Change Repurchase Date or Change of Control Repurchase Date falls after a Regular Record Date but on or prior to the related Interest Payment Date, the right of the Holder of record on such Regular Record Date to receive the related interest payment).
88 (c) Upon surrender of a Physical Note that is to be repurchased in part pursuant to Section 15.02 or Section 15.03, the Company shall execute and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unrepurchased portion of the Note surrendered. Section 15.06 Covenant to Comply with Applicable Laws Upon Repurchase of Notes. In connection with any repurchase offer pursuant to a Fundamental Change Repurchase Notice or Change of Control Repurchase Notice, as applicable, the Company will, if required: (a) comply with any tender offer rules under the Exchange Act that may then be applicable, including, without limitation, Rule 13e-4 and Rule 14e-1, if applicable; (b) file a Schedule TO or any other required schedule under the Exchange Act; and (c) otherwise comply with all federal and state securities laws in connection with any offer by the Company to repurchase the Notes; in each case, so as to permit the rights and obligations under this Article 15 to be exercised in the time and in the manner specified in this Article 15; provided that to the extent that the provisions of any securities laws or regulations conflict with the provisions of this Agreement relating to the Company’s obligations to purchase the Notes upon a Fundamental Change or upon a Change of Control, the Company shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such provisions of this Agreement by virtue of such conflict. Section 15.07 Repurchase Procedures. (a) Repurchases of Notes under Sections 15.02 and 15.03, as applicable, shall be made, at the option of the Holder thereof, upon: (i) delivery to the Paying Agent by a Holder (x) of a duly completed notice substantially in the form of the Form of Fundamental Change Repurchase Notice (the “Fundamental Change Repurchase Notice”) or (y) no later than the date that is at least three calendar days prior to the expected effectiveness of a Change of Control, of a duly completed notice substantially in the form of the Form of Change of Control Repurchase Notice (the “Change of Control Repurchase Notice”), on or before the close of business on the Business Day immediately preceding (x) with respect to a repurchase pursuant to Section 15.02, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Expiration Time”) or (y) with respect to a repurchase pursuant to Section 15.03, the Change of Control Repurchase Date (the “Change of Control Repurchase Expiration Time”), as applicable; and (ii) delivery of the Notes, with respect to a repurchase pursuant to Section 15.02, prior to the Fundamental Change Repurchase Expiration Time or, with respect to a repurchase pursuant to Section 15.03, prior to the Change of Control Repurchase Expiration Time, as applicable, by physical delivery to the Paying Agent at any time after delivery of the Fundamental Change Repurchase Notice or the Change of Control Repurchase Notice, as the case may be, (together with all necessary endorsements for transfer).
89 (b) The Fundamental Change Repurchase Notice or the Change of Control Repurchase Notice, as applicable, in respect of any Notes to be repurchased shall state: (i) the certificate numbers of the Notes to be delivered for repurchase; (ii) the portion of the principal amount of Notes to be repurchased, which must be $1,000 (or if a PIK Payment has been made, $1.00) or an integral multiple in excess thereof; and (iii) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Agreement; Notwithstanding anything herein to the contrary, any Holder electing to require the Company to repurchase for cash all of such Holder’s Notes, or any portion of the principal amount thereof, as contemplated by this Article 15, shall have the right to withdraw, in whole or in part, such notice at any time prior to, with respect to a repurchase pursuant to Section 15.02, the close of business on the Business Day immediately preceding Fundamental Change Repurchase Expiration Time or, with respect to a purchase pursuant to Section 15.03, the close of business on the third calendar day immediately preceding the Change of Control Repurchase Expiration Time, by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 15.04 hereof. The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice, Change of Control Repurchase Notice or notice of withdrawal thereof. Notwithstanding the foregoing, no Notes may be repurchased by the Company on any date at the option of the Holders upon a Fundamental Change or Change of Control, as applicable, if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price or Change of Control Repurchase Price, as the case may be, with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price or Change of Control Repurchase Price, as the case may be, with respect to such Notes), and, upon such return or cancellation, as the case may be, the Fundamental Change Repurchase Notice or Change of Control Repurchase Price with respect thereto shall be deemed to have been withdrawn. ARTICLE 16 GUARANTEE Section 16.01 Note Guarantee. Subject to the limitations set forth in Section 16.05, the Guarantors hereby, jointly and severally unconditionally and irrevocably Guarantee, as primary obligor and not merely as surety, to each Secured Party and their respective successors and assigns, irrespective of the validity and enforceability of this Agreement, the Notes or the obligations of the Company hereunder or thereunder (including all of the Company’s Agreement Obligations), that: (a) the principal of and premium, if any, and interest, if any, on the Notes (including interest
90 accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceedings), shall be promptly paid in full when due, whether at Stated Maturity, by acceleration, required purchase, redemption or repurchase or otherwise, and interest on the overdue principal of and interest on premium, if any, and interest, if any, if lawful, and all other obligations of the Company to the Secured Parties hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration, required purchase, redemption or repurchase or otherwise (the “Note Guarantee”). Failing payment when due, subject to any applicable grace period, of any amount so Guaranteed or any performance so Guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, legality, regularity or enforceability of the Notes or this Agreement, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company or any Guarantor, if any, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantors hereby waive, to the fullest extent permitted by applicable law, diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or another Guarantor, protest, notice and all demands whatsoever and covenant that the Note Guarantee shall not be discharged except by payment in full (or, with respect to the Notes, conversion in full) of the Notes and the other Agreement Obligations in accordance with this Agreement and the other Agreement Documents. If any Holder is required by any court or otherwise to return to the Company or any of the Guarantors, or any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law or other similar official acting in relation to either the Company or any of the Guarantors, any amount paid either to such Holder, the Note Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Secured Parties in respect of any obligations Guaranteed hereby until payment in full of all obligations Guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders, on the other hand, (x) the maturity of the obligations Guaranteed hereby may be accelerated as provided in Article 6 for the purposes of the Note Guarantees, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations Guaranteed hereby and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of the Note Guarantees. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impact the rights of the Holders under the Note Guarantees. Section 16.02 Execution and Delivery of Note Guarantee. Each Guarantor hereby agrees that its execution and delivery of any supplemental agreement substantially in the form of Exhibit B shall evidence its Note Guarantee set forth in Section 16.01 without the need for notation on the Notes.
91 Section 16.03 Guarantors may Consolidate, etc., on Certain Terms. Except as otherwise provided in Section 16.04, no Guarantor (other than a Guarantor whose Note Guarantee is to be released in accordance with Section 16.04) may sell, convey, assign, transfer, lease or otherwise Dispose of all or substantially all of its assets, in one transaction or any series of transactions to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person unless: (a) (i) the resulting, surviving or transferee Person is the Guarantor; or (ii) if not the Guarantor, such resulting, surviving or transferee Person (the “Successor Guarantor”) shall be a corporation or other legal entity organized and existing under the laws of the United States of America, any State thereof, the District of Columbia or any Designated Country; (b) in any such transaction where the Guarantor is not the resulting, surviving or transferee Person, the Successor Guarantor unconditionally assumes all of the Guarantor’s obligations under its Note Guarantee and this Agreement pursuant to a supplemental agreement in a form reasonably satisfactory to the Representative; (c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Agreement; and (d) in any transaction where the Guarantor is not the surviving or transferee Person, the Guarantor shall have delivered to the Representative and Collateral Agent an Officer’s Certificate and Opinion of Counsel (to the extent requested by Representative or Collateral Agent), each stating that the consolidation, merger, sale, conveyance, assignment, transfer, lease or other disposition and such supplemental agreement complies with this Agreement and all conditions precedent provided for in this Agreement relating to such transaction have been complied with. For purposes of this Section 16.03, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Guarantor to another Person that is not the Guarantor or a Subsidiary of the Guarantor, which properties and assets, if held by the Guarantor instead of such Subsidiaries, would constitute all or substantially all of the consolidated properties and assets of the Guarantor and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease by the Guarantor of all or substantially all of its consolidated properties and assets to another Person. In case of any such consolidation, merger, sale or conveyance and, if required by this Agreement, upon the assumption by the Successor Guarantor, by supplemental agreement, executed and delivered to the Representative and satisfactory in form to the Representative, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of this Agreement to be performed by the Guarantor, such Successor Guarantor will succeed to and, except in the case of a lease of all or substantially all of the consolidated properties or assets of the Guarantor and its Subsidiaries, taken as a whole, shall be substituted for the Guarantor, with the same effect as if it had been named herein as the Guarantor, and the Guarantor (except in the case of a lease of all or substantially all of the consolidated properties or assets of the Guarantor and its
92 Subsidiaries, taken as a whole) shall be discharged from the obligations of the Guarantor under the Notes and this Agreement. The Note Guarantee so evidenced will in all respects have the same legal rank and benefit under this Agreement as the Note Guarantee theretofore executed in accordance with the terms of this Agreement as though such Note Guarantee had been executed at the Issue Date. Section 16.04 Release of Note Guarantees. In the event of: (a) the satisfaction and discharge of this Agreement in accordance with Article 3; (b) the liquidation or dissolution of any Guarantor permitted by this Agreement; or (c) a consolidation, merger, sale or conveyance covered by the first paragraph of Section 16.03 where the Guarantor is not the resulting, surviving or transferee Person, such Guarantor shall be automatically and unconditionally released and relieved of any obligations under its Note Guarantee and the Agreement Documents. Upon delivery by the Company to the Representative and the Collateral Agent of an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Representative or Collateral Agent) to the effect that such satisfaction and discharge or liquidation or dissolution (in each case, to the extent applicable) permitted by this Agreement has occurred, the Representative or the Collateral Agent shall execute any documents reasonably requested by the Company (at the Company’s expense) in order to evidence the release of any Guarantor from its obligations under its Note Guarantee and the Agreement Documents. Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of, premium, if any, and interest, if any, on the Notes and for the other obligations of any Guarantor under the Agreement Documents as provided in this Article 16. Section 16.05 Limitation on Guarantor Liability. For purposes hereof, the Guarantor’s liability shall be that amount from time to time equal to the aggregate liability of the Guarantor under its Note Guarantee, but shall be limited to the lesser of (a) the aggregate amount of the Agreement Obligations of the Company and (b) the amount, if any, which would not have (A) rendered the Guarantor “insolvent” (as such term is defined in the federal Bankruptcy Law and in the Debtor and Creditor Law of the State of New York), (B) left it with unreasonably small capital at the time its Note Guarantee was entered into, or at the time the Guarantor incurred liability thereunder, after giving effect to the incurrence of existing Indebtedness immediately prior to such time or (C) left the Guarantor with debts beyond the Guarantor’s ability to pay as such debts mature; provided that, it shall be a presumption in any lawsuit or other proceeding in which the Guarantor is a party that the amount Guaranteed pursuant to its Note Guarantee is the amount set forth in subsection (a) above unless any creditor, or representative of creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit or other proceeding that the aggregate liability of the Guarantor is limited to the amount set forth in subsection (b) above.
93 Section 16.06 “Representative” to Include Paying Agent. In case at any time any Paying Agent other than the Company shall have been appointed by the Company and be then acting hereunder, the term “Representative” as used in this Article 16 shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 16 in place of the Company. ARTICLE 17 COLLATERAL AND SECURITY Section 17.01 Security Documents. (a) Subject to Sections 17.01(b) and 17.12 below, the due and punctual payment of the principal of, premium, if any, and interest on the Notes and amounts due hereunder and under the Note Guarantees when and as the same shall be due and payable, subject to any applicable grace period, whether on an interest payment date, by acceleration, purchase, repurchase or otherwise, and interest on the overdue principal of, premium, if any, and interest on the Notes and the performance of all other Agreement Obligations shall be secured by the Security Documents. The Security Documents shall provide for the grant by the Company and the Guarantors party thereto to the Collateral Agent of security interests in the Collateral. (b) The Company shall, and shall cause each of the Guarantors on the date hereof (or after the date hereof, on the date such Person becomes a Guarantor or as soon as possible thereafter, but in any event in accordance with the timeframes set forth in Section 4.19) to enter into the applicable Security Document(s) and such additional assignments, agreements, powers of attorney and instruments, and take such other actions, in each case as are necessary or reasonably requested by the Representative or the Collateral Agent to grant the Collateral Agent, on behalf of the Secured Parties, a second priority Lien on the Collateral. Section 17.02 Recording and Opinions. The Company shall, and shall cause each of the Guarantors to, at its sole cost and expense, take or cause to be taken such actions as may be required by the Security Documents, to perfect, maintain (with the priority required under the Security Documents), preserve and protect the valid and enforceable, perfected (except as expressly provided herein or therein) security interests in and on all the Collateral granted by the Security Documents in favor of the Collateral Agent for the benefit of the Secured Parties as security for the Agreement Obligations, superior to and prior to the rights of all third Persons, and subject to no other Liens (other than Permitted Liens). The Company shall from time to time promptly pay all financing and continuation statement recording and/or filing fees, charges and recording and similar taxes relating to this Agreement, the Security Documents and the other Agreement Documents and any amendments hereto or thereto and any other instruments of further assurance required to perfect and maintain the security interests in and on all of the Collateral granted by the Security Documents, or as reasonably requested by the Collateral Agent or the Representative. Notwithstanding the foregoing obligation of each of the Company and the Guarantors, each of the Company and the Guarantors hereby authorizes the filing of financing statements, continuation statements and other instruments pursuant to the UCC by the Collateral Agent. Section 17.03 Release of Collateral.
94 (a) The Liens of the Collateral Agent created by the Security Documents shall not at any time be released on all or any portion of the Collateral from the Liens created by the Security Documents unless such release is in accordance with the provisions of this Agreement, the applicable Security Documents and the other Agreement Documents. (b) The release of any Collateral from the Liens created by the Security Documents shall not be deemed to impair the security under this Agreement in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to this Agreement and the Security Documents. The Company and the Guarantors shall not be required to comply with Section 314(d) of the Trust Indenture Act in connection with any release of Collateral. Section 17.04 Specified Releases of Collateral. (a) Collateral shall be released from the Liens created by the Security Documents at any time or from time to time in accordance with the provisions of the Security Documents and this Agreement. The Liens securing the Collateral shall be automatically released without the need for further action by any Person under any one or more of the following circumstances: (i) in part, as to any property that is sold, transferred, disbursed or otherwise disposed of by the Company or any Guarantor (other than to the Company, any Guarantor, any Subsidiary of the Company or any Affiliate of the foregoing) in a transaction expressly permitted by this Agreement, the Security Documents and the other Agreement Documents at the time of such sale, transfer, disbursement or disposition; (ii) in whole or in part, with the consent of the Holders of a Minimum Principal Amount of Notes in accordance with the provisions in Section 10.02; (iii) in whole with respect to the Collateral of any Guarantor, upon the release of the Note Guarantee of such Guarantor in accordance with this Agreement; (iv) in whole or in part, as applicable, as to all or any portion of the Collateral which has been taken by eminent domain, condemnation or similar circumstances; and (v) in part, in accordance with the applicable provisions of the Security Documents and this Agreement. (b) Upon a release in accordance with Section 17.04(a) and the request of the Company that a specified release of Collateral is requested and delivery of an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Collateral Agent) confirming the satisfaction of the requirements under this Agreement and the Security Documents, as applicable, have been met, and any instruments of termination, satisfaction or release prepared by the Company or the Guarantors, as the case may be, the Collateral Agent, with the consent of the Representative and at the expense of the Company or the Guarantors, shall execute, deliver or acknowledge such instruments or releases (in form and substance reasonably satisfactory to the Collateral Agent and the Representative) reasonably requested by the Company in order to evidence the release from the Liens created by the Security Documents of any Collateral permitted to be released pursuant
95 to this Agreement or the Security Documents, any such release to be made without any recourse, representation or warranty of the Collateral Agent. Section 17.05 Release upon Satisfaction and Discharge or Amendment. (a) The Liens on all Collateral that secure the Notes and the Note Guarantees shall be automatically terminated and released without the need for further action by any Person: (i) upon the full and final payment and performance of the Company’s and the Guarantors’ respective Obligations under this Agreement, the Notes, the Note Guarantees and the other Agreement Documents (other than contingent indemnification obligations that have yet to accrue); (ii) upon satisfaction and discharge of this Agreement as described under Section 3.01; or (iii) with the prior written consent of the Holders of a Minimum Principal Amount of Notes. (b) Upon a release in accordance with Section 17.05(a), and upon the request of the Company and delivery of an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Collateral Agent) confirming the satisfaction of the requirements under this Agreement and the Security Documents, as applicable, have been met, any instruments of termination, satisfaction or release prepared by the Company or the Guarantors, as the case may be, the Collateral Agent, without the consent of any Holder and at the expense of the Company or the Guarantors, shall execute, deliver or acknowledge such instruments or releases to evidence the release from the Liens created by the Security Documents, any such release to be made without any recourse, representation or warranty of the Collateral Agent and to be in form and substance reasonably acceptable to the Collateral Agent and the Representative. Section 17.06 Form and Sufficiency of Release and Subordination. In the event that the Company or any Guarantor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise Dispose of any portion of the Collateral that may be sold, exchanged or otherwise disposed of by the Company or such Guarantor to any Person other than the Company, a Guarantor, a Subsidiary or any Affiliate thereof in compliance with this Agreement and the Security Documents, and the Company or such Guarantor requests, pursuant to an Officer’s Certificate and an Opinion of Counsel (to the extent requested by Collateral Agent) confirming that a sale, exchange or disposition of property that constitutes Collateral is being made in compliance with this Agreement and the Security Documents and that the conditions to the release of such Collateral (if any) have been met, that (a) the Collateral Agent shall authorize the filing of a UCC termination statement, written disclaimer, release, quit-claim or other applicable release document of any interest in such property under this Agreement and the Security Documents, or, (b) to the extent applicable to such Collateral, take all action that is reasonably requested by the Company in writing (in each case at the expense of the Company) to promptly release and reconvey to the Company or such Guarantor, without recourse, such Collateral or promptly deliver such Collateral in its possession to the Company or such Guarantor, the Collateral Agent, as applicable, shall execute, acknowledge (without any recourse, representation and warranty) and deliver to the
96 Company or such Guarantor (in the form prepared by the Company at the Company’s sole expense) such an instrument (in form and substance reasonably satisfactory to the Collateral Agent and the Representative) promptly or take such other action so requested after satisfaction of the conditions set forth herein for delivery of any such release. Section 17.07 Purchaser Protected. No purchaser or grantee of any property or rights purported to have been released from the Lien of this Agreement or of the Security Documents shall be bound to ascertain the authority of the Collateral Agent, as applicable, to execute the release or to inquire as to the existence of any conditions herein prescribed for the exercise of such authority; nor shall any purchaser or grantee of any property or rights permitted by this Agreement to be sold or otherwise disposed of by the Company be under any obligation to ascertain or inquire into the authority of the Company to make such sale or other disposition. Section 17.08 Authorization of Actions to be Taken by the Collateral Agent Under the Security Documents. (a) Subject to the provisions of the applicable Security Documents, each Holder, by acceptance of the Notes, appoints the Representative as Collateral Agent and consents to the terms of and agrees that the Collateral Agent shall, and the Collateral Agent is hereby authorized and directed to, execute and deliver the Security Documents to which it is a party, all agreements, documents and instruments incidental thereto, binding the Holders to the terms thereof, and act in accordance with the terms thereof. For the avoidance of doubt, the Collateral Agent shall have no discretion under this Agreement or the Security Documents and whenever reference is made in this Agreement to any action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression or satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Collateral Agent, it is understood in all cases that the Collateral Agent shall not be required to make or give and shall be fully protected in not making or giving any determination, consent, approval, request or direction without the written direction of the Holders of at least the Minimum Principal Amount of the then outstanding Notes, the Representative or the Company, as applicable. This provision is intended solely for the benefit of the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto. Further, the Collateral Agent shall be under no obligation to exercise any of its rights and powers under this Agreement at the request or direction of any Holders, unless such Holder shall have offered to the Collateral Agent security and indemnity satisfactory to the Collateral Agent against any loss, cost, liability or expense which might be incurred by the Collateral Agent in compliance with such direction or request and then only to the extent required by the terms of this Agreement. (b) No provision of the Agreement Documents shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or to take or omit to take any action hereunder or thereunder or take any action at the request or direction of Holders or the Representative if it shall have reasonable grounds for believing that repayment of such funds is not assured to it. Notwithstanding anything to the contrary contained in the Agreement Documents, in the event the
97 Collateral Agent is entitled or required to commence an action to foreclose or otherwise exercise its remedies to acquire control or possession of the Collateral, the Collateral Agent shall not be required to commence any such action or exercise any remedy or take any such other action if the Collateral Agent has determined that the Collateral Agent may incur personal liability as a result of the presence at, or release on or from, the Collateral or such property, of any hazardous substances unless the Collateral Agent has received security or indemnity from the Holders in an amount and in a form satisfactory to the Collateral Agent in its sole discretion, protecting the Collateral Agent from all such liability. The Collateral Agent shall at any time be entitled to cease taking any action described in this clause if it no longer reasonably deems any indemnity, security or undertaking from the Company or the Holders to be sufficient. (c) The Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Collateral Agent shall have received written notice from the Representative, a Holder or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Collateral Agent shall take such action with respect to such Default or Event of Default as may be requested by the Representative or the Holders of at least the Minimum Principal Amount of the Notes then outstanding subject to this Article 17. (d) The Collateral Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders of not less than Minimum Principal Amount of Notes at the time outstanding and shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith. (e) In the absence of written investment direction from the Company, all cash received by the Collateral Agent shall be placed in a non-interest bearing account, and in no event shall the Collateral Agent be liable for the selection of investments or for investment losses incurred thereon or for losses incurred as a result of the liquidation of any such investment prior to its maturity date or the failure of the party directing such investments prior to its maturity date or the failure of the party directing such investment to provide timely written investment direction, and the Collateral Agent shall have no obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction from the Company. (f) (a) The Collateral Agent may conclusively rely and shall be fully protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, coupon, other evidence of Indebtedness or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties; and (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Collateral Agent by a copy thereof certified by the Secretary or an Assistant Secretary of the Company. (g) The Collateral Agent may consult with counsel of its selection and require an Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel.
98 (h) The Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, other evidence of Indebtedness or other paper or document. (i) The Collateral Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Collateral Agent shall not be responsible for any misconduct or negligence on the part of any agent, custodian, nominee or attorney appointed by it with due care hereunder. (j) The Collateral Agent may request that the Company and the Guarantors, if any, deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Agreement. (k) The permissive rights of the Collateral Agent enumerated herein shall not be construed as duties. (l) In no event shall the Collateral Agent be liable for any consequential, special, indirect or punitive loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. Section 17.09 Authorization of Receipt of Funds by the Collateral Agent Under the Security Documents. The Collateral Agent is authorized to receive any funds for the benefit of itself, the Representative and the Holders distributed under the Security Documents and, to the extent not prohibited hereunder, to make further distributions of such funds to itself, the Representative and the Holders in accordance with the provisions of Section 6.06 and the other provisions of this Agreement. Such funds shall be held on deposit by the Representative or the Collateral Agent without investment (unless otherwise provided in this Agreement), and the Representative and the Collateral Agent shall have no liability for interest or other compensation thereon. Section 17.10 Action by the Collateral Agent. Beyond the exercise of reasonable care in the custody thereof, the Collateral Agent shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith and with reasonable care. Neither the Representative nor the Collateral Agent shall be responsible for (i) the existence, genuineness or value of any of the Collateral; (ii) the validity, perfection, priority or enforceability of the Liens intended to be created by this Agreement or the Security Documents in any of the Collateral, whether impaired by operation of law or by reason of any action or omission
99 to act on its part hereunder (except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Collateral Agent (as determined by a final non- appealable order of a court of competent jurisdiction not subject to appeal)); (iii) the sufficiency of the Collateral; (iv) the validity of the title of the Company and the Guarantors to any of the Collateral; (v) insuring the Collateral; (vi) any action taken or omitted to be taken by it under or in connection with this Agreement or the transactions contemplated hereby (except for its own gross negligence or willful misconduct as determined by a final nonappealable order of a court of competent jurisdiction) or (vii) any recital, statement, representation, warranty, covenant or agreement made by the Company or any Affiliate of the Company, or any officer or Affiliate thereof, contained in the Agreement Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, the Agreement Documents. The Company and the Guarantors shall be responsible for the maintenance of the Collateral and for the payment of taxes, charges or assessments upon the Collateral. For the avoidance of doubt, nothing herein shall require the Collateral Agent or the Representative to file financing statements or continuation statements, or be responsible for maintaining the security interests purported to be created and described herein (except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder or under any other Agreement Document) and such responsibility shall be solely that of the Company. The Collateral Agent shall not be under any obligation to the Representative or any Holder to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Agreement Documents or to inspect the properties, books, or records of the Company or any of its Affiliates. Section 17.11 Compensation and Indemnity. (a) The Company shall pay to the Collateral Agent from time to time compensation as shall be agreed to in writing by the Company and the Collateral Agent for its acceptance of this Agreement, the Security Documents and services hereunder. The Company shall reimburse the Collateral Agent promptly upon request for all reasonable disbursements, advances and reasonable and documented expenses incurred or made by it in connection with Collateral Agent’s duties under the Agreement Documents, including the reasonable compensation, disbursements and expenses of the Collateral Agent’s agents and counsel, except any disbursement, advance or expense as may be attributable to the Collateral Agent’s willful misconduct or gross negligence. (b) The Company and the Guarantors shall, jointly and severally, indemnify the Collateral Agent and any predecessor Collateral Agent and each of their agents, employees, officers and directors for, and hold them harmless against, any and all losses, liabilities, claims, damages or expenses (including the fees and expenses of counsel to the Collateral Agent and any environmental liabilities) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Agreement and the Security Documents, including, without limitation (i) any claim relating to the grant to the Collateral Agent of any Lien in any property or assets of the Company or the Guarantors and (ii) the costs and expenses of enforcing this Agreement and the Security Documents against the Company and the Guarantors (including this Section 17.11) and defending itself against or investigating any claim (whether asserted by the Company, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder or thereunder, except to the extent
100 any such loss, liability, claim, damage or expense shall have been determined by a court of competent jurisdiction to have been attributable to its willful misconduct or gross negligence. The Collateral Agent shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Collateral Agent to so notify the Company shall not relieve the Company or the Guarantors of their obligations hereunder, except to the extent the Company or the Guarantors are materially prejudiced thereby. At the Collateral Agent’s sole discretion, the Company and the Guarantors shall defend any claim or threatened claim asserted against the Collateral Agent, with counsel reasonably satisfactory to the Collateral Agent, and the Collateral Agent shall cooperate in the defense at the Company’s and the Guarantors’ expense. The Company and the Guarantors need not pay for any settlement made without their consent, which consent shall not be unreasonably withheld. (c) The Collateral Agent shall be entitled to all rights, privileges, immunities and protections of the Representative set forth in this Agreement whether or not expressly stated therein, including but not limited to the right to be compensated, reimbursed and indemnified under this Section 17.11, in the acceptance, execution, delivery and performance of the Security Documents as though fully set forth therein. Notwithstanding any provision to the contrary contained elsewhere in the Agreement Documents, the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth in the Agreement Documents to which the Collateral Agent is a party, nor shall the Collateral Agent have or be deemed to have any fiduciary relationship with the Representative, any Holder or the Company, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Agreement Documents or otherwise exist against the Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (d) The obligations of the Company and the Guarantors under this Section 17.11 shall survive the satisfaction and discharge of this Agreement and the resignation, removal or replacement of the Collateral Agent. Section 17.12 [Intentionally Omitted]. Section 17.13 Resignation of Collateral Agent. The Collateral Agent may at any time resign by giving written notice of such resignation to the Company and by delivering notice thereof to the Holders. Upon receiving such notice of resignation, the Company shall promptly appoint a successor collateral agent by written instrument, in duplicate, executed by order of the Board of Directors of the Company, one copy of which instrument shall be delivered to the resigning Collateral Agent and one copy to the successor collateral agent. If no successor collateral agent shall have been so appointed and have accepted appointment within 60 calendar days after the delivery of such notice of resignation to the Holders, the resigning Collateral Agent may, upon ten Business Days’ notice to the Company and the Holders and at the Company’s expense petition any court of competent jurisdiction for the appointment of a successor collateral agent, or any Holder who has been a bona fide holder of a Note or Notes for at least six months (or since the Issue Date) may, on behalf of himself or herself and all others similarly situated, petition any such court for
101 the appointment of a successor collateral agent. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor collateral agent. Section 17.14 Succession by Merger. Any corporation or other entity into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Collateral Agent (including the administration of this Agreement), shall be the successor to the Collateral Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE 18 MISCELLANEOUS PROVISIONS Section 18.01 Provisions Binding on Company’s and Guarantor’s Successors. All the covenants, stipulations, promises and agreements of the Company and Guarantor contained in this Agreement shall bind its successors and assigns whether so expressed or not. Section 18.02 Official Acts by Successor Company. Any act or proceeding by any provision of this Agreement authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company. Section 18.03 Addresses for Notices, Etc. Any notice, request or demand that by any provision of this Agreement is required or permitted to be given or served by the Representative or by the Holders on the Company or the Guarantors, if any, shall be deemed to have been sufficiently given or made, for all purposes upon actual receipt if given or served by registered or certified mail or reputable overnight courier, postage prepaid, or if by electronic mail, at such time as it is delivered to the addressee, addressed (until another address is filed by the Company with the Representative) to Appgate Cybersecurity, Inc., 2 Alhambra Plaza, Suite PH-1-B, Coral Gables, Florida 33134; Attention: Chief Financial Officer; Email: [intentionally omitted] with a copy (which shall not constitute notice) to Appgate Cybersecurity, Inc., 2 Alhambra Plaza, Suite PH-1-B, Coral Gables, Florida 33134; Attention: General Counsel; Email: [intentionally omitted]. Any notice, direction, request or demand hereunder to or upon the Representative or the Collateral Agent shall be deemed to have been sufficiently given or made, for all purposes, upon actual receipt if given or served by registered or certified mail or reputable overnight courier, postage prepaid, or if by electronic mail, at such time as it is delivered to the addressee, addressed (until another address is filed by the Representative or the Collateral Agent, as applicable, with the Company) to 2 Alhambra Plaza STE PH-1-B, Coral Gables, FL 33134, Attn: Manuel D. Medina ([intentionally omitted]), Tony Jimenez ([intentionally omitted]). The Representative, by notice to the Company and the Collateral Agent, may designate additional or different addresses for subsequent notices or communications. The Company, by notice to the Representative and the Collateral Agent, may designate additional or different addresses for subsequent notices or communications. The Collateral Agent, by notice to the Representative and the Company, may designate additional or different addresses for subsequent notices or communications.
102 Any notice or communication delivered or to be delivered to a Holder of Physical Notes shall be mailed to it by first class mail, postage prepaid, at its address as it appears on the Note Register and shall be sufficiently given to it if so sent within the time prescribed. Failure to mail or deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is sent or delivered, as the case may be, in the manner provided above, it is duly given, whether or not the addressee receives it. If by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give notice as provided above, then such notification as shall be made with the approval of the Representative shall constitute a sufficient notification for every purpose hereunder. If it is impossible or, in the opinion of the Representative, impracticable to give any notice by publication in the manner herein required, then such publication in lieu thereof as shall be made with the approval of the Representative shall constitute a sufficient publication of such notice. Section 18.04 Governing Law; Jurisdiction. THIS AGREEMENT AND EACH NOTE AND NOTE GUARANTEE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT AND EACH NOTE AND NOTE GUARANTEE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each of the Company and the Guarantors, if any, irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Representative, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Agreement, the Notes or the Note Guarantees may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes and Note Guarantees have been paid in full, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues. Each of the Company and the Guarantors, if any, irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Agreement brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Section 18.05 Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Representative and Collateral Agent. Upon any application by the Company or the Guarantors, if any, to the Representative or the Collateral Agent to take any action under any of the provisions of this Agreement, the Company or the Guarantor, as applicable, shall furnish to the Representative and the Collateral Agent, as the case may be, an Officer’s Certificate
103 and Opinion of Counsel (to the extent requested by the Representative or Collateral Agent) stating that the conditions precedent and covenants, if any, provided for in this Agreement relating to such action have been satisfied. Each Officer’s Certificate or Opinion of Counsel, provided for, by or on behalf of the Company or the Guarantor in this Agreement and delivered to the Representative or the Collateral Agent, as applicable, with respect to compliance with this Agreement (other than the Officer’s Certificates provided for in Section 4.08) shall include (i) a statement that the person signing such certificate or opinion has read such covenant or condition precedent and is familiar with the requested action and this Agreement; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statement contained in such certificate or opinion is based; (iii) a statement that, in the judgment of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed judgment as to whether or not the covenants and conditions precedent to such action have been satisfied; and (iv) a statement as to whether or not, in the opinion of such person, such covenants and conditions precedent have been satisfied. Notwithstanding anything to the contrary in this Section 18.05, if any provision in this Agreement specifically provides that the Representative or the Collateral Agent shall or may receive an Opinion of Counsel in connection with any action to be taken by the Representative or the Collateral Agent, or the Company or the Guarantor hereunder, the Representative and the Collateral Agent, as applicable, shall be entitled to such Opinion of Counsel. Section 18.06 Legal Holidays. In any case where any Interest Payment Date, Change of Control Redemption Date, Fundamental Change Repurchase Date, Change of Control Repurchase Date, or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue or be paid in respect of the delay. Section 18.07 [Intentionally Omitted]. Section 18.08 Benefits of Agreement. Nothing in this Agreement, the Notes or the Note Guarantee, if any, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Note Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement, any Note or the Note Guarantee. Section 18.09 Table of Contents, Headings, Etc. The table of contents and the titles and headings of the articles and sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 18.10 [Intentionally Omitted] Section 18.11 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery
104 of this Agreement as to the parties hereto and may be used in lieu of the original Agreement for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. Section 18.12 Severability; Conflict. In the event any provision of this Agreement or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired. Notwithstanding anything to the contrary in any Agreement Document, in the event of any conflict between any provision set forth in any Agreement Document, on one hand, and this Agreement, on the other hand, that may affect any rights, privileges, protections and indemnities in favor of any Holder, such provision set forth in this Agreement shall prevail. Section 18.13 Waiver of Jury Trial. EACH OF THE COMPANY, THE GUARANTORS, IF ANY, AND THE REPRESENTATIVE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY. Section 18.14 Force Majeure. In no event shall the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, epidemics, pandemics, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Collateral Agent shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. Section 18.15 Calculations. Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the stock price, Last Reported Sale Prices of the Common Stock, the Transaction Price, accrued interest payable or the applicable interest rate (including the Default Rate, if applicable), on the Notes, determination of how whether interest shall be payable as PIK Interest, Partial PIK Interest or Cash Interest, Defaulted Amounts, and the Conversion Rate (including the Change of Control Conversion Rate) of the Notes. The Company shall make all these calculations in good faith and its calculations shall be final and binding on Holders of Notes except (i) in the case of manifest error or (ii) to the extent the Company fails to comply with the next sentence. Prior to finalizing any calculations called for under the Notes, the Company shall provide a proposed schedule of its calculations, including reasonable supporting detail, to the Representative at least five Business Days in advance of finalizing any such calculations, and the Company shall reflect, in the final calculation schedule, all reasonable comments that the Representative shall have provided to the Company during the four Business Day period immediately following the Representative’s receipt of the draft calculation schedule. The Company will forward its calculations to any Holder upon the written request of that Holder. Section 18.16 PATRIOT Act. The parties hereto acknowledge that in accordance with Section 326 of the PATRIOT Act, the Representative and the Collateral Agent, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required
105 to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Representative and the Collateral Agent. The parties to this Agreement agree that they will provide the Representative and the Collateral Agent with such information as it may request in order for the Representative and the Collateral Agent to satisfy the requirements of the PATRIOT Act. Section 18.17 Electronic Signatures. The parties agree that the electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based recordkeeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. Without limiting the foregoing, the parties agree that any electronically signed document (including this Agreement) shall be deemed (i) to be “written” or “in writing”, (ii) to have been signed, and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Such paper copies or “printouts”, if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. The Company and Guarantors (if any) each agree to assume all risks arising out of the use of using digital signatures and electronic methods to submit communications to the Representative and the Collateral Agent, including without limitation the risk of the Representative and the Collateral Agent acting on unauthorized instructions, and the risk of interception and misuse by third parties. [Remainder of page intentionally left blank]
[Signature Page to Note Issuance Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. APPGATE CYBERSECURITY, INC. By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO APPGATE, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO CRYPTZONE WORLDWIDE, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO CRYPTZONE INTERNATIONAL HOLDINGS, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO
[Signature Page to Note Issuance Agreement] CRYPTZONE NORTH AMERICA, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO IMMUNITY, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO IMMUNITY FEDERAL SERVICES, LLC, as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO
[Signature Page to Note Issuance Agreement] IMMUNITY PRODUCTS, LLC, as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO IMMUNITY SERVICES, LLC as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO EASY SOLUTIONS ENTERPRISES CORP., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO EASY SOLUTIONS, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO
[Signature Page to Note Issuance Agreement] CATBIRD NETWORKS, INC., as Guarantor By: /s/ Leo Taddeo Name: Leo Taddeo Title: CEO
[Signature Page to Note Issuance Agreement] APPGATE FUNDING, LLC, as Representative and Collateral Agent By: /s/ Manuel D. Medina Name: Manuel D. Medina Title: Authorized Signatory
A-1 EXHIBIT A [FORM OF FACE OF NOTE] [INCLUDE FOLLOWING LEGEND IF A RESTRICTED SECURITY] [THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS NOTE MAY NOT BE OFFERED, PLEDGED, RESOLD OR OTHERWISE TRANSFERRED, EXCEPT: (A) TO APPGATE CYBERSECURITY, INC. (THE “COMPANY”) OR ANY SUBSIDIARY THEREOF; (B) PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER; (C) TO A PERSON THAT YOU REASONABLY BELIEVE TO BE (1) A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (2) AN ACCREDITED INSTITUTIONAL INVESTOR, WITHIN THE MEANING OF CLAUSES (1), (2), (3), (7), (8), (9) AND (12) OF RULE 501(A) OF REGULATION D UNDER THE SECURITIES ACT; OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT), IN EACH CASE, SUBJECT TO COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. THE “RESALE RESTRICTION TERMINATION DATE” MEANS THE LATER OF (1) THE DATE THAT IS ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES, (2) THE EXPIRATION OF ANY APPLICABLE HOLDING PERIOD WITH RESPECT TO THE NOTES PURSUANT TO RULE 144 OR ANY SUCCESSOR PROVISION THERETO, AND (3) THE DATE ON WHICH THE NOTES CONSTITUTE “COVERED SECURITIES” UNDER CLAUSE (1), (2) OR (3) OF THE DEFINITION OF “COVERED SECURITIES” UNDER SECTION 18 OF THE SECURITIES ACT. WITH RESPECT TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE (C)(2) AND CLAUSE (D), THE COMPANY AND THE NOTE REGISTRAR SHALL BE ENTITLED TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND MAY RELY UPON FOR THE COMPANY TO CONFIRM THAT SUCH TRANSFER IS
A-2 BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.] THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, SUCH SHARES MAY BE “RESTRICTED SECURITIES” THAT MAY NOT BE OFFERED, PLEDGED, RESOLD OR OTHERWISE TRANSFERRED EXCEPT TO THE ISSUER OF SUCH SECURITIES (OR ANY SUBSIDIARY THEREOF), PURSUANT TO, AND IN ACCORDANCE WITH, A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT AT THE TIME OF SUCH TRANSFER, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
A-3 Appgate Cybersecurity, Inc. Convertible Senior Note due 2026 [PIK] No. [_____] $[_________] Appgate Cybersecurity, Inc., a corporation duly organized and validly existing under the laws of the State of Delaware (the “Company,” which term includes any successor corporation or other entity under the Agreement referred to on the reverse hereof), for value received, hereby promises to pay to [_______], or registered assigns, on the Maturity Date, the principal sum of $[_______] and interest thereon as set forth below. This Note shall bear interest at the rate (the “Interest Rate”) of 9.50% from July 20, 2023, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until the Maturity Date; provided that, in the event the Company duly makes an election under Section 2.03(c)(i) and timely delivers a notice to the Representative and the Holders prior to the beginning of the related Interest Period to make a Cash Interest payment, the Interest Rate in respect of such Interest Period shall be 9.50% for any Interest Period, or portion thereof. Interest is payable semi-annually in arrears on each February 1 and August 1, commencing on February 1, 2024, to Holders of record at the close of business on the preceding January 15 and July 15 (whether or not such record date is a Business Day), respectively. Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months or, in the case of a partial month, the actual number of days elapsed over a 30-day month, and shall be compounded annually. Notwithstanding anything to the contrary herein, the payment of accrued interest shall be made solely in cash, (A) in connection with any redemption of Notes as described under Section 13.02 of the Agreement, (1) with respect to all Notes, if the related Change of Control Redemption Date is after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the date on which the corresponding interest payment is made or (2) solely with respect to the Notes to be redeemed, if the Change of Control Redemption Date is on any other date, (B) in connection with any repurchase of Notes as described under Section 15.02 and Section 15.03 of the Agreement, (1) with respect to all Notes, if the related Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, is after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the date on which the corresponding interest payment is made or (2) solely with respect to the Notes to be repurchased, if the related Fundamental Change Repurchase Date or Change of Control Repurchase Date, as applicable, is on any other date, (C) with respect to all Notes, if any Notes are surrendered for conversion after the close of business on a Regular Record Date for the payment of interest and on or prior to the related Interest Payment Date, and (D) on the final Interest Payment Date. Any PIK Notes issued in certificated form will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All PIK Notes issued pursuant to a
A-4 PIK Payment will be governed by, and subject to the terms, provisions and conditions of, the Agreement and shall have the same rights and benefits as the Initial Notes. Any Defaulted Amounts shall accrue interest per annum at the rate borne by the Notes, subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company. The Company shall pay the principal of and interest (other than PIK Interest or Partial PIK Interest) on this Note in immediately available funds to a Holder’s account within the United States as specified in writing by such Holder to the Company. As provided in and subject to the provisions of the Agreement, the Company shall pay the principal of any Notes at the office or agency designated by the Company for that purpose. The Company has initially designated itself as its Paying Agent and Note Registrar in respect of the Notes and its agency in the continental United States of America as a place where Notes may be presented for payment or for registration of transfer and exchange. At all times, PIK Interest and Partial PIK Interest on the Notes will be payable by issuing PIK Notes in certificated form in an aggregate principal amount equal to the amount of PIK Interest or Partial PIK Interest, as applicable, for the applicable Interest Period (rounded to the nearest whole dollar, with amounts of $0.50 or more being rounded up) to the Holders on the relevant Regular Record Date, as shown in the register of the Note Registrar. Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into shares of Common Stock on the terms and subject to the limitations set forth in the Agreement. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York. In the case of any conflict between this Note and the Agreement, the provisions of the Agreement shall control and govern. [Remainder of page intentionally left blank]
A-5 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed. APPGATE CYBERSECURITY, INC. By: Name: Title:
A-6 [FORM OF REVERSE OF NOTE] Appgate Cybersecurity, Inc. Convertible Senior Note due 2026 This Note is one of a duly authorized issue of Notes of the Company, designated as its “Convertible Senior Notes due 2026” (the “Notes”), initially limited to the aggregate principal amount of $[ ,0]00,000, subject to any PIK Payments permitted by the Agreement that are made pursuant to Section 2.03(c)(i) thereof, and except for (i) Notes delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes to the extent expressly permitted by the Agreement and (ii) Additional Notes issued in accordance with the terms of the Agreement, all issued or to be issued under and pursuant to a Note Issuance Agreement dated as of July 20, 2023 (the “Agreement”), among the Company, the Guarantors party thereto from time to time and Appgate Funding, LLC, as representative of the Holders (in such capacity, the “Representative”) and as collateral agent (in such capacity, “Collateral Agent”), to which Agreement and all agreements supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Representative, the Company, the Collateral Agent and the Holders of the Notes. Additional Notes may be issued subject to certain conditions specified in the Agreement. Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Agreement. In case certain Events of Default shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Representative or Holders of at least 25% in aggregate principal amount of Notes then outstanding determined in accordance with Section 8.01 and Section 8.02 of the Agreement, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Agreement. Subject to the terms and conditions of the Agreement, the Company will make all payments and deliveries in respect of the Change of Control Redemption Price on the Change of Control Redemption Date, Fundamental Change Repurchase Price or Change of Control Repurchase Price on the Fundamental Change Repurchase Date or the Change of Control Repurchase Date, as applicable, and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Agreement contains provisions permitting the Company, in certain circumstances, without the consent of the Holders of the Notes (but with prior notice to and consultation with the Representative), and in certain other circumstances, with the consent of the Holders of not less than 25% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.01 and Section 8.02 of the Agreement or not less than the Minimum Principal Amount of the Notes at the time outstanding, evidenced as in the Agreement provided, to execute a supplemental agreement modifying the terms of the Agreement and the Notes as described therein. It is also provided in the Agreement that, subject to certain exceptions, the Holders of at least 25% in principal amount of the Notes at the time outstanding determined in accordance with
A-7 Section 8.01 and Section 8.02 of the Agreement may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Agreement and its consequences. No reference herein to the Agreement and no provision of this Note or of the Agreement shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money or shares of Common Stock, as the case may be, herein prescribed. The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples in excess thereof; provided that after a PIK Payment, the Notes shall be in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Agreement, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company, with payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or similar governmental charge that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange. The Notes are not subject to any sinking fund. Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option and subject to the provisions of the Agreement, to require the Company to repurchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 (or, if a PIK Payment has been made, in principal amounts of $1.00) or integral multiples in excess thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price. If a Change of Control occurs (other than the Specified Transaction), the Holder has the right, at such Holder’s option and subject to the provisions of the Agreement, to require the Company to repurchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 (or, if a PIK Payment has been made, in principal amounts of $1.00) or integral multiples in excess thereof) on the Change of Control Repurchase Date at a price equal to the Change of Control Repurchase Price or on the Change of Control Redemption Date at a price equal to the Change of Control Redemption Price, as applicable. The Notes are convertible into Common Stock in accordance with the terms of the Agreement. The payment of the principal of, premium, if any, and interest, if any, on the Notes, is unconditionally guaranteed, jointly and severally, by the Guarantors, if any, to the extent set forth in and subject to the provisions of the Agreement.
A-8 ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM = as tenants in common UNIF GIFT MIN ACT = Uniform Gifts to Minors Act CUST = Custodian TEN ENT = as tenants by the entireties JT TEN = joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list.
A-9 ATTACHMENT 1 [FORM OF NOTICE OF CONVERSION] Appgate Cybersecurity, Inc. Convertible Senior Notes due 2026 To: Appgate Cybersecurity, Inc., as issuer of the above-referenced Notes [____________] Appgate Funding, LLC, as Representative of the Holders [____________] The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount (or if a PIK Payment has been made, $1.00 principal amount) or an integral multiple in excess thereof) below designated pursuant to: Section 14.02, in accordance with the terms of the Agreement referred to in this Note, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon such conversion, together with any cash for any fractional share, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp or similar issue or transfer taxes, if any in accordance with Section 14.03(d) and Section 14.03(e) of the Agreement. Any amount required to be paid to the undersigned on account of interest accompanies this Note. The undersigned Holder represents and warrants that the Notes delivered for conversion represents: [__] At least the Minimum Conversion Amount; or [__] If less than the Minimum Conversion Amount, all of the Notes held at such time by such Holder. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Agreement. Dated:
A-10 Signature(s) Signature Guarantee Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder. Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder: (Name) (Street Address) (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all): $______,000 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. Social Security or Other Taxpayer Identification Number
A-11 ATTACHMENT 2 [FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE] Appgate Cybersecurity, Inc. Convertible Senior Notes due 2026 To: Appgate Cybersecurity, Inc., as issuer of the above-referenced Notes [____________] Appgate Funding, LLC, as Representative of the Holders [____________] The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Appgate Cybersecurity, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.02 of the Agreement referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount (or if a PIK Payment has been made, $1.00 principal amount) or an integral multiple in excess thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Repurchase Date. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Agreement. In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below: Dated: Signature(s) Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $______,000 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
A-12 ATTACHMENT 3 [FORM OF CHANGE OF CONTROL REPURCHASE NOTICE] Appgate Cybersecurity, Inc. Convertible Senior Notes due 2026 To: Appgate Cybersecurity, Inc., as issuer of the above-referenced Notes [____________] Appgate Funding, LLC, as Representative of the Holders [____________] The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Appgate Cybersecurity, Inc. (the “Company”) as to the occurrence of a Change of Control with respect to the Company and specifying the Change of Control Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.03 of the Agreement referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount (or if a PIK Payment has been made, $1.00 principal amount) or an integral multiple in excess thereof) below designated, and (2) if such Change of Control Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the Scheduled Trading Day immediately following the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Change of Control Repurchase Date. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Agreement. In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below: Dated: Signature(s) Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $______,000 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
A-13 ATTACHMENT 4 [FORM OF ASSIGNMENT AND TRANSFER] Appgate Cybersecurity, Inc. Convertible Senior Notes due 2026 For value received, ____________________________ hereby sell(s), assign(s) and transfer(s) unto _________________ (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints _____________________ as attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Agreement governing such Note, the undersigned confirms that such Note is being transferred: • To Appgate Cybersecurity, Inc. or a Subsidiary thereof; or • Pursuant to, and in accordance with, a registration statement that is effective under the Securities Act at the time of such transfer; or • To a person that (A) the undersigned reasonably believes to be a qualified institutional buyer in compliance with Rule 144A under the Securities Act of 1933, as amended, or (B) is an accredited investor, within the meaning of clauses (1), (2), (3), (7), (8), (9) and (12) of Rule 501(A) of Regulation D under the Securities Act; or • Pursuant to any other available exemption from the registration requirements of the Securities Act of 1933, as amended (including, if available, the exemption provided by Rule 144 under the Securities Act of 1933, as amended).
A-14 Dated: Signature(s) Signature Guarantee Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Notes are to be delivered, other than to and in the name of the registered holder. NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
B-1 EXHIBIT B [Form of Supplemental Agreement] SUPPLEMENTAL AGREEMENT (this “Supplemental Agreement”), dated as of [____________], among [_______] (the “Guarantor”), a [_____] [corporation] and direct or indirect subsidiary of Appgate Cybersecurity, Inc. (or its successor), a Delaware corporation (the “Company”), the Company, and Appgate Funding, LLC, as representative of the Holders (in such capacity, the “Representative”) and as Collateral Agent (in such capacity, the “Collateral Agent”). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Representative a Note Issuance Agreement (as further amended or supplemented, the “Agreement”), dated as of July 20, 2023, providing for the issuance of Convertible Senior Notes due 2026 (the “Notes”); WHEREAS, the undersigned may execute and deliver to the Representative a supplemental agreement pursuant to which the undersigned becomes the Guarantor under the Agreement and shall unconditionally guarantee all of the Company’s obligations under the Agreement Documents pursuant to a Note Guarantee on the terms and conditions set forth herein; and WHEREAS, Section 10.01(c) of the Agreement provides, among other things, that the Company, the Guarantors, if any, and the Representative may amend or supplement the Agreement Documents without the consent of any Holder to add the Note Guarantee with respect to the Notes. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Guarantor, the Company and the Representative mutually covenant and agree for the equal and ratable benefit of the Holders as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Agreement. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees to guarantee the Company’s Obligations under the Notes and the Agreement on the terms and subject to the conditions set forth in Article 16 of the Agreement and to be bound by all other applicable provisions of the Agreement. 3. EFFECTIVENESS. This Supplemental Agreement shall be effective upon execution by the parties hereto. Upon effectiveness of this Supplemental Agreement, the Guarantor will be the Guarantor under the Agreement. 4. RECITALS. The recitals contained herein shall be taken as the statements of the Company and the Guarantors and the Representative assumes no responsibility for their correctness. The Representative makes no representations as to the validity of this Supplemental Agreement.
B-2 5. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL AGREEMENT, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL AGREEMENT, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 6. COUNTERPARTS. The parties hereto may sign any number of copies of this Supplemental Agreement (including by electronic transmission). Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Agreement and of signature pages by facsimile or portable document format transmission shall constitute effective execution and delivery of this Supplemental Agreement as to the parties hereto and may be used in lieu of the original Supplemental Agreement for all purposes. Signatures of the parties hereto transmitted by facsimile or portable document format shall be deemed to be their original signatures for all purposes. 7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 8. ACCEPTANCE BY THE REPRESENTATIVE AND THE COLLATERAL AGENT. The Representative and the Collateral Agent each assume no responsibility for the correctness of the recitals contained herein, which shall be taken as the statements of the Company and the Guarantor and the Representative and the Collateral Agent shall not be responsible or accountable in any way whatsoever for or with respect to the validity, execution or sufficiency of this Supplemental Agreement and make no representation with respect thereto. 9. SEVERABILITY. In case any provision in this Supplemental Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability. 10. RATIFICATION OF AGREEMENT; SUPPLEMENTAL AGREEMENTS PART OF AGREEMENT. Except as expressly amended hereby, the Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Agreement shall form a part of the Agreement for all purposes, and every Holder of Notes heretofore or hereafter delivered shall be bound hereby. (signature pages follow)
B-3 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement to be duly executed as of the day and year first above written. APPGATE CYBERSECURITY, INC. By: Name: Title: [Insert Name of Guarantor] By: Name: Title: APPGATE FUNDING, LLC, as Representative and Collateral Agent By: Name: Title:
C-1 EXHIBIT C [Intentionally Omitted]
D-1 EXHIBIT D Form of Subordination Agreement SUBORDINATION AGREEMENT This Subordination Agreement, made as of _________, 20___ (this “Agreement”), is among the Persons designated as subordinated creditors on Schedule 1 attached hereto (each individually a “Subordinated Creditor” and collectively the “Subordinated Creditors”), Appgate Funding, LLC, as representative of the Holders under the Note Issuance Agreement referred to below (in such capacity, the “Representative”) and as Collateral Agent under the Note Issuance Agreement referred to below (in such capacity, the “Collateral Agent”, and together with the Representative and the Holders under the Note Issuance Agreement, the “Senior Creditors”), and Appgate Cybersecurity, Inc., a Delaware corporation (the “Borrower”). Capitalized terms used in this Agreement and not otherwise defined have the meanings assigned to such terms in the Note Issuance Agreement (as defined below). PRELIMINARY STATEMENTS: A. Each Subordinated Creditor has extended credit to Borrower under the terms of certain loan documents described on Exhibit I attached hereto (collectively with all other documents, certificates, instruments or agreements entered into in connection therewith, the “Subordinated Debt Documentation”). B. The whole or part of any amounts which may now or in the future be owing by the Borrower or any successor or assignee of the Borrower, including, without limitation, a receiver or debtor in possession (the term “Borrower” in this Agreement includes any such successor or assign of the Borrower) to the Subordinated Creditors under the Subordinated Debt Documentation (whether such amounts represent principal, interest, fees, expenses, indemnification or other obligations, whether now existing or hereafter arising, which are due or not due, direct or indirect, absolute or contingent or guaranteed) are referred to in this Agreement as the “Subordinated Debt.” C. In connection with the Note Issuance Agreement, dated as of July 20, 2023 (as such agreement may be further amended, restated, supplemented or otherwise modified, the “Note Issuance Agreement”), among the Borrower, the Representative, the Collateral Agent, and the guarantors signatory thereto, and the Notes issued thereunder, the Borrower is indebted to the Senior Creditors. D. The execution and delivery of this Agreement is a requirement under the Note Issuance Agreement. AGREEMENT: In consideration of the foregoing and the mutual agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned agree as follows:
D-2 1. Agreement to Subordinate. (a) Each of the Subordinated Creditors and the Borrower agree that the payment and performance of the Subordinated Debt is and shall be subordinate in right of payment to the prior payment in full of the Agreement Obligations and all other obligations and indebtedness of the Borrower under the Note Issuance Agreement and the other Agreement Documents, whether secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, whether now existing or hereafter arising, whether for principal, interest, fees, expenses, indemnities or otherwise, together with all extensions, renewals, modifications, supplementations or amendments thereof or any part thereof (all such obligations and indebtedness, together with the Agreement Obligations, being the “Senior Obligations”). (b) For the purposes of this Agreement, the Senior Obligations are not deemed to have been paid in full until the Senior Creditors have received the irrevocable payment in full of the Senior Obligations in cash (other than any indemnification obligations which are not due and payable but which by their terms shall survive the termination of the Agreement Documents (the “surviving obligations”)). 2. Subordination of Liens. Notwithstanding any understanding between the Subordinated Creditors and the Borrower, the order or time of creation, acquisition, attachment, or the order, time, or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a security interest or lien on and against any of the assets and/or property of the Borrower (the “Collateral”), each of the Subordinated Creditors agree that any lien or security interest now or hereafter existing in and to the Collateral in favor of any of the Subordinated Creditors shall be and at all times remain subject and subordinate in all respects to any lien or security interest which may now or hereafter at any time or from time to time be granted to any Secured Party, on or in any or all of the Collateral as security for the Senior Obligations. 3. Limitation on Liens. Notwithstanding anything to the contrary in this Agreement, each of the Subordinated Creditors agree that without the prior written consent of the Representative (i) none of the Subordinated Creditors will obtain as security for the Subordinated Debt any lien or security interest on any assets or properties of the Borrower, and (ii) subject to the preceding clause (i), any lien or security interest that any of the Subordinated Creditors at any time obtains on any assets or properties of the Borrower will only secure the Subordinated Debt and the costs of collecting or enforcing the Subordinated Debt. 4. Restrictions on Foreclosure, etc. None of the Subordinated Creditors shall foreclose on or otherwise realize upon the Collateral, nor exercise any rights of a secured party or lien creditor or any other rights with respect to the Collateral, nor assert any claims with respect to the Collateral, nor take any action directly or indirectly with respect to the Collateral, in each case unless and until all of the Senior Obligations (other than the surviving obligations) shall be paid and satisfied in full in immediately available funds. 5. Restrictions on Payment of the Subordinated Debt. Provided no Default or Event of Default shall have occurred and be continuing (and no Default or Event of Default will occur as a result of any such payments), the Borrower may make regularly scheduled payments of interest, costs and expenses, but no other payments of any kind (including any principal payments) with
D-3 respect to the Subordinated Debt pursuant to the Subordinated Debt Documentation shall be made without the prior written consent of the Representative. In the event a Default or Event of Default under the Note Issuance Agreement shall have occurred and be continuing, then no payment in respect to the Subordinated Debt shall be made unless such Default or Event of Default shall be cured or waived under the terms of the Note Issuance Agreement. Except as provided in this Section 5, no payments may be made on the Subordinated Debt. 6. In Furtherance of Subordination. (a) Upon any distribution of all or any of the assets of the Borrower to creditors of the Borrower upon the dissolution, winding up, liquidation, arrangement or reorganization of the Borrower, whether in any bankruptcy, insolvency, arrangement, reorganization or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Borrower or otherwise, any payment or distribution of any kind (whether in cash, property or securities) which otherwise would be payable or deliverable upon or with respect to the Subordinated Debt will be paid or delivered directly to the Collateral Agent for application (in the case of cash) to or as collateral (in the case of noncash property or securities) for the payment or prepayment of the Senior Obligations until the Senior Obligations have been paid in full (other than the surviving obligations) before any payment is made on account of the Subordinated Debt. (b) If any proceeding referred to in Section 6(a) is commenced by or against the Borrower: (i) subject to Section 6(c), each of the Subordinated Creditors will duly and promptly take such reasonable actions as any Senior Creditor may request (A) to collect the Subordinated Debt for the respective accounts of the Senior Creditors and to file and prove appropriate claims or proofs of claim in respect of the Subordinated Debt; (B) to execute and deliver to the Senior Creditors such powers of attorney, assignments or other instruments as any of them may reasonably request in order to enable them to enforce any and all claims with respect to the Subordinated Debt, and (C) to collect and receive any and all payments or distributions which may be payable or deliverable upon or with respect to the Subordinated Debt; and (ii) each Senior Creditor is irrevocably authorized and empowered (in its own name or in the name of the Subordinated Creditors or otherwise), but has no obligation, to demand, sue for, collect and receive every payment or distribution referred to in Section 6(a) and give acquittance therefor and to file claims and proofs of claim and take such other action as it may deem reasonably necessary or advisable for the exercise or enforcement of any of the rights or interests of such Senior Creditor under this Agreement. Notwithstanding the foregoing, the Senior Creditors shall file claims in respect of the Subordinated Debt on behalf of the Subordinated Creditors only if the Subordinated Creditors do not do so prior to twenty days before the expiration of the time to file claims in such proceedings.
D-4 (c) All payments or distributions upon or with respect to the Subordinated Debt which are received by any of the Subordinated Creditors contrary to the provisions of this Agreement (whether Subordinated Creditor knows at the time such payments or distributions are contrary to the terms of this Agreement) are received in trust for the benefit of the Senior Creditors, will be segregated from other funds and property held by the Subordinated Creditors and will be immediately paid over to the Collateral Agent, for the benefit of the Senior Creditors, in the same form as so received (with any necessary indorsement) to be applied (in the case of cash) to or held as collateral (in the case of noncash property or securities) for the payment or prepayment of the Senior Obligations in accordance with the terms of the Note Issuance Agreement and shall be immediately paid over or delivered to the Collateral Agent for the benefit of the Senior Creditors (in the same form as received, with any necessary endorsements) until the full repayment of the Senior Obligations (other than the surviving obligations); provided, that, any excess amounts turned over to the Collateral Agent pursuant to the foregoing shall be returned to the Subordinated Creditor. (d) Each Senior Creditor is authorized to demand specific performance of this Agreement, whether or not the Borrower has complied with any of the provisions of this Agreement applicable to it, at any time when any Subordinated Creditor has failed to comply with any provision of this Agreement applicable to the Subordinated Creditors. (e) Each of the Subordinated Creditors consents and agrees that none of the Senior Creditors is under any obligation to marshal any collateral or any other assets of the Borrower or any other Person in favor of either of the Subordinated Creditors or otherwise in connection with obtaining payment of any or all of the Senior Obligations from any Person or source and hereby waives any right that it may now or in the future have to the fullest extent permitted by applicable law to any such marshalling of assets or similar relief. 7. No Commencement of Any Proceeding; Permitted Actions. Each of the Subordinated Creditors agrees that, so long as any of the Senior Obligations (other than the surviving obligations) have not been paid in full (a) it will not commence, or join with any creditor other than the Senior Creditors in commencing, any proceeding referred to in Section 6(a) or take any other action, judicial or otherwise, to enforce the Subordinated Debt (other than the filing proofs of claim under Section 6(b)(ii)), (b) it will refrain from exercising any and all remedies available to it under the Subordinated Debt Documentation and any and all remedies otherwise permitted by applicable law upon a default under any Subordinated Debt, (c) it will not be granted any lien or security interest in any property of the Borrower, (d) it will not convert or exchange any of the Subordinated Debt into or for any other indebtedness of the Borrower or any other indebtedness, (e) permit the terms of any of the Subordinated Debt to be modified in any way that could have an adverse effect on the rights or interests of the Senior Creditors, (f) permit or require any repayment, prepayment, redemption or repurchase of the Subordinated Debt, unless such repayment, prepayment, redemption or repurchase is permitted under the Note Issuance Agreement and no Default or Event of Default shall have occurred, be continuing or result therefrom, (g) take from or for the account of Borrower or any other person, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by Borrower with respect to the Subordinated Debt or (h) exercise any put option or to cause Borrower to honor any redemption or mandatory prepayment obligation under the Subordinated Debt; provided, that the Subordinated Creditors
D-5 may commence such actions or otherwise exercise any or all such rights or remedies in respect of the Subordinated Debt ten days after the date on which the Senior Obligations are paid in full. Notwithstanding anything herein to the contrary, in the event an event of default occurs with respect to any Subordinated Debt, the Subordinated Creditor may accelerate the maturity of its Subordinated Debt and charge default interest as provided in the Subordinated Debt Documentation, but no Subordinated Creditor may take any action to attempt to satisfy such Subordinated Debt in contravention of this Agreement. 8. [Intentionally Omitted]. 9. Rights of Subrogation. Each of the Subordinated Creditors agree that no payment or distribution to any Senior Creditor under the provisions of this Agreement entitle any of the Subordinated Creditors to exercise any rights of subrogation in respect of such payments or distributions until the Senior Obligations have been paid in full (other than the surviving obligations). 10. Further Assurances. Each of the Subordinated Creditors and the Borrower will, at the Borrower’s expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary, or that any Senior Creditor may reasonably request, in order to protect any right or interest granted or purported to be granted by this Agreement or to enable such Senior Creditor to exercise and enforce its rights and remedies under this Agreement. 11. No Change in or Disposition of Subordinated Debt. Each of the Subordinated Creditors may assign, pledge, encumber or otherwise dispose of any of the Subordinated Debt to any other person or entity (each, an “Assignee”), provided that the Assignee expressly agrees that its rights in the Subordinated Debt are subject to the terms of this Agreement and acknowledges and agrees in writing to be bound by the terms of this Agreement. 12. Administration of Collateral, etc. The Senior Creditors shall have complete and sole discretion in, and shall not be liable to any of the Subordinated Creditors for, determining how, when and in what manner the Senior Creditors administer the Senior Obligations or foreclose or otherwise realize upon the Collateral or exercise any rights or remedies of a secured party or lien creditor or any other rights with respect to the Collateral or otherwise takes any action with respect thereto. Without in any way limiting the foregoing, each of the Subordinated Creditors specifically acknowledges and agrees that each Senior Creditor may take such action as it deems appropriate to enforce the Senior Obligations and its lien on and security interest, if any, in the Collateral, whether or not such action is beneficial to any of the Subordinated Creditors’ interest. Also without in any way limiting the foregoing, each Subordinated Creditor for itself and for all who may claim through or under it, hereby expressly waives and releases any and all rights to have the Collateral or any part thereof marshaled upon any foreclosure, sale or other realization thereon by any Senior Creditor. In order for a Senior Creditor to enforce its rights in the Collateral, there shall be no obligation on the part of such Senior Creditor, at any time, to resort for payment of the Senior Obligations to any obligor thereon or any guarantor thereof, or to any other Person, such Person’s properties or estates, or to resort to any other rights or remedies whatsoever, and such Senior
D-6 Creditor shall have the right to foreclose or otherwise realize upon the Collateral upon which it has a security interest irrespective of whether or not other proceedings or steps are pending seeking resort to or realization upon or from any of the foregoing. 13. Delivery of Proceeds of Collateral. So long as the Senior Obligations are outstanding, each of the Subordinated Creditors will without demand or request being made upon it deliver any parts or proceeds of the Collateral (other than payments permitted under Section 5) which shall come into its possession, control or custody, as follows: (a) First, to the Collateral Agent for application to the Senior Obligations then outstanding in accordance with the terms of the Note Issuance Agreement, whether or not then due and payable, until paid in full; (b) Second, to the payment of all principal of and interest on the Subordinated Debt and all costs of collecting or enforcing the same; and (c) Third, any surplus remaining thereafter shall be remitted to the Borrower, or to such other Person as may be lawfully entitled thereto. 14. Agreement Not to Contest. None of the Subordinated Creditors shall contest the validity, perfection, priority or enforceability of any security interest or lien, if any, granted to any Senior Creditor by the Borrower under the Note Issuance Agreement and the other Agreement Documents. 15. Release of Collateral. Each of the Subordinated Creditors agree that in the event a Senior Creditor shall come into the possession, custody and control of any property or assets of the Borrower as the result of any security interest granted to secure the Senior Obligations, such Senior Creditor may, to the extent such Senior Creditor does not apply the same to the payment or partial payment of the Senior Obligations, release the same to or upon the order of the Borrower, without notice, or accounting for the same, to any of the Subordinated Creditors or any other person, firm or corporation whomsoever, it being specifically understood and agreed that any property so released shall remain subject to all claims of the Subordinated Creditors and the Senior Creditors thereto in accordance herewith. Without limiting the foregoing, each of the Subordinated Creditors acknowledge and agree that any Senior Creditor in the course of administering credit extensions to the Borrower may from time to time in its discretion release proceeds of the Collateral in which such Senior Creditor has a security interest to the Borrower or otherwise deal with the Collateral in which such Senior Creditor has a security interest, without any notice or accounting to any of the Subordinated Creditors whatsoever. 16. [Intentionally Omitted]. 17. Agreements by the Borrower. The Borrower agrees that it will not make any payment of any of the Subordinated Debt, or take any other action, in contravention of the provisions of this Agreement. 18. Obligations under this Agreement Not Affected.
D-7 (a) All rights and interests of the Senior Creditors under this Agreement, and all agreements and obligations of each of the Subordinated Creditors and the Borrower under this Agreement, remain in full force and effect irrespective of: (i) any lack of validity or enforceability of the Note Issuance Agreement or the other Agreement Documents; (ii) any increase or decrease in the amount of the Senior Obligations or the commitments therefor, any increase or decrease in the interest rates applicable to the Senior Obligations, any change in the time, manner or place of payment of, or in any other term of, all or any of the Senior Obligations, or any other amendment or waiver of or any consent to or departure from the Note Issuance Agreement or the other Agreement Documents; (iii) any exchange, release or nonperfection of any Collateral, or any release or amendment or waiver of or consent to or departure from any guaranty, for all or any of the Senior Obligations; or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Borrower in respect of the Senior Obligations or either of the Subordinated Creditors in respect of this Agreement. (b) To the extent that the Borrower or any guarantor of or provider of collateral for the Senior Obligations makes any payment on the Senior Obligations that is subsequently invalidated, declared to be a fraudulent or preferential transfer, conveyance or set aside or is required to be repaid to the Borrower as a debtor in possession, a trustee, receiver or any other party under any bankruptcy, insolvency or reorganization act, state or federal law, common law or equitable cause (such payment being hereinafter referred to as a “Voided Payment”), then to the extent of such Voided Payment, that portion of the Senior Obligations that had been previously satisfied by such Voided Payment will be revived and continue in full force and effect as if such Voided Payment had never been made. If a Voided Payment is recovered from a Senior Creditor, an Event of Default is deemed to have existed and to be continuing under the Note Issuance Agreement from the date of such Senior Creditor’s initial receipt of such Voided Payment until the full amount of such Voided Payment is restored to such Senior Creditor. During any continuance of any such Event of Default, this Agreement remains in full force and effect with respect to the Subordinated Debt. To the extent that either of Subordinated Creditors have received any payments with respect to the Subordinated Debt subsequent to the date of a Senior Creditor’s initial receipt of such Voided Payment and such payments have not been invalidated, declared to be a fraudulent or preferential transfer, conveyance or set aside or are required to be repaid to the Borrower as a debtor in possession, a trustee, receiver, or any other party under any bankruptcy, insolvency or reorganization act, state or federal law, common law or equitable cause, each of the Subordinated Creditors will be obligated and agree that any such payment so made or received will be deemed to have been received in trust for the benefit of such Senior Creditor and each of the Subordinated Creditors agrees to pay to such Senior Creditor upon demand, the amount so received by either of the Subordinated Creditors during such period of time to the extent necessary fully to restore to such Senior Creditor the amount of such Voided Payment.
D-8 (c) Except as specifically described in this Agreement, nothing contained in this Agreement or in any instrument evidencing any Subordinated Debt is intended to or impairs, as between the Borrower, its creditors other than the Senior Creditors and the Subordinated Creditors, the obligations of the Borrower, which are absolute and unconditional, to pay to each of the Subordinated Creditors the Subordinated Debt as and when it becomes due and payable in accordance with its terms, subject, however, to the terms of this Agreement. Except as specifically described in this Agreement, nothing contained in this Agreement or in any instrument evidencing any Subordinated Debt is intended to or affects the relative rights of any of the Subordinated Creditors and creditors of the Borrower other than the Senior Creditors. As between the Borrower, its creditors other than the Senior Creditors and each of the Subordinated Creditors, no payments or distributions otherwise payable or deliverable in respect of the Subordinated Debt, which are paid or delivered to the Senior Creditors under this Agreement, are deemed to be a payment by the Borrower on account of the Subordinated Debt. 19. Information Concerning Financial Condition of the Borrower. Each of the Subordinated Creditors assume responsibility for keeping itself informed of the financial condition of the Borrower and of all other circumstances bearing upon the risk of nonpayment of the Subordinated Debt or any part of the Subordinated Debt. Each of the Subordinated Creditors agree that no Senior Creditor has any duty to advise it of information known to such Senior Creditor regarding such condition or any such circumstance. In the event that a Senior Creditor in its sole discretion undertakes at any time or from time to time to provide any such information to the Subordinated Creditors, such Senior Creditor is under no obligation (a) to undertake any investigation, (b) to disclose any information which it wishes to maintain confidential, or (c) to make any other or future disclosures of such information or any other information to either of the Subordinated Creditors. 20. Subordinated Creditors’ Waivers. (a) Each of the Subordinated Creditors and the Borrower expressly waive all notice of the acceptance by the Senior Creditors of the subordination and other provisions of this Agreement and all other notices not specifically required under the terms of this Agreement whatsoever, and each of the Subordinated Creditors and the Borrower expressly consent to reliance by the Senior Creditors upon the subordination and other agreements as provided in this Agreement. (b) Each of the Subordinated Creditors agrees that each Senior Creditor: (i) has made no warranties or representations with respect to the due execution, legality, validity, completeness or enforceability of the Note Issuance Agreement or the other Agreement Documents or the collectability of the obligations or indebtedness thereunder; (ii) is entitled to manage and supervise loans to the Borrower in accordance with applicable law and the terms of the Note Issuance Agreement and the other Agreement
D-9 Documents and without regard to the existence of any rights that any of the Subordinated Creditors may now or in the future have in or to any of the assets of the Borrower; (iii) has no liability to any of the Subordinated Creditors for, and each of the Subordinated Creditors waives and releases such Senior Creditor from any and all liability with respect to, any claim which each of the Subordinated Creditors may now or in the future have against such Senior Creditor arising out of (A) any and all actions which such Senior Creditor takes or omits to take in connection with the Senior Obligations (including, without limitation, actions with respect to the creation, perfection or continuation of liens or security interests in the Collateral and other security for the obligations and indebtedness under the Note Issuance Agreement), (B) any and all actions with respect to the occurrence of an Event of Default, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral, or (C) any and all actions with respect to the collection of any claim securing all or any part of the obligations and indebtedness under the Note Issuance Agreement from any account debtor, guarantor or any other party with respect to the Note Issuance Agreement or the other Agreement Documents or the collection of the obligations or indebtedness thereunder or the valuation, use, protection or release of the Collateral; and (iv) shall be entitled to make an election, in any bankruptcy proceeding, of the application of section 1111(b)(2) of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1330 (the “Bankruptcy Code”). 21. Amendments to Subordinated Debt. Without the prior written consent of the Representative, no Subordinated Debt Documentation may be amended, restated, supplemented or otherwise modified, or entered into, to the extent such amendment, restatement, supplement or modification would contravene the provisions of this Agreement. 22. Amendment; Waiver. This Agreement may be amended only by a writing executed by each of the parties hereto. No waiver of any provision of this Agreement is effective unless it is in writing and signed by the Subordinated Creditors, the Borrower, the Collateral Agent and the Representative. 23. Expenses. The Borrower agrees to pay, upon demand, to the Senior Creditors the amount of any and all reasonable expenses, including the reasonable fees and expenses of its attorneys and paralegals, which the Senior Creditors may incur in connection with the exercise or enforcement of its rights or interests under this Agreement. 24. Addresses for Notices. All notices hereunder shall be in writing (including facsimile or email transmission) and shall be sent to the applicable party at its address shown on the signature page hereto or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose. Notices sent by facsimile or email transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.
D-10 25. No Waiver; Remedies. No failure on the part of any Senior Creditor to exercise, and no delay in exercising, any right under this Agreement operates as a waiver of such right, nor does any single or partial exercise of any right under this Agreement preclude any other or further exercise of such right or the exercise of any other right. The remedies provided in this Agreement are cumulative and not exclusive of any remedies provided by law. 26. Continuing Agreement; Transfer of Notes. This Agreement is a continuing agreement and (a) remains in full force and effect until the Senior Obligations have been paid in full, (b) is binding upon each of the Subordinated Creditors, the Borrower, the Senior Creditors and their respective successors, transferees, participants and assigns, and (c) inures to the benefit of and is enforceable by the Senior Creditors and each of the Subordinated Creditors and their successors, transferees, participants and assigns. Without limiting the generality of clause (c) above, any Senior Creditor may, in accordance with the Note Issuance Agreement, assign, participate or otherwise transfer the Senior Obligations in accordance with the Note Issuance Agreement to any other Person, which Person upon such transfer becomes vested with all or a portion of the rights in respect of such Senior Obligations granted to the Senior Creditors in this Agreement or otherwise. 27. Bankruptcy. Each of the Subordinated Creditors agrees that in the event bankruptcy proceedings are instituted by or against the Borrower, the Senior Creditors may consent to the use of cash collateral or provide post-petition financing under section 364 of the Bankruptcy Code, to the Borrower, on such terms and conditions and in such amounts as the Senior Creditors, in their sole discretion, may decide. Each of the Subordinated Creditors waives any rights it may have under applicable law to object to such use of such cash collateral or post-petition financing. 28. GOVERNING LAW; SEVERABILITY. THIS AGREEMENT, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. If any portion or provision of this Agreement is determined to be invalid or unenforceable, all other provisions of this Agreement remain in full force and effect and this Agreement remains binding between the parties to this Agreement with respect to such remaining provisions. 29. Headings and Captions. Headings and captions used in this Agreement are for convenience only and do not affect the construction of this Agreement. 30. CONSENT TO JURISDICTION; WAIVERS. EACH SUBORDINATED CREDITOR, IN CONNECTION WITH ANY LITIGATION ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED BY THIS AGREEMENT, CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES LOCATED IN THE BOROUGH OF MANHATTAN, NEW YORK CITY, NEW YORK; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY SENIOR CREDITOR FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. EACH SUBORDINATED CREDITOR WAIVES PERSONAL
D-11 SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO THE SUBORDINATED CREDITORS AT THE ADDRESS STATED IN THIS AGREEMENT. EACH OF THE SUBORDINATED CREDITORS WAIVES TRIAL BY JURY, ANY OBJECTION BASED UPON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED UNDER THIS AGREEMENT. 31. Enforceability. The existence of parties who have not executed this Agreement shall not affect the enforceability of this Agreement against the parties who have executed this Agreement. [The remainder of this page intentionally is left blank]
D-12 Schedule 1 Subordinated Creditors [ ]
E-1 EXHIBIT E Form of Security Agreement [See attached]
Pledge and Security Agreement REFERENCE IS MADE TO (A) THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JULY 20, 2023 (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT FROM TIME TO TIME, THE “SENIOR INTERCREDITOR AGREEMENT”), AMONG U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, AS COLLATERAL AGENT FOR THE SECURED PARTIES REFERRED TO THEREIN (BY REFERENCE TO THE DEFINITION IN THE ORIGINAL SENIOR NIA AS DEFINED THEREIN); APPGATE FUNDING, LLC, AS ORIGINAL SECOND LIEN AGENT, SIS HOLDINGS, L.P., AS ORIGINAL THIRD LIEN AGENT; APPGATE, INC., A DELAWARE CORPORATION; AND CERTAIN SUBSIDIARIES PARTY THERETO, AND (B) THAT CERTAIN INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JULY 20, 2023 (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT FROM TIME TO TIME, THE “JUNIOR INTERCREDITOR AGREEMENT” AND, COLLECTIVELY WITH THE SENIOR INTERCREDITOR AGREEMENT, THE “INTERCREDITOR AGREEMENT”), AMONG APPGATE FUNDING, LLC, AS ORIGINAL SENIOR AGENT, SIS HOLDINGS, L.P., AS ORIGINAL SUBORDINATED AGENT; APPGATE, INC., A DELAWARE CORPORATION; AND CERTAIN SUBSIDIARIES PARTY THERETO. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THE LIENS CREATED HEREBY AND THE RIGHTS, REMEDIES, DUTIES AND OBLIGATIONS PROVIDED FOR HEREIN ARE SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE INTERCREDITOR AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE SENIOR INTERCREDITOR AGREEMENT AND THE JUNIOR INTERCREDITOR AGREEMENT, THE PROVISIONS OF THE SENIOR INTERCREDITOR AGREEMENT SHALL CONTROL. PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT dated as of July 20, 2023 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), among Appgate, Inc., a Delaware corporation (“Parent”), Appgate Cybersecurity, Inc., a Delaware corporation (“Company”), each of the Subsidiaries of the Company identified under the caption “OBLIGORS” on the signature pages hereto and each entity, if any, that becomes an “Obligor” hereunder as contemplated by Section 5.12 (collectively, the “Subsidiary Guarantors” and, together with Company and Parent, the “Obligors”), and Appgate Funding, LLC, a Delaware limited liability company (“Lender”). WHEREAS, Company, Parent, the Subsidiary Guarantors and Lender, in its capacity as representative of the holders and collateral agent, are parties to a Note Issuance Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Note Issuance Agreement”; capitalized terms used herein but not otherwise defined shall have the meaning assigned to such term in the Note Issuance Agreement); WHEREAS, the Obligors are the direct or indirect legal and beneficial owners of all of the Pledged Shares more particularly described on Annex 3 attached hereto; WHEREAS, each Subsidiary Guarantor, as a Subsidiary of the Company, and Parent, as the owner of 100% of the issued and outstanding common stock of the Company, will derive substantial direct and indirect benefits from the Note Issuance Agreement (which benefits are hereby acknowledged by each Subsidiary Guarantor and Parent); and
- 2 - WHEREAS, to induce the Lender to enter into the Note Issuance Agreement, in its capacity as representative of the holders and collateral agent, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Obligor has agreed to grant a security interest in the Collateral as security for the Secured Obligations. Accordingly, the parties hereto agree as follows: Section 1. Definitions, Etc. 1.01 Certain Uniform Commercial Code Terms. As used herein, the terms “Accession”, “Account”, “As-Extracted Collateral”, “Chattel Paper”, “Commercial Tort Claims”, “Commodity Account”, “Commodity Contract”, “Deposit Account”, “Document”, “Electronic Chattel Paper”, “Equipment”, “Farm Products”, “Fixture”, “General Intangible”, “Goods”, “Health-care-insurance receivable”, “Instrument”, “Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Manufactured Home”, “Payment Intangible”, “Proceeds”, “Promissory Note”, “Record”, “Supporting Obligation”, and “Tangible Chattel Paper” have the respective meanings set forth in Article 9 of the NYUCC, and the terms “Financial Asset”, “Instruction”, “Securities Account”, “Security”, “Security Entitlement” and have the respective meanings set forth in Article 8 of the NYUCC. 1.02 Additional Definitions. In addition, as used herein: “Collateral” has the meaning assigned to such term in Section 3. “Contract” means all written contracts and agreements between any Obligor and any other Person (in each case, whether third party or intercompany) as the same may be amended, extended, restated, amended and restated, supplemented, replaced or otherwise modified from time to time, including (i) all rights of any Obligor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Obligor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect thereto, (iii) all rights of any Obligor to damages arising thereunder and (iv) all rights of any Obligor to terminate and to perform and compel performance of, such contracts and to exercise all remedies thereunder. “Copyright Collateral” means all Copyrights, whether now owned or hereafter acquired by any Obligor, including each Copyright identified in Annex 4. “Copyrights” means all copyrights, copyright registrations and applications for copyright registrations, including all renewals and extensions thereof, all rights to recover for past, present or future infringements thereof and all other rights whatsoever accruing thereunder or pertaining thereto. “Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit D delivered by a Person pursuant to Section 5.12. “Excluded Accounts” has the meaning set forth in the Note Issuance Agreement. “Excluded Equity Interests” shall mean any of the outstanding Shares of a Foreign Subsidiary which is not a Guarantor in excess of 65% of the voting power of all classes of Shares of such Foreign Subsidiary entitled to vote to the extent the Parent and the Lender agree that a pledge thereof would result in materially adverse tax consequences to the Parent.
- 3 - “Excluded Property” has the meaning assigned to such term in Section 3. “Initial Pledged Shares” means the Shares of each Issuer beneficially owned by any Obligor on the date hereof and identified in Annex 3. For the avoidance of doubt, Initial Pledged Shares shall not include the Excluded Equity Interests (if any). “Insurance” means all property and casualty insurance policies covering any or all of the Collateral (regardless of whether Lender is the loss payee thereof). “Intellectual Property” means any and all (a) Patents, Copyrights, and Trademarks; (b) inventions (whether or not patentable and whether or not reduced to practice), utility models, invention disclosures, any other rights of invention, and all improvements thereon; (c) mask works and integrated circuit topologies, and any applications, registrations and renewals for any of the foregoing; (d) industrial designs and any applications, registrations and renewals for any of the foregoing; (e) trade secrets, know-how, show-how, technology, skills, expertise, experience, and all other confidential or proprietary business or technical information, in each case whether tangible or intangible, and all documentation relating to any of the foregoing, including, any ideas, concepts, research and development, customer and supplier lists and related information, pricing and cost information, business and marketing plans and proposals, any other financial, marketing and business data, technical data, research records, test data, test information, employee work product, records of invention, processes, methods, techniques, formulations, compilations, patterns, compositions, specifications, programs, device, schematics, drawings, designs, flow charts, state diagrams and sequence diagrams; (f) databases and data collections; (g) moral and economic rights of authors, artists and inventors, however denominated, and all other rights of priority and protection of interests therein, and waivers of such rights by others; (h) copies and tangible embodiments thereof (in whatever form or medium); (i) names, likenesses and biographical data of natural persons and other publicity rights; and (j) all other proprietary rights. “Intercreditor Agreement” has the meaning assigned to such term in the header of this Agreement. “Issuers” means, collectively, (a) the respective Persons identified on Annex 3 under the caption “Share Issuer”, (b) any other Person that shall at any time be a Subsidiary of any Obligor, and (c) the issuer of any Shares hereafter owned by any Obligor. “Junior Intercreditor Agreement” has the meaning assigned to such term in the header of this Agreement. “NYUCC” means the Uniform Commercial Code as in effect from time to time in the State of New York. “Original Senior Agent” has the meaning assigned to such term in the Senior Intercreditor Agreement. “Patent Collateral” means all Patents, whether now owned or hereafter acquired by any Obligor, including each Patent identified in Annex 4, and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect thereto.
- 4 - “Patents” means all patents and patent applications, including the inventions and improvements described and claimed therein together with the reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof, all income, royalties, damages and payments now or hereafter due and/or payable with respect thereto, all damages and payments for past or future infringements thereof and rights to sue therefor, and all rights corresponding thereto throughout the world. “Pledged Shares” means, collectively, (i) the Initial Pledged Shares and (ii) all other Shares of any Issuer now or hereafter owned by any Obligor, together in each case with (a) all certificates representing the same, (b) all Shares, securities, moneys or other property representing a dividend on or a distribution or return of capital on or in respect of the Pledged Shares, or resulting from a split-up, revision, reclassification or other like change of the Pledged Shares or otherwise received in exchange therefor, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Shares, and (c) without prejudice to any provision of any of the Agreement Documents prohibiting any merger or consolidation by an Issuer, all Shares of any successor entity of any such merger or consolidation. For the avoidance of doubt, Pledged Shares shall not include the Excluded Equity Interests. “Receivable” means all Accounts and any other right to payment for goods or other property sold, leased, licensed or otherwise disposed of or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper or classified as a Payment Intangible and whether or not it has been earned by performance. References herein to Receivables shall include any Supporting Obligation or collateral securing such Receivable. “Secured Obligations” means the “Agreement Obligations” as defined in the Note Issuance Agreement. “Senior Intercreditor Agreement” has the meaning assigned to such term in the header of this Agreement. “Senior Loan Documents” has the meaning assigned to such term in the Senior Intercreditor Agreement. “Shares” means shares of capital stock of a corporation, limited liability company interests, partnership interests and other ownership or Capital Stock of any class in any Person. “Trademark Collateral” means all Trademarks, whether now owned or hereafter acquired by any Obligor, including each Trademark identified in Annex 4, together, in each case, with the goodwill of the business connected with the use of, and symbolized by, each such trade name, trademark and service mark. Notwithstanding the foregoing, the Trademark Collateral does not and shall not include any Trademark that would be rendered invalid, abandoned, void or unenforceable by reason of its being included as part of the Trademark Collateral. “Trademarks” means all trade names, trademarks and service marks, logos, trademark and service mark registrations, and applications for trademark and service mark registrations, including all renewals of trademark and service mark registrations, all rights to recover for all past, present and future infringements thereof and all rights to sue therefor, and all rights corresponding thereto throughout the world. “USCO” means United States Copyright Office.
- 5 - “USPTO” means the United States Patent and Trademark Office. 1.03 Terms Generally. Terms used herein and not otherwise defined herein are used herein as defined in the Note Issuance Agreement. The definitions of terms herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference hereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The terms lease and license shall include sub-lease and sub-license, as applicable. Section 2. Representations and Warranties. Each Obligor represents and warrants to Lender that the following statements are true and correct: 2.01 Title. Such Obligor is the sole beneficial owner of the Collateral in which it purports to grant a security interest pursuant to Section 3 and no Lien exists upon the Collateral (and no right or option to acquire the same exists in favor of any other Person) other than (a) the security interest created or provided for herein, which security interest constitutes a valid perfected security interest after giving effect to the filing of a financing statement in the jurisdiction of formation of each Obligor, naming such Obligor as debtor and the Lender as secured party, to the extent such security interest may be perfected by the filing of a financing statement, and (b) Permitted Liens. 2.02 Names, Etc. The full and correct legal name, type of organization, jurisdiction of organization, organizational ID number (if applicable) and mailing address of each Obligor as of the date hereof are correctly set forth in Annex 1. Said Annex 1 also correctly specifies for any Obligor that is not a registered organization or is not organized under any State of the United States, the place of business of each Obligor or, if such Obligor has more than one place of business, the location of the chief executive office of such Obligor. Also set forth in Annex 1 is a description of all the occasions in which any of the Obligors has acquired the Shares of another entity or substantially all the assets of another entity within the past five years (including the exact legal name and jurisdiction of organization of such entity), except with respect to the Specified Transaction. 2.03 Changes in Circumstances. Such Obligor has not (a) within the period of four months prior to the date hereof, changed its location (as defined in Section 9-307 of the NYUCC), (b) except as specified in Annex 1, heretofore changed its name within the past five years, (c) except as specified in Annex 2, heretofore become a “new debtor” (as defined in Section 9-102(a)(56) of the NYUCC) with respect to a currently effective security agreement previously entered into by any other Person, or (d) except with respect to the Specified Transaction, changed its identity or corporate structure within the past five years. 2.04 Pledged Shares. The Initial Pledged Shares constitute 100% of the issued and outstanding Shares of each Issuer beneficially owned directly by such Obligor on the date hereof (other than any Shares held in a Securities Account referred to in Annex 3 or any Excluded Equity Interests), whether or not registered in the name of such Obligor. Annex 3 correctly identifies, as at the date hereof, the respective Issuers of the Initial Pledged Shares and (in the case of any corporate Issuer) the respective
- 6 - class and par value of such Shares, whether such Shares are certificated and the respective number of such Shares (and registered owner thereof) represented by each such certificate. The Initial Pledged Shares are, and all other Pledged Shares in which such Obligor shall hereafter grant a security interest pursuant to Section 3 will be, (i) duly authorized, validly existing, fully paid and non-assessable (in the case of any Shares issued by a corporation) and (ii) duly issued and outstanding (in the case of any Shares in any other entity), and none of such Pledged Shares are or will be subject to any contractual restriction, or any restriction under the charter, by-laws, partnership agreement or other organizational instrument of the respective Issuer thereof, upon the transfer of such Pledged Shares (except for any such restriction contained herein or in the Agreement Documents, or under such organizational instruments or any Permitted Liens). All certificates, agreements or instruments representing or evidencing the Pledged Shares (to the extent such Pledged Shares are certificated) in existence on the date hereof have been, or will be, delivered to Lender in a suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and (assuming continuing possession by Lender of all such Pledged Shares) Lender has a perfected security interest therein. Notwithstanding the foregoing, in accordance with the terms of the Senior Intercreditor Agreement, all certificates, agreements or instruments representing or evidencing the Pledged Shares that have been or shall be delivered to the Original Senior Agent shall be held by the Original Senior Agent as gratuitous bailee for the Lender solely for purposes of perfecting the security interest granted under this Agreement. 2.05 Promissory Notes, Instruments and Tangible Chattel Paper. Other than the Global Intercompany Note, Annex 3 sets forth a complete and correct list of all Promissory Notes (including any intercompany notes), Instruments and Tangible Chattel Paper held by any Obligor on the date hereof with a value of $100,000 or greater individually or with a value of $250,000 or greater in the aggregate. 2.06 Intellectual Property. Annex 4 sets forth under the name of such Obligor a complete and correct list of all Copyright registrations, Patents, Patent applications, Trademark registrations and Trademark applications owned by such Obligor on the date hereof (or, in the case of any supplement to said Annex 4, effecting a grant of security interest with respect thereto, as of the date of each such supplement). 2.07 Deposit Accounts, Securities Accounts and Commodity Accounts. Annex 5 sets forth a complete and correct list of all Deposit Accounts, Securities Accounts and Commodity Accounts of the Obligors on the date hereof as well as whether those accounts constitute an Excluded Account. 2.08 Commercial Tort Claims. Annex 6 sets forth a complete and correct list of all Commercial Tort Claims of the Obligors in existence on the date hereof with a value of $100,000 or greater individually or with a value of $250,000 or greater in the aggregate. 2.09 Letter-of-Credit Rights. Annex 7 sets forth a complete and correct list of all letters of credit issued in favor of each Obligor, as beneficiary thereunder, on the date hereof with a value of $100,000 or greater individually or with a value of $250,000 or greater in the aggregate. 2.10 Foreign Intellectual Property. No Intellectual Property registered in a jurisdiction outside of the United States of America is material to the business of any Obligor. 2.11 Special Collateral. As of the date hereof, none of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) As-Extracted Collateral, (3) Manufactured Homes, (4) timber to be
- 7 - cut, (5) Health-care-insurance receivables, (6) [reserved], (7) aircraft, aircraft engines, satellites, ships or railroad rolling stock or (8) motor vehicles or other goods subject to a certificate of title statute of any jurisdiction. 2.12 Benefit to Each Obligor. The Obligors are members of an affiliated group of Persons, and the Obligors are engaged in related businesses. The obligations of each Obligor pursuant to this Agreement reasonably may be expected to benefit, directly or indirectly, it; and each Obligor has determined that this Agreement is necessary and convenient to the conduct, promotion and attainment of the business of such Obligor. Such Obligor has received at least “reasonably equivalent value” (as such phrase is used in Section 548 of the Bankruptcy Code and in comparable provisions of other applicable law) and more than sufficient consideration to support its obligations hereunder in respect of the Secured Obligations and under any of the Agreement Documents to which it is a party. 2.13 Consents; Authorizations, etc. No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a security interest by such Obligor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Obligor, or (ii) for the exercise by Lender of the voting or other rights provided for in this Agreement with respect to the Investment Property or the remedies in respect of the Collateral pursuant to this Agreement, except (A) as may be required in connection with such disposition of Investment Property by laws affecting the offering and sale of securities generally, (B) consents or approvals that have been obtained and that are still in force and effect, (C) with respect to registered Copyrights only, the recordation of the Copyright Security Agreement with the USCO, (D) customary procedures required by applicable law in connection with the foreclosure or other realization on the security interest, (E) filings and recordings with respect to the Collateral required to be made, as of the Effective Date or thereafter, in each case, in accordance with the Agreement Documents, (F) on or prior to the date that they are required to be made pursuant to the terms of the Agreement Documents, other filings, recordings or other actions necessary to perfect Liens granted to Lender in Collateral, (G) the Senior Loan Documents and (H) the Subordinated Loan Documents (as defined in the Senior Intercreditor Agreement). 2.14 Limited Liability Companies; Partnerships, etc. As to the limited liability company or partnership interests, issued under any operating agreement or partnership agreement of any Obligor, each Obligor hereby represents and warrants that the Pledged Shares issued pursuant to such agreement (A) are not dealt in or traded on securities exchanges or in securities markets, (B) do not constitute investment company securities, (C) are not held by such Obligor in a securities account and (D) are not securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction. Section 3. Collateral. As collateral security for the payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, each Obligor hereby pledges and grants to Lender as hereinafter provided a security interest in all of such Obligor’s right, title and interest in, to and under the following property, in each case whether tangible or intangible, wherever located, and whether now owned by such Obligor or hereafter acquired and whether now existing or hereafter coming into existence (all of the property described in this Section 3 being collectively referred to herein as “Collateral”): (a) all Accounts, Receivables and Receivables Records; (b) all As-Extracted Collateral;
- 8 - (c) all Chattel Paper; (d) all Deposit Accounts; (e) all Documents and Contracts; (f) all Equipment; (g) all Fixtures; (h) all General Intangibles, including any and all claims for damages by way of past, present and future infringement of any Intellectual Property, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of Intellectual Property; (i) all Goods not covered by the other clauses of this Section 3; (j) the Pledged Shares; (k) all Instruments, including all Promissory Notes; (l) all Insurance; (m) all Intellectual Property; (n) all Inventory; (o) all Investment Property, including all Securities, all Securities Accounts and all Security Entitlements with respect thereto and Financial Assets carried therein, and all Commodity Accounts and Commodity Contracts; (p) all Letter-of-Credit Rights; (q) all Money, as defined in Section 1-201(24) of the NYUCC; (r) all commercial tort claims, as defined in Section 9-102(a)(13) of the NYUCC, including those arising out of the events described on Annex 6; (s) all other tangible and intangible personal property whatsoever of such Obligor; and (t) all Proceeds of any of the Collateral, all Accessions to and substitutions and replacements for, any of the Collateral, and all offspring, rents, profits and products of any of the Collateral, and, to the extent related to any Collateral, all books, correspondence, credit files, records, invoices and other papers (including all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Obligor or any computer bureau or service company from time to time acting for such Obligor), provided that Collateral hereunder shall not include: (1) any lease, license, contract, property rights or agreement to which any Obligor is a party (or to any of its rights or interests thereunder) if the grant of such security interest would constitute or result in either (i) the abandonment, invalidation or unenforceability of
- 9 - any right, title or interest of any Obligor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement (other than to the extent that any such term would be rendered ineffective by Section 9-406, 9-407, 9-408 or 9-409 of the UCC), provided that the Collateral shall include, and the security interest granted by each Obligor shall attach to, immediately at such time as the contractual or legal prohibition shall no longer be applicable and to the extent severable, any portion of such lease, license, contract, property rights or agreement not subject to the prohibitions specified in (i) or (ii) above, provided further, that the exclusions referred to in this clause (1) shall not include any Proceeds of any such lease, license, contract, property rights or agreement, (2) any intent-to-use United States trademark application for which an “Amendment to Allege Use” or “Statement of Use” has not been filed under 15 U.S.C. § 1051(c) or (d), respectively, or, if filed, has not been deemed in conformance with 15 U.S.C. § 1051 (a) or (c) and accepted by the USPTO, unless and until a “Statement of Use” or “Amendment to Allege Use” is filed, has been deemed in conformance with 15 U.S.C. § 1051 (a) and (c) or examined and accepted, respectively, by the USPTO, (3) Excluded Accounts which constitute “Excluded Accounts” pursuant to clause (i) of the definition thereof, (4) any assets and the proceeds thereof which are subject to a purchase money security interest or a Capital Lease Obligation which is permitted to be granted or entered into by an Obligor under the terms of the Note Issuance Agreement but only to the extent that an agreement evidencing such purchase money security interest or Capital Lease Obligations contains a term that restricts, prohibits, or requires a consent (that has not been obtained) of a Person (other than an Obligor or any of its Subsidiaries or their respective Affiliates) to, the creation, attachment or perfection of the security interest granted with respect to such assets, and any such restriction, prohibition and/or requirement of consent is effective and enforceable under applicable law and is not rendered ineffective by applicable law, (5) Excluded Equity Interests, (6) Non-Material Real Property (other than to the extent a security interest therein may be perfected by the filing of a UCC financing statement or similar filings under applicable law), (7) any leasehold interests in real property and (8) any property of any Obligor, to the extent that the Company and the Lender reasonably agree in writing that the burden or cost of obtaining a security interest therein would be excessive in relation to the practical benefit to the Lender obtained thereby or that would result in material adverse Tax consequences (each of the foregoing, the “Excluded Property”). Section 4. Further Assurances; Remedies. In furtherance of the grant of the security interest pursuant to Section 3, the Obligors hereby jointly and severally agree with Lender as follows: 4.01 Delivery and Other Perfection. Each Obligor shall promptly from time to time give, execute, deliver, file, record, authorize or obtain all such financing statements, continuation statements, notices, instruments, documents, agreements or consents or other papers as may be necessary or, as the Lender may reasonably request, to create, preserve, perfect, maintain the perfection of or validate the security interest granted pursuant hereto or to enable Lender to exercise and enforce its rights hereunder with respect to such security interest, and without limiting the foregoing shall: (a) if any of the Pledged Shares, Investment Property or Financial Assets constituting part of the Collateral are received by such Obligor, forthwith (x) deliver to Lender the certificates or instruments representing or evidencing the same, duly endorsed in blank or accompanied by such instruments of assignment and transfer in such form and substance as Lender may reasonably request, all of which thereafter shall be held by Lender, pursuant to the terms of this Agreement, as part of the Collateral and (y) take such other action as Lender may reasonably deem necessary or appropriate to duly record or otherwise perfect the security interest created hereunder in such Collateral; (b) promptly from time to time deliver to Lender any and all Instruments constituting part of the Collateral, endorsed and/or accompanied by such instruments of assignment and transfer
- 10 - as are necessary or may be reasonably requested to evidence assignment and transfer in such form and substance as Lender may request; provided that (other than in the case of the promissory notes described in Annex 3) so long as no Event of Default shall have occurred and be continuing, such Obligor may retain for collection in the ordinary course any Instruments received by such Obligor in the ordinary course of business and Lender shall, promptly upon request of such Obligor (through Company), make appropriate arrangements for making any Instrument delivered by such Obligor available to such Obligor for purposes of presentation, collection or renewal (any such arrangement to be effected, to the extent requested by Lender, against trust receipt or like document); (c) promptly from time to time enter into such control agreements or consents to assignments of Proceeds, each in form and substance reasonably acceptable to Lender (provided that the Obligors shall use commercially reasonable efforts to ensure that the Lender is not exposed to individual liability (i.e., liability other than in its capacity as the Lender in any control agreement)), as are necessary to perfect the security interest created hereby in any and all Deposit Accounts, Investment Property and Letter-of-Credit Rights, and will promptly furnish to Lender true copies thereof, provided, that, notwithstanding the foregoing, in accordance with the terms of the Senior Intercreditor Agreement, all such control agreements or consents to assignments of Proceeds that have been or shall be delivered in favor of Original Senior Agent shall be entered into by the Original Senior Agent as gratuitous bailee for the Lender solely for purposes of perfecting the security interest granted under this Agreement; (d) promptly execute and deliver to Lender a Trademarks Security Agreement substantially in the form of Exhibit A hereto, a Patents Security Agreement substantially in the form of Exhibit B hereto, and/or a Copyrights Security Agreement substantially in the form of Exhibit C hereto, as necessary or desirable to record the security interest granted herein to Lender with the USPTO, the USCO, and any other applicable Governmental Authority, as applicable; (e) keep full and accurate books and records relating to the Collateral, and stamp or otherwise mark such books and records in such manner as Lender may reasonably require in order to reflect the security interests granted by this Agreement; and (f) permit representatives of Lender, upon reasonable notice, at any time during normal business hours to inspect and make abstracts from its books and records pertaining to the Collateral, and permit representatives of Lender to be present at such Obligor’s place of business to receive copies of communications and remittances relating to the Collateral, and forward copies of any notices or communications received by such Obligor with respect to the Collateral, all in such manner as such Persons may require. Notwithstanding anything herein to the contrary, prior to the full satisfaction of the Secured Obligations (as defined in the Senior Loan Documents), to the extent any Obligor is required hereunder to deliver Collateral to the Lender or enter into control agreements or consents to assignments of Proceeds in favor of the Lender for purposes of possession and/or control and is unable to do so as a result of having previously delivered such Collateral to the Original Senior Agent or entered into such agreements in favor of the Original Senior Agent in accordance with the terms of the Senior Loan Documents, such Obligor’s obligations hereunder with respect to such delivery shall be deemed satisfied by the delivery to the Original Senior Agent, acting as gratuitous bailee of the Lender. Notwithstanding anything herein to the contrary (i), with respect to any Collateral subject to a certificate of title, no Obligor shall be required to take any steps to perfect by recordation the Lender’s Lien
- 11 - on the appropriate certificate of title and (ii) no Obligor shall be required to deliver control agreements with respect to, or perfect security interests in, Excluded Accounts. 4.02 Other Financing Statements or Control. Except as otherwise permitted under Section 4.14 of the Note Issuance Agreement, no Obligor shall (a) file or suffer to be on file, or authorize or permit to be filed or to be on file, in any jurisdiction, any financing statement or like instrument with respect to any of the Collateral in which Lender is not named as the sole secured party, or (b) cause or permit any Person other than Lender to have “control” (as defined in Section 9-104, 9-105, 9-106 or 9-107 of the NYUCC) of any Deposit Account, Electronic Chattel Paper, Investment Property or Letter-of-Credit Right constituting part of the Collateral. 4.03 Preservation of Rights. Lender shall not be required to take steps necessary to preserve any rights against prior parties to any of the Collateral. 4.04 Special Provisions Relating to Certain Collateral. (a) Pledged Shares. (i) The Obligors will cause the Pledged Shares to constitute at all times 100% of the total number of Shares of each Issuer then outstanding and owned by the Obligors, other than any Excluded Equity Interests. The Obligors shall at no time elect to treat any limited liability company or partnership interests pledged hereunder as a “security” within the meaning of Article 8 of the UCC. (ii) So long as no Event of Default shall have occurred and be continuing, the Obligors shall have the right to exercise all voting, consensual and other powers of ownership pertaining to the Pledged Shares for all purposes not inconsistent with the terms of this Agreement, the Agreement Documents or any other instrument or agreement referred to herein or therein, provided that the Obligors jointly and severally agree that they will not vote the Pledged Shares in any manner that is inconsistent with the terms of this Agreement, the Agreement Documents or any such other instrument or agreement, or in any manner adverse to the Lender’s rights, remedies or interest in any of the Agreement Documents. (iii) Unless and until an Event of Default shall have occurred and be continuing, the Obligors shall be entitled to receive and retain any dividends, distributions or Proceeds on the Pledged Shares paid in cash out of earned surplus to the extent such dividends, distributions or Proceeds are permitted to be made under Section 4.16 of the Note Issuance Agreement. (iv) If an Event of Default shall have occurred and be continuing, whether or not the Lender exercises any available right to declare any Secured Obligations due and payable or seek or pursue any other relief or remedy available to it under applicable law or under this Agreement, the Agreement Documents or any other agreement relating to such Secured Obligation, (A) all rights of each Obligor to exercise the voting and other consensual rights it would otherwise be entitled to exercise with respect to the Pledged Shares pursuant to Section 4.04(a)(ii) hereof shall immediately cease, and all such rights shall thereupon become vested in Lender, which shall thereupon have the sole right (but not the obligation) to exercise such voting and other consensual rights, and, in connection therewith, each Obligor shall, at its sole cost and expense, from time to time execute and deliver to Lender appropriate instruments, and such other documentation as Lender may reasonably request in order to permit Lender to exercise the voting and other rights which it may be entitled to exercise pursuant to this clause (A), and (B), all dividends and other distributions on
- 12 - the Pledged Shares shall be paid directly to Lender, subject to the terms of this Agreement and the Intercreditor Agreement, and, if Lender shall so request in writing, the Obligors jointly and severally agree to execute and deliver to Lender appropriate additional dividend, distribution and other orders and documents to that end. (v) Subject to the Intercreditor Agreement, each Obligor hereby expressly authorizes and instructs each Issuer of any Pledged Shares pledged hereunder to (i) comply with any Instruction received by it from Lender in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further Instructions from such Obligor, and such Obligor agrees that such issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend or other payment with respect to the Pledged Shares directly to Lender. (b) Intellectual Property. (i) For the purpose of enabling Lender to exercise rights and remedies under Section 4.05 (which are effective upon the occurrence of and during the continuation of an Event of Default), each Obligor hereby grants to Lender, to the extent grantable, upon the occurrence of and solely during the continuation of an Event of Default, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Obligor) to use and exploit the Intellectual Property in any manner as is necessary in connection with Lender’s exercise of its rights and remedies under this Agreement and the Note Issuance Agreement in connection with an Event of Default (including the licensing or sublicensing of such Intellectual Property if so permitted) now owned or hereafter acquired by such Obligor forming part of the Collateral, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof; provided, that, in the case of Trademarks, the foregoing license is subject to sufficient rights of quality control and inspection in favor of such Obligor with respect to use of the Trademarks in order to avoid the risk of invalidation of such Trademarks. Such license shall terminate in the event the applicable Event of Default is cured. (ii) Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Note Issuance Agreement that limit the rights of the Obligors to dispose of their property, so long as no Event of Default shall have occurred and be continuing, the Obligors will be permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of the business of the Obligors. In furtherance of the foregoing, so long as no Default or Event of Default shall have occurred and be continuing, Lender shall from time to time, upon the reasonable request of the respective Obligor (through Company), execute and deliver any instruments, certificates or other documents, in the form so reasonably requested, that such Obligor (through Company) shall have determined are appropriate in its reasonable business judgment to allow it to take any action permitted above. The exercise of rights and remedies under Section 4.05 by Lender shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Obligors in accordance with the first sentence of this clause (ii). (iii) With respect to Intellectual Property that is owned by an Obligor, each Obligor shall have the duty, to the extent determined by such Obligor in its reasonable business judgment to be necessary or in its best interests in the operation of such Obligor’s business, to use commercially reasonable efforts, (A) to promptly sue for infringement, misappropriation, or dilution and to recover any and all damages for such infringement, misappropriation, or dilution,
- 13 - (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter until the termination of this Agreement, (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement and (D) to take all reasonable and necessary action to preserve and maintain all of such Obligor’s Trademarks, Patents, Copyrights, domain names, other material Intellectual Property, Intellectual Property licenses, and its rights therein, including filing of applications for renewal, affidavits of use and affidavits of incontestability and opposition and interference and cancellation proceedings. Each Obligor hereby agrees to take the steps described in this Section 4.04(b)(iii) with respect to all new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later becomes entitled, if and to the extent that such Obligor determines, in its reasonable business judgment, to be necessary to do so. To the extent that: (i) registration is necessary to perfect the security interest with respect to the unregistered Copyright Collateral, (ii) such unregistered Copyright Collateral is material to the business of the Obligors taken as a whole, and (iii) Lender reasonably requests that registration be sought for such unregistered Copyright Collateral, the applicable Obligor that owns such unregistered Copyright shall file an application with the USCO for such Copyright Collateral. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Obligor. Each Obligor further agrees not to abandon any Trademark, Patent, Copyright or Intellectual Property license (except in dispositions permitted by the Agreement Documents) that is economically desirable in the operation of such Obligor’s business unless such Obligor has determined in the reasonable business judgement of such Obligor that maintaining such Trademark, Patent, Copyright or Intellectual Property License is no longer necessary or in the best interests of such Obligor’s business. (iv) Without limiting any obligations under an Intellectual Property license which has been assigned to Lender in connection with an Event of Default, Obligors acknowledge and agree that the Lender shall have no duties with respect to the Intellectual Property or Intellectual Property licenses. Without limiting the generality of this Section 4.04(b)(iv), Obligors acknowledge and agree that Lender shall not be under any obligation to take any steps necessary to preserve rights in the Collateral consisting of Intellectual Property or Intellectual Property licenses, but Lender may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all reasonable and documented out-of-pocket expenses incurred in connection therewith (including reasonable fees and expenses of attorneys and other professionals) shall be the joint and several responsibility of the Obligors. (v) Within thirty (30) days of each fiscal quarter end, Obligors shall give Lender written notice of any and all Patents or Trademarks for which an application for the registration of any such Patent or Trademark with the USPTO has been filed by an Obligor, and Obligors shall cause to be filed any such Patents Security Agreements and Trademarks Security Agreements and/or amendments thereto with respect to such filings and applications, as applicable, with the USPTO within forty-five (45) days of each fiscal quarter end. Within thirty (30) days after any filing or application of any Copyright with the USCO by an Obligor, Obligors shall give Lender written notice of any and all such Copyrights, and Obligors shall cause to be filed any such Copyright Security Agreements and/or amendments thereto with respect to such filings and applications with the USCO. (c) Chattel Paper. Each Obligor shall (i) deliver to Lender each original of each item of Chattel Paper at any time constituting part of the Collateral, and (ii) cause each such original and each copy thereof to bear a conspicuous legend, in form and substance reasonably satisfactory to Lender, indicating that such Chattel Paper is subject to the security interest granted hereby and that purchase of such Chattel Paper by a Person other than Lender without the consent of Lender would violate the rights of
- 14 - Lender. Notwithstanding the foregoing, the requirements of this Section 4.04(c) shall not apply to Chattel Paper with a value less than $250,000 individually or to Chattel Paper with a value less than $500,000 in the aggregate. (d) Commercial Tort Claims. Each Obligor agrees that, if it shall acquire any interest in any Commercial Tort Claim (whether from another Person or because such commercial tort claim shall have come into existence), (i) such Obligor shall, promptly (but in any event within thirty (30) days thereof) deliver to Lender, in each case in form and substance reasonably satisfactory to Lender, a notice of the existence and nature of such Commercial Tort Claim and a supplement to Annex 4 containing a specific description of such Commercial Tort Claim, (ii) Section 3 of this Agreement shall apply to such Commercial Tort Claim and (iii) upon the request of the Lender, such Obligor shall execute and deliver to Lender, in each case in form and substance reasonably satisfactory to Lender, any document, and take all other action, deemed by Lender to be reasonably necessary for Lender to obtain a perfected security interest in all such Commercial Tort Claims, subject to Permitted Liens. Any supplement to Annex 4 delivered pursuant to this Section 4.04(d) shall, after the receipt thereof by Lender, become part of Annex 4 for all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt. Notwithstanding the foregoing, the requirements of this Section 4.04(d) shall not apply to a Commercial Tort Claim with a value less than $250,000 individually or to Commercial Tort Claims with a value less than $500,000 in the aggregate. 4.05 Remedies. (a) Rights and Remedies Generally upon Default. Subject to the Intercreditor Agreement, if applicable, if an Event of Default shall have occurred and is continuing, Lender shall have all of the rights and remedies with respect to the Collateral of a secured party under the UCC (whether or not the UCC is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including the right (but not the obligation), to the fullest extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if Lender were the sole and absolute owner thereof (and each Obligor agrees to take all such action as may be appropriate to give effect to such right); and without limiting the foregoing the Lender may, but shall not be obligated to: (i) in its name or in the name of any Obligor or otherwise, demand, sue for, collect or receive any money or other property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so; (ii) make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral; (iii) require the Obligors to notify (and each Obligor hereby authorizes Lender to so notify) each account debtor in respect of any Account, Chattel Paper or General Intangible, and each obligor on any Instrument, constituting part of the Collateral that such Collateral has been assigned to Lender hereunder, and to instruct that any payments due or to become due in respect of such Collateral shall be made directly to Lender or as it may direct (and if any such payments, or any other Proceeds of Collateral, are received by any Obligor they shall be held in trust by such Obligor for the benefit of Lender and as promptly as possible remitted or delivered to Lender for application as provided herein);
- 15 - (iv) require the Obligors to assemble the Collateral at such place or places, reasonably convenient to Lender and the Obligors, as Lender may direct; (v) require the Obligors to cause the Pledged Shares to be transferred of record into the name of Lender or its nominee (and Lender agrees that if any of such Pledged Shares is transferred into its name or the name of its nominee, Lender will thereafter promptly give to respective Obligor (through Company) copies of any notices and communications received by it with respect to such Pledged Shares); and (vi) sell, lease, assign or otherwise dispose of all or any part of the Collateral, at such place or places as Lender deems best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is required by applicable statute and cannot be waived), and Lender or anyone else may be the purchaser, lessee, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Obligors, any such demand, notice and right or equity being hereby expressly waived and released. In the event of any sale, assignment, or other disposition of any of the Trademark Collateral, the goodwill connected with and symbolized by the Trademark Collateral subject to such disposition shall be included. Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned. The Proceeds of each collection, sale or other disposition under this Section 4.05, including by virtue of the exercise of any license granted to Lender in Section 4.04(b), shall be applied in accordance with Section 4.09. (b) Certain Securities Act Limitations. The Obligors recognize that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and applicable federal, foreign or state securities laws, or otherwise, Lender may determine that a public sale is impracticable, not desirable or not commercially reasonable and may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who will agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Obligors acknowledge that any such private sales may be at prices and on terms less favorable to Lender than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agree that any such private sale shall be deemed to have been made in a commercially reasonable manner and that Lender shall have no obligation to engage in public sales and no obligation to delay the sale of any Collateral for the period of time necessary to permit the issuer thereof to register it for public sale. (c) Other acts. Each Obligor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Shares pursuant to this Section 4.05 valid and binding and in compliance with all other applicable legal requirements. Each Obligor further agrees that a breach of any covenant contained in this Section 4.05 will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 4.05 shall be specifically enforceable against such Obligor, and such Obligor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Note Issuance Agreement.
- 16 - (d) Notice. The Obligors agree that to the extent Lender is required by applicable law to give reasonable prior notice of any sale or other disposition of any Collateral, ten Business Days’ notice shall be deemed to constitute reasonable prior notice. 4.06 Deficiency. If the Proceeds of sale, collection or other realization of or upon the Collateral pursuant to Section 4.05 are insufficient to cover the costs and expenses of such realization and the payment in full of the Secured Obligations, the Obligors shall remain liable for any deficiency. 4.07 Locations; Names, Etc. Without at least 30 days’ prior written notice to Lender, no Obligor shall agree to or authorize any modification of the terms of any item of Collateral that would result in a change thereof from one UCC category to another such category (such as from a General Intangible to Investment Property), if the effect of any such change would be to result in a loss of perfection of, or diminution of priority for, the security interests created hereunder in such item of Collateral, or the loss of control (within the meaning of Section 9-104, 9-105, 9-106 or 9-107 of the NYUCC) over such item of Collateral. 4.08 Private Sale. The Lender shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to Section 4.05 conducted in a commercially reasonable manner. Each Obligor hereby waives any claims against the Lender arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount of the Secured Obligations, even if Lender accepts the first offer received and does not offer the Collateral to more than one offeree. 4.09 Application of Proceeds. The Proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by Lender under this Section 4, shall be applied by Lender, in accordance with the Note Issuance Agreement. 4.10 Attorney-in-Fact. Without limiting any rights or powers granted by this Agreement to Lender while no Event of Default has occurred and is continuing, upon the occurrence and during the continuance of any Event of Default, Lender is hereby appointed the attorney-in-fact of each Obligor for the purpose of carrying out the provisions of this Section 4 and taking any action and executing any instruments that Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, so long as Lender shall be entitled under this Section 4 to make collections in respect of the Collateral, Lender shall have the right and power to receive, endorse and collect all checks made payable to the order of any Obligor representing any dividend, payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. 4.11 Perfection and Recordation. Each Obligor authorizes Lender to file UCC financing statements describing the Collateral as “all assets” or “all personal property and fixtures” of such Obligor, provided that no such description shall be deemed to modify the description of Collateral set forth in Section 3. Each Obligor authorizes Lender to file any Patents Security Agreements, Trademarks Security Agreements and/or Copyrights Security Agreements with the USPTO, or USCO, as applicable. Notwithstanding the foregoing, the Obligors agree to prepare, record and file, at their own expense, financing statements (including renewal statements), amendments and supplements and any necessary filings with the USPTO and USCO, as applicable, and such other instruments with respect to the Collateral now existing or hereafter created in such manner and in such jurisdictions as are necessary to perfect and maintain the security interests granted hereunder, and to deliver a file stamped copy of each such financing
- 17 - statement or other evidence of filing to Lender, and Lender has no obligation to file UCC financing statements, continuation statements or amendments, filings with the USPTO or USCO, or any similar filings. 4.12 Termination. (a) Subject to clause (c) below, when all Secured Obligations shall have been indefeasibly paid in full in cash (or, in the case of the Notes, converted in accordance with the Note Issuance Agreement), this Agreement and all obligations (other than those expressly stated to survive such termination) of Lender and each Obligor hereunder shall automatically terminate, and Lender shall, at the request and expense of the Obligors, execute and deliver such documentation as is requested to evidence the assignment and transfer, against receipt but without any recourse, warranty or representation whatsoever, of any remaining Collateral and money received in respect thereof, to or on the order of the respective Obligor and to be released and canceled all licenses and rights referred to in Section 4.04(b). Lender shall also, at the expense and request of such Obligor, authorize the filing of and/or cause to be executed and delivered to the respective Obligor upon such termination such UCC termination statements, releases of security interests with respect to the Patent Collateral, Trademark Collateral and Copyright Collateral for recording at the USPTO or USCO, as applicable, and such other documentation as shall be reasonably requested by the respective Obligor to effect the termination and release of the Liens on the Collateral as required by this Section 4.12(a). In each instance, the Obligors shall have delivered to the Lender such documentation as is required under the Note Issuance Agreement, including but not limited to Sections 16.04, 17.04 and 17.05 of the Note Issuance Agreement. (b) Upon (i) any disposition of any asset permitted by the Note Issuance Agreement to any Person that is not an Obligor or an Affiliate thereof and/or (ii) any release of a Subsidiary Guarantor from its Guaranty in accordance with the Note Issuance Agreement, the Liens granted herein covering such asset or the assets of such Subsidiary Guarantor, as the case may be, shall be released. Lender shall, at the request and expense of the Obligors, execute and deliver such documentation as is requested to evidence the release any Lien covering any asset that has been disposed of with the written consent of the Lender under the Note Issuance Agreement. Lender shall also, at the expense of such Obligor, execute and deliver to the respective Obligor upon such release such documentation as shall be reasonably requested by the respective Obligor to effect or confirm the release of the Liens on the Collateral as required by this Section 4.12(b). In each instance, the Obligors shall have delivered to the Lender an Officer’s Certificate and Opinion of Counsel (to the extent requested by the Lender) to the effect that such release is in compliance with the Agreement Documents (on which the Lender may conclusively rely) and such other supporting documentation as the Lender may reasonably request. (c) Notwithstanding the foregoing, to the extent that any payments on the Secured Obligations or proceeds of any Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then, to such extent of the amount of such voided or returned amount of the Secured Obligations, such amount shall be revived and continue as if such payment or proceeds had not been received and the Lender’s Liens, security interests, rights, powers and remedies under this Agreement and each other applicable Agreement Document shall continue in full force and effect, and the obligations of the Obligor under this Agreement (including, without limitation, with respect to the provision of collateral herein) shall continue to be effective, or be reinstated, as the case may be. In such event, this Agreement and each other applicable Agreement Document shall be automatically reinstated and the Obligor shall take such action as may be reasonably requested by the Lender to effect such reinstatement.
- 18 - 4.13 Further Assurances. Each Obligor agrees that, from time to time, at such Obligor’s expense, upon the written request of Lender, such Obligor will execute and deliver such further documents and do such other acts and things as Lender may reasonably request in order fully to effect the purposes of this Agreement. Section 5. Miscellaneous. 5.01 Notices. (a) Notices Generally. Any notice or other communication herein required or permitted to be given to an Obligor or Lender, shall be sent to (1) if to an Obligor, 2 Alhambra Plaza, Suite PH-1-B, Coral Gables, Florida, 33134, Attention: General Counsel with a copy to [intentionally omitted] and (2) if to Lender, 2 Alhambra Plaza, Suite PH-1-B, Coral Gables, Florida 33134, Attention: Manuel D. Medina ([intentionally omitted]) and Tony Jimenez ([intentionally omitted]). Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally served or sent by telefacsimile (except for any notices sent to Lender) or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that no notice to Lender shall be effective until received by Lender. (b) Electronic Communications. Notices and other communications to any Obligor or Lender may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Lender. Lender or Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Lender otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. 5.02 No Waiver. No failure on the part of Lender to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Lender of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. 5.03 Amendments, Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by each Obligor and Lender. Any such amendment or waiver shall be binding upon the Lender and each Obligor. 5.04 Expenses; Indemnification. (a) The Obligors jointly and severally agree to reimburse the Lender for all reasonable and documented costs and expenses incurred or made by it (including the reasonable fees, expenses and
- 19 - disbursements of external legal counsel) in connection with (i) the entry into this Agreement and administration thereof, (ii) any Default, Event of Default or any enforcement or collection proceeding resulting therefrom, including all manner of participation in or other involvement with (w) performance by Lender of any obligations of the Obligors in respect of the Collateral that the Obligors have failed or refused to perform, (x) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation proceedings, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the Collateral, and for the care of the Collateral and defending or asserting rights and claims of Lender in respect thereof, by litigation or otherwise, including expenses of insurance, (y) judicial or regulatory proceedings and (z) workout, restructuring or other negotiations or proceedings (whether or not the workout, restructuring or transaction contemplated thereby is consummated) and (iii) the enforcement of this Section 5.04, and all such costs and expenses shall be Secured Obligations entitled to the benefits of the collateral security provided pursuant to Section 3. (b) Each Obligor agrees to pay, and to hold Lender harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. (c) Each Obligor agrees to pay, and to hold Lender harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement in accordance with Section 9.03 of the Note Issuance Agreement. (d) The agreements in this Section 5.04 shall survive repayment of the Secured Obligations and all other amounts payable under the Note Issuance Agreement and the other Agreement Documents. 5.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each Obligor and Lender (provided that no Obligor shall assign or transfer its rights or obligations hereunder without the prior written consent of Lender). 5.06 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic format (i.e., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement. 5.07 Applicable Law; Consent to Jurisdiction; Etc. (a) Governing Law; Jurisdiction. Section 18.04 of the Note Issuance Agreement shall apply hereto, mutatis mutandis. 5.08 WAIVER OF JURY TRIAL. Section 18.13 of the Note Issuance Agreement shall apply hereto, mutatis mutandis. 5.09 Captions. The captions and section headings appearing herein are included solely for convenience of reference and shall not constitute a part hereof for any other purpose or be given any substantive effect.
- 20 - 5.10 Agents and Attorneys-in-Fact. Lender may employ agents and attorneys-in-fact in connection herewith and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. 5.11 Severability. In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 5.12 Additional Obligors. As contemplated by Section 4.19 of the Note Issuance Agreement, certain Subsidiaries of the Company formed or acquired after the date hereof, or certain other Subsidiaries not then a party hereto, may be required to become an “Obligor” under this Agreement, by executing and delivering to Lender a Counterpart Agreement substantially in the form of Exhibit D hereto or such other joinder agreement as Lender may approve or request. Accordingly, upon the execution and delivery of any such Counterpart Agreement or joinder agreement by any such new Subsidiary, such new Subsidiary shall automatically and immediately, and without any further action on the part of any Person, become an “Obligor” under and for all purposes of this Agreement, and each of the Annexes hereto shall be supplemented in the manner specified in such Counterpart Agreement. 5.13 Entire Agreement. This Agreement and the other Agreement Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. 5.14 Intercreditor Agreement. Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Lender pursuant to this Agreement and (ii) the exercise of any right or remedy by the Lender hereunder or the application of proceeds of any Collateral, in each case, are subject to the limitations and provisions of the Intercreditor Agreement to the extent provided therein.
[Signature Page to Pledge and Security Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. OBLIGORS APPGATE CYBERSECURITY, INC., as an Obligor By: ___________________________________ Name: Title: APPGATE, INC., as an Obligor By: ___________________________________ Name: Title: CRYPTZONE WORLDWIDE, INC., as an Obligor By: _________________________________________ Name: Title: CRYPTZONE INTERNATIONAL HOLDINGS INC., as an Obligor By: _________________________________________ Name: Title:
[Signature Page to Pledge and Security Agreement] CRYPTZONE NORTH AMERICA INC., as an Obligor By: _________________________________________ Name: Title: IMMUNITY, INC., as an Obligor By: _________________________________________ Name: Title: IMMUNITY FEDERAL SERVICES, LLC, as an Obligor By: _________________________________________ Name: Title: IMMUNITY PRODUCTS, LLC, as an Obligor By: _________________________________________ Name: Title: IMMUNITY SERVICES, LLC, as an Obligor By: _________________________________________ Name: Title:
[Signature Page to Pledge and Security Agreement] EASY SOLUTIONS ENTERPRISES CORP., as an Obligor By: _________________________________________ Name: Title: EASY SOLUTIONS, INC., as an Obligor By: _________________________________________ Name: Title: CATBIRD NETWORKS, INC., as an Obligor By: _________________________________________ Name: Title:
[Signature Page to Pledge and Security Agreement] APPGATE FUNDING, LLC, as Lender By: Name: Title:
EXHIBIT A [Form of Trademark Security Agreement] SHORT-FORM TRADEMARKS SECURITY AGREEMENT WHEREAS, [NAME OF GRANTOR]1 (the “Grantor”) has used, intends to use, or is using and is the owner of the trademarks and the trademark registrations and registration applications for same listed in the attached Schedule of Trademarks (as defined in the Security Agreement); WHEREAS, the Grantor has contemporaneously with the execution of this Short-Form Trademarks Security Agreement entered into the Pledge and Security Agreement dated as of July 20, 2023 (as modified from time to time, the “Security Agreement”), in which the Grantor has granted a security interest with respect to the Trademark Collateral (as defined therein) in favor of Appgate Funding, LLC, as Lender (“Lender”); and WHEREAS, pursuant to the Security Agreement, the Grantor has agreed with Lender to execute this Short-Form Trademarks Security Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor hereby grants to Lender, to the extent provided in the Security Agreement (the terms and conditions of which are hereby incorporated herein), a security interest in all of its right, title and interest in, to and under all the trademarks, whether now owned or at any time hereafter acquired, of the Grantor that are registered with, or for which applications for registration have been filed with, the United States Patent and Trademark Office, including the trademarks listed on the attached Schedule of Trademarks, and all registrations and pending applications for same (excluding any intent-to- use United States trademark application for which an “Amendment to Allege Use” or “Statement of Use” has not been filed under 15 U.S.C. § 1051(c) or (d), respectively, or, if filed, has not been deemed in conformance with 15 U.S.C. § 1051 (a) or (c) and accepted by the USPTO, unless and until a “Statement of Use” or “Amendment to Allege Use” is filed, has been deemed in conformance with 15 U.S.C. § 1051 (a) and (c) or examined and accepted, respectively, by the USPTO, as collateral security for the prompt and complete payment and performance when due of all the Secured Obligations (as defined in the Security Agreement). Notwithstanding the foregoing, in the event of any conflict between this Short Form Trademarks Security Agreement and the Security Agreement, the Security Agreement shall control. Date: [________ __], 20[__] [NAME OF GRANTOR] By:___________________________ Name: Title: 1 Form prepared under the assumption that it is being delivered for a single “Grantor” that pledges the trademarks. Appropriate adjustments should be made if this is not the case.
SCHEDULE OF TRADEMARKS
EXHIBIT B [Form of Patent Security Agreement] SHORT-FORM PATENTS SECURITY AGREEMENT WHEREAS, [NAME OF GRANTOR]2 (the “Grantor”) is the owner of the patent applications and patents listed in the attached Schedule of Patents and Patent Applications associated therewith; WHEREAS, the Grantor has contemporaneously with the execution of this Short-Form Patents Security Agreement entered into the Pledge and Security Agreement dated as of July 20, 2023 (as modified from time to time, the “Security Agreement”), in which the Grantor has granted a security interest in favor of Appgate Funding, LLC, as Lender (“Lender”) with respect to the Patent Collateral (as defined therein); and WHEREAS, pursuant to the Security Agreement, the Grantor has agreed with Lender to execute this Short-Form Patents Security Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor hereby grants to Lender, to the extent provided in the Security Agreement (the terms and conditions of which are hereby incorporated herein), a security interest in all of its right, title and interest in, to and under all the patents and patent applications whether now owned or at any time hereafter acquired, of the Grantor issued by, or for which applications have been filed with, the United States Patent and Trademark Office, including the patents and applications on the attached Schedule of Patents and Patent Applications, and all related patents and applications thereto, including all reissuances, continuations, continuations-in-part, revisions, extensions, re-examinations thereof, any patents and patent applications claiming priority to said patents and patent applications or from which said patents and patent applications claim priority, and pending applications associated therewith, as collateral security for the prompt and complete payment and performance when due of all the Secured Obligations (as defined in the Security Agreement). Notwithstanding the foregoing, in the event of any conflict between this Short Form Patents Security Agreement and the Security Agreement, the Security Agreement shall control. Date: [________ __], 20[__] [NAME OF GRANTOR] By:___________________________ Name: Title: 2 Form prepared under the assumption that it is being delivered for a single “Grantor” that pledges the patents. Appropriate adjustments should be made if this is not the case.
SCHEDULE OF PATENTS AND PATENT APPLICATIONS
EXHIBIT C [Form of Copyright Security Agreement] SHORT-FORM COPYRIGHTS SECURITY AGREEMENT WHEREAS, [NAME OF GRANTOR]3 (the “Grantor”) is the owner of the copyrights and copyright registrations and registration applications for same listed in the attached Schedule of Registered Copyrights; WHEREAS, the Grantor has contemporaneously with the execution of this Short-Form Copyrights Security Agreement entered into the Pledge and Security Agreement dated as of July 20, 2023 (as modified from time to time, the “Security Agreement”), in which the Grantor has granted a security interest in favor of Appgate Funding, LLC, as Lender (“Lender”) with respect to the Copyright Collateral; and WHEREAS, pursuant to the Security Agreement, the Grantor has agreed with Lender to execute this Short-Form Copyrights Security Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor hereby grants to Lender, to the extent provided in the Security Agreement (the terms and conditions of which are hereby incorporated herein), a security interest in all of its right, title and interest in, to and under all the copyrights, whether registered or unregistered, now owned or at any time hereafter acquired of the Grantor located in the United States of America, including the copyright registrations and registration applications that are listed on the attached Schedule of Registered Copyrights, and all registrations, recordings, and pending applications associated therewith, as collateral security for the prompt and complete payment and performance when due of all the Secured Obligations (as defined in the Security Agreement). Notwithstanding the foregoing, in the event of any conflict between this Short Form Copyrights Security Agreement and the Security Agreement, the Security Agreement shall control. Date: [________], 20[__] [NAME OF GRANTOR] By:___________________________ Name: Title: 3 Form prepared under the assumption that it is being delivered for a single “Grantor” that pledges the patents. Appropriate adjustments should be made if this is not the case.
SCHEDULE OF REGISTERED COPYRIGHTS
EXHIBIT D [Form of Counterpart Agreement] COUNTERPART AGREEMENT COUNTERPART AGREEMENT dated as of ________ __, ____ by [NAME OF ADDITIONAL OBLIGOR], a ________ (the “Additional Obligor”), in favor of Appgate Funding, LLC, as Lender (“Lender”). Appgate Cybersecurity, Inc., a Delaware corporation (the “Company”), Appgate, Inc., a Delaware corporation (“Parent”), certain subsidiaries of the Company as guarantors, and Lender (in its capacity as representative of the holders and collateral agent) are parties to a Note Issuance Agreement dated as of July 20, 2023 (as modified and supplemented and in effect from time to time, the “Note Issuance Agreement”). In connection with the Note Issuance Agreement, the Company, the other Obligors referred to therein and Lender are parties to a Pledge and Security Agreement dated as of July 20, 2023 (as modified and supplemented and in effect from time to time, the “Security Agreement”). Pursuant to Section 5.12 of the Security Agreement, the Additional Obligor hereby agrees to become an “Obligor” for all purposes of the Security Agreement (and hereby supplements each of the Annexes to the Security Agreement in the manner specified in Appendix A hereto). Without limiting the foregoing, the Additional Obligor hereby: (a) as collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration, by liquidation or otherwise) of the Secured Obligations, pledges and grants to Lender, a security interest in all of its right, title and interest in, to and under the Collateral, in each case whether tangible or intangible, wherever located, and whether now owned by it or hereafter acquired and whether now existing or hereafter coming into existence, in the same manner and to the same extent as is provided in Section 4 of the Security Agreement; and (b) makes the representations and warranties set forth in Section 2 of the Security Agreement with respect to itself and its obligations under this Agreement, as if each reference in such Sections to the Agreement Documents included reference to this Agreement. The Additional Obligor hereby instructs its counsel to deliver any opinions to Lender required to be delivered in connection with the execution and delivery hereof.
IN WITNESS WHEREOF, the Additional Obligor has caused this Counterpart Agreement to be duly executed and delivered as of the day and year first above written. [NAME OF OBLIGOR] By ________________________ Title: Accepted and agreed: Appgate Funding, LLC, as Lender By ________________________ Title:
Appendix A SUPPLEMENT[S] TO ANNEX[ES] TO SECURITY AGREEMENT Supplement to Annex 1: [to be completed] [Supplement to Annex 2: [to be completed] Supplement to Annex 3: [to be completed] Supplement to Annex 4: [to be completed] Supplement to Annex 5: [to be completed] Supplement to Annex 6: [to be completed] Supplement to Annex 7: [to be completed]
F-1 EXHIBIT F Form of Intercreditor Agreement [See attached]
EXECUTION VERSION INTERCREDITOR AND SUBORDINATION AGREEMENT This INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Subordination Agreement”), dated as of July 20, 2023, is made by and between Appgate Funding, LLC, in its capacity as collateral agent under and pursuant to the Original NIA (as hereinafter defined) (in such capacity, together with its successors and assigns in such capacity, the “Original Senior Agent”), and SIS Holdings, L.P., as lender under and pursuant to the Original Subordinated Credit Agreement (as hereinafter defined) (in such capacity, together with its successors and assigns in such capacity, the “Original Subordinated Agent”), and is acknowledged by Appgate Cybersecurity, Inc., a Delaware corporation (the “Borrower”), and each of its affiliates identified as “Original Obligors” on the signature pages hereto (such affiliates, together with the Borrower, each an “Original Obligor” and collectively, the “Original Obligors”). WHEREAS, the Original Obligors and the Original Senior Agent, have entered into that certain Note Issuance Agreement, dated as of the date hereof (the “Original NIA”). The repayment of the Senior Obligations (as hereinafter defined) is secured by, among other things, security interests in and liens on substantially all of the assets of the Obligors pursuant to certain collateral documents in favor of the Original Senior Agent for the benefit of itself and the other Secured Parties (as defined in the Original NIA). WHEREAS, the Original Obligors and the Original Subordinated Agent have entered into an Amended and Restated Revolving Credit Agreement, dated as of June 9, 2023 (as amended by the First Amendment to Amended and Restated Revolving Credit Agreement and Pledge and Security Agreement, dated as of the date hereof, the “Original Subordinated Credit Agreement”), pursuant to which the Original Subordinated Agent has agreed, upon the terms and conditions stated therein, to make loans in the original principal amount of up to $50,000,000. The repayment of the Subordinated Obligations (as hereinafter defined) is secured by, among other things, security interests in and liens on substantially all of the assets of the Obligors pursuant to certain collateral documents in favor of the Original Subordinated Agent. WHEREAS, the Original Senior Agent, for and on behalf of itself and the other Secured Parties (as defined in the Original NIA), and the Original Subordinated Agent, wish to enter into this Subordination Agreement to establish their respective rights and priorities in the Collateral and their claims against the Original Obligors. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Original Senior Agent and the Original Subordinated Agent hereby agree as follows: 1. Definitions; Rules of Construction. a. Terms Defined Above and in the Recitals. As used in this Subordination Agreement, the following terms shall have the following meanings: “Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended and in effect from time to time, and any successor statute and all rules and regulations promulgated thereunder. “Capital Stock” means (a) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (b) with respect to any Person that is not a corporation, any and all partnership, membership or other equity or other ownership interests of such Person.
- 2 - “Cash and Cash Equivalents” means, collectively, all cash and all “Cash Equivalents” as defined in the Senior NIA. “Cash Collateral” means any Collateral consisting of Cash and Cash Equivalents, any security entitlement (as defined in the UCC) and any financial assets (as defined in the UCC). “Collateral” means all assets and properties whether now owned or hereafter acquired by the Obligors or any other Person in or upon which either the Senior Agent or the Subordinated Agent is purported to now have or hereafter acquire a Lien pursuant to the terms of the Senior Loan Documents or the Subordinated Loan Documents, as the case may be, together with all rents, issues, profits, products, and Proceeds thereof. “Debtor Relief Law” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief law of the United States or other applicable jurisdiction from time to time in effect. “Default” means “Default” as defined in the Senior NIA. “DIP Financing” has the meaning set forth in Section 5.c. “Discharge of Senior Indebtedness” means payment in full in cash (or other consideration acceptable to the Senior Lenders and other Secured Parties (as defined in the Original NIA)) of all Senior Indebtedness (excluding unasserted contingent indemnity or reimbursement obligations that survive termination of the Senior Loan Documents) and the termination of all commitments to extend credit or purchase notes under the Senior Loan Documents. “Equity Interests” means Capital Stock and all warrants, options, or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). “Event of Default” means “Event of Default” as defined in the Senior NIA. “Exercise Any Secured Creditor Remedies” or “Exercise of Secured Creditor Remedies” means, in each case, with respect to the Senior Agent and the Senior Lenders, on one hand, and the Subordinated Agent and the Subordinated Lenders, on the other hand, with respect to the Collateral: (a) the taking of any action to foreclose, execute, levy, or collect on, take possession or control of, sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), any of the Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral (including by way of setoff, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable); (b) the exercise of any right or remedy provided to a secured creditor or otherwise on account of a Lien under the Senior Loan Documents, the Subordinated Loan Documents, applicable law or in an Insolvency Proceeding, including the election to retain Collateral in satisfaction of a Lien,
- 3 - (c) the taking of any action or the exercise of any right or remedy in respect of the collection on, set-off against, marshaling of, or foreclosure on the Collateral or the Proceeds of Collateral (including the notification of account debtors), (d) the sale, conveyance, assignment, transfer, lease, license, or other disposition of any Collateral, by private or public sale, other disposition or any other means permissible under applicable law, (e) the solicitation of bids from third parties to conduct the liquidation of any Collateral or to engage, (f) the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers or other third parties for the purposes of marketing, promoting and selling the Collateral, (g) the exercise of any other enforcement rights or secured creditor remedy relating to the Collateral (including the exercise of any voting rights relating to any Capital Stock and including any right of recoupment or set-off) whether under the Senior Loan Documents, the Subordinated Loan Documents, applicable law or in an Insolvency Proceeding or otherwise, (h) the commencement of, or the joinder with any creditor (other than the Senior Lenders and the Senior Agent) in commencing any Insolvency Proceeding against any Obligor or any of its Subsidiaries or any assets of any Obligor or any of its Subsidiaries, (i) the disposition of Collateral by any Obligor after the occurrence and during the continuation of an Event of Default with the consent of Senior Agent or Subordinated Agent, as applicable, and/or (i) to receive a transfer of Collateral in satisfaction of indebtedness or any other obligation secured thereby. “Insolvency Proceeding” means “Insolvency Proceeding” as defined in the Senior NIA. “Obligor” means each of the Original Obligors and any other Person that now or hereafter is, or whose assets now or hereafter are, liable for all or any portion of the Senior Indebtedness or the Subordinated Obligations. “Payment Collateral” means all accounts, instruments, chattel paper, letters of credit, deposit accounts, securities accounts, and payment intangibles, together with all supporting obligations (as those terms are defined in the UCC), in each case, composing a portion of the Collateral. “Permitted Refinancing” has the meaning set forth in Section 6.c. “Proceeds” means (a) all “proceeds” as defined in Article 9 of the UCC with respect to the Collateral, and (b) whatever is recoverable or recovered when Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily. “Recovery” has the meaning set forth in Section 5.b. “Refinancing” means to amend, restate, supplement, waive, replace (whether or not upon termination, and whether with the original parties or otherwise), restructure, repay, refund, refinance or
- 4 - otherwise modify from time to time (including by means of any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the obligations under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof). “Release Event” means any sale or other disposition of Collateral (a) in connection with any Exercise of Secured Creditor Remedies by the Senior Agent, (b) by one or more Obligors with the consent of the Senior Agent either (i) after the occurrence and during the continuance of a Default or an Event of Default, which sale or other disposition is conducted by such Obligor with the consent of the Senior Agent in connection with efforts by the Senior Agent to either (x) collect the Senior Indebtedness through the sale or other disposition of Collateral, or (y) assist the Obligors in restructuring their business operations to allow the Obligors to continue to perform their obligations with respect to the Senior Indebtedness, or (ii) in a sale during an Insolvency Proceeding (including a sale pursuant to Section 363 of the Bankruptcy Code or pursuant to a plan of reorganization) or (c) permitted by the Senior Loan Documents. “Senior Agent” means the Original Senior Agent, together with its successors, assigns, transferees and any Person that has a similar title (such as “Agent” “Administrative Agent” or “Collateral Agent”) under any Senior NIA. “Senior Indebtedness” means all obligations and all other amounts owing, due or secured under the terms of the Senior NIA or any other Senior Loan Document, including any and all amounts payable to the Senior Agent or any Senior Lender, all principal, prepayment or other premium, interest, fees, attorneys’ fees, costs, charges, expenses, reimbursement obligations in respect of letters of credit, any obligation to post cash collateral in respect of letters of credit or indemnities in respect thereof, indemnities, guarantees, and all other amounts payable under any Senior Loan Document or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Obligor or any other Person, or that would have accrued or become due under the terms of the Senior Loan Documents but for the effect of the Insolvency Proceeding or other applicable law, and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any Insolvency Proceeding). “Senior Lenders” means the Original Senior Agent, together with any other holder, purchaser or lender under any Senior NIA or Senior Loan Documents. “Senior Loan Documents” means the Senior NIA and the other Agreement Documents (as such term is defined in the Original NIA), or any other security, collateral, ancillary or other document entered into in connection with or related to any agreement that is a Senior NIA, as such documents may be amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, in each case as of the date hereof or as may be amended, restated, modified, renewed, refunded, replaced or refinanced in accordance with the terms of this Subordination Agreement. “Senior NIA” means the Original NIA as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, and any other agreement extending the maturity of, consolidating, otherwise restructuring (including adding Subsidiaries or affiliates of any Obligor or any other Persons as parties thereto), renewing, replacing or refinancing all or any portion of the Agreement Obligations (as such term is defined in the Original NIA) or any commitment in connection therewith or all or any portion of the amounts owed under any other agreement that itself is a Senior NIA hereunder and whether by the same or any other agent, lender, or group of lenders and whether or not increasing the amount of Senior Indebtedness that may be incurred thereunder, in each case as the Senior
- 5 - NIA may be amended, restated, modified, renewed, refunded, replaced, refinanced, extended or otherwise modified to be in accordance with the terms of this Subordination Agreement. “Senior Obligations” means the “Agreement Obligations” as defined in the Senior Loan Documents and shall include all Senior Indebtedness. “Subordinated Agent” means the Original Subordinated Agent, together with its successors, assigns, transferees and any Person that has a similar title (such as “Agent” “Administrative Agent” or “Collateral Agent”) under any Subordinated Credit Agreement. “Subordinated Credit Agreement” means the Original Subordinated Credit Agreement as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, and any other agreement extending the maturity of, consolidating, otherwise restructuring (including adding Subsidiaries or affiliates of any Obligor or any other Persons as parties thereto), renewing, replacing or refinancing all or any portion of the Subordinated Obligations or any commitment in connection therewith or all or any portion of the amounts owed under any other agreement that itself is a Subordinated Credit Agreement hereunder and whether by the same or any other agent, lender, or group of lenders, in each case as of the date hereof or as may be amended, restated, modified, renewed, refunded, replaced or refinanced in accordance with the terms of this Subordination Agreement. “Subordinated Lenders” means the Original Subordinated Agent, together with any other holder, purchaser or lender under any Subordinated Credit Agreement or Subordinated Loan Document. “Subordinated Loan Documents” means the Subordinated Credit Agreement and the other Loan Documents (as such term is defined in the Original Subordinated Credit Agreement), or any other security, collateral, ancillary or other document entered into in connection with or related to any agreement that is a Subordinated Credit Agreement, as such documents may be amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time. “Subordinated Obligations” means the “Obligations” as defined in the Subordinated Loan Documents and includes all obligations and all other amounts owing, due or secured under the terms of the Subordinated Credit Agreement or any other Subordinated Loan Document, including any and all amounts payable to the Subordinated Agent or any Subordinated Lender, all principal, prepayment or other premium, interest (including payment-in-kind interest), fees (including payment-in-kind fees), attorneys’ fees, costs, charges, expenses, reimbursement obligations, indemnities, guarantees, and all other amounts payable under any Subordinated Loan Document or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Obligor or any other Person, or that would have accrued or become due under the terms of the Subordinated Loan Documents but for the effect of the Insolvency Proceeding or other applicable law, and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any Insolvency Proceeding). “UCC” means the Uniform Commercial Code as enacted and in effect from time to time in the State of New York, or the Uniform Commercial Code (or any similar or equivalent legislation) of the jurisdictions which govern the perfection of the security interest in the particular item of the Obligors’ property to which the definition is applied. b. Terms Defined in the Original NIA. Unless otherwise defined in this Subordination Agreement, any and all initially capitalized terms set forth in this Subordination Agreement shall have the meaning ascribed thereto in the Original NIA.
- 6 - c. Rules of Construction. Unless the context of this Subordination Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Subordination Agreement refer to this Subordination Agreement as a whole and not to any particular provision of this Subordination Agreement. Article, section, subsection, clause, schedule, and exhibit references herein are to this Subordination Agreement unless otherwise specified. Any reference in this Subordination Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person’s successors and assigns. 2. Subordination and Standstill. a. Payment Subordination. Subject to the terms hereof, each of the Subordinated Agent and Subordinated Lenders hereby subordinates and defers, to the extent and in the manner set forth herein, the payment (including, without limitation, in any Insolvency Proceeding) of any and all Subordinated Obligations, including all indebtedness or other obligations (including, principal, interest, fees, prepayment or other premiums, indemnities, payment of legal fees and disbursements of counsel and other amounts and all guarantees in respect of any thereof) under the Subordinated Loan Documents which may be now or hereafter owing by any Obligor to any such Subordinated Agent or Subordinated Lender to the prior Discharge of Senior Indebtedness. Except as set forth in Section 4 of this Subordination Agreement, unless and until the Discharge of Senior Indebtedness shall have occurred, without the prior written consent of the Senior Agent (at the direction or with the consent of the requisite Senior Lenders), neither the Subordinated Agent nor any Subordinated Lender shall accept, take or receive, by payment, in cash or in kind (other than payments-in-kind of interest, fees or other amounts), by way of setoff, or in any other manner, from any Obligor the whole or any part of any sums which may now or hereafter be owing to the Subordinated Agent or any Subordinated Lender on account of the Subordinated Obligations. b. Lien Subordination. Notwithstanding (i) the date, time, method, manner or order of grant, attachment, or perfection of any Liens granted to the Senior Agent (or any Senior Lender) or the Subordinated Agent (or any Subordinated Lender) in respect of all or any portion of the Collateral, (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of the Senior Agent (or any Senior Lender) or the Subordinated Agent (or any Subordinated Lender) in any Collateral, (iii) any provision of the UCC, any other applicable law, any of the Senior Loan Documents or the Subordinated Loan Documents, (iv) whether the Liens securing all or part of the Senior Indebtedness are valid, perfected, enforceable, void, avoidable, subordinated, disputed, or allowed, (v) the fact that any such Liens in favor of the Senior Agent securing the Senior Indebtedness are (x) subordinated to any Lien securing any obligation of any Obligor other than the Subordinated Obligations or (y) otherwise subordinated, voided, avoided, invalidated or lapsed, or (vi) any other circumstance whatsoever, the Senior Agent, on behalf of itself and the other Secured Parties, and the Subordinated Agent, on behalf of itself and the Subordinated Lenders, hereby agree that: (1) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Subordinated Agent or any Subordinated Lender that secures all or any portion of the Subordinated Obligations, shall in all respects be junior and subordinate to all Liens granted to the Senior Agent or any Senior Lender in the Collateral to secure all or any portion of the Senior Indebtedness, and
- 7 - (2) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Senior Agent or any Senior Lender that secures all or any portion of the Senior Indebtedness shall in all respects be senior and prior to all Liens granted to the Subordinated Agent or any Subordinated Lender in the Collateral to secure all or any portion of the Subordinated Obligations. c. Remedies Standstill. Until the Discharge of Senior Indebtedness shall have occurred, without the prior written consent of the Senior Agent, neither the Subordinated Agent nor any Subordinated Lender shall at any time, (1) accelerate, demand or otherwise make due and payable prior to the original due date thereof any portion of the Subordinated Obligations (it being understood, for the avoidance of doubt, that this clause (1) is not intended to limit automatic acceleration upon an actual or deemed entry of an order for relief with respect to any Obligor or its subsidiaries under any Debtor Relief Law that does not require any action under the Subordinated Loan Documents on the part of the Subordinated Agent or the Subordinated Lenders) except after expiration of the Standstill Period (as hereinafter defined) upon not less than twenty days’ prior notice to the Senior Agent, which notice may be given during the Standstill Period, provided that if an Event of Default has occurred and is continuing, Subordinated Agent may charge default interest provided in the Subordinated Loan Documents (but not receive payments on account thereof), (2) commence, prosecute, or participate in any lawsuit, action, or proceeding, whether private, judicial, equitable, administrative or otherwise (including any bankruptcy case) against any Obligor or any Obligor’s assets, in each case, for the purpose of effecting an Exercise of Secured Creditor Remedies or otherwise in any way relating to or in connection with the Subordinated Loan Documents except, unless, subject to clauses (x) and (y) set forth in Section 2.c(3), after expiration of the Standstill Period, upon not less than twenty days’ prior notice to the Senior Agent, which notice may be given during the Standstill Period, (3) Exercise Any Secured Creditor Remedies or exercise any other enforcement rights or remedies as against any Obligor’s assets, provided that the Subordinated Agent may Exercise any Secured Creditor Remedies with respect to an Event of Default (as defined in the Subordinated Credit Agreement) which has occurred and is continuing (a) after the passage of at least 180 consecutive days has elapsed since the earlier of (i) the date on which the Senior Agent has received written notice from the Borrower of such Event of Default (so long as such Event of Default has not been cured or waived) and (ii) the Senior Agent has received written notice from the Subordinated Agent of such Event of Default (so long as such Event of Default has not been cured or waived) (such period, the “Standstill Period”) and (b) upon not less than twenty days’ prior notice to the Senior Agent of the intent to exercise such remedies, which notice may be given during the Standstill Period, provided further however that, notwithstanding anything to the contrary herein, the Subordinated Agent (x) may only Exercise Any Secured Creditor Remedies if the Senior Agent is not then diligently pursuing the exercise of any Secured Creditor Remedies, or diligently attempting to vacate any stay on enforcement of its rights or remedies against the Collateral, and (y) may not Exercise Any Secured Creditor Remedies following the commencement of any Insolvency Proceeding other than as permitted by this Subordination Agreement, (4) possess any assets of any Obligor, send any notice to or otherwise receive or accept any proceeds of the Collateral or seek to obtain payment directly from any account debtor of any Obligor, sue for an attachment, an injunction, a keeper, a receiver or any other similar legal or equitable remedy, exercise any rights of set off or recoupment, or otherwise take any action whatsoever, directly or indirectly to collect any amounts on the Subordinated Obligations from any
- 8 - Obligor or any of its assets, except, subject to clauses (x) and (y) in the second proviso set forth in Section 2.c(3), after expiration of the Standstill Period and the Subordinated Agent shall have given the Senior Agent no less than thirty days’ prior notice of its intention to take any of the foregoing actions, which notice may be given during the Standstill Period, (5) commence or cause to be commenced or join with any creditor (other than the Senior Lenders and the Senior Agent) in commencing any Insolvency Proceeding against any Obligor, (6) in any Insolvency Proceeding, submit or prosecute any “credit bid” or other offer to acquire any of the Collateral pursuant to Section 363 of the Bankruptcy Code or otherwise that does not provide for the complete Discharge of Senior Indebtedness, (7) will not contest, protest or object to any foreclosure proceeding or action brought by the Senior Agent or any Senior Lender or any other exercise by the Senior Agent or any Senior Lender of any rights and remedies relating to the Collateral under the Senior Loan Documents or otherwise, or (8) subject to the rights of the Subordinated Agent under clauses (1) through (4) above, will not object to the forbearance by the Senior Agent or the Senior Lenders from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral. Notwithstanding anything herein to the contrary, no provision of this Subordination Agreement shall at any time prohibit, limit, or restrict the Subordinated Agent or the Subordinated Lenders from (A) filing proofs of claim against any Obligor in any Insolvency Proceeding involving such Obligor, (B) taking any action (not adverse to the priority status of the Liens on the Collateral securing the Senior Obligations, or the rights of the Senior Agent or the Senior Lenders to exercise remedies in respect thereof) in order to create, perfect, preserve or protect (but not enforce) the Liens securing the Subordinated Obligations against the Collateral or establish priority (subject to the prior ranking of Liens securing the Senior Indebtedness against the Collateral in accordance with this Subordination Agreement), except through possession or control, (C) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Subordinated Agent or Subordinated Lenders, including any claims secured by the Collateral, if any, in each case in accordance with the terms of this Subordination Agreement, (D) vote on any plan of reorganization that is consistent in all respects with Section 5e. or (E) delivering any notice of default in respect of the Subordinated Obligations, reservation of rights or similar letters of notices. If any distributions or other proceeds resulting from any Exercise of Secured Creditor Remedies are obtained by the Subordinated Agent or any Subordinated Lender, then and in such event, the turn-over and other obligations of the Subordinated Agent and the Subordinated Lenders set forth in Section 7 shall apply. d. Release of Liens. In the event of any private or public sale or other disposition of all or any portion of the Collateral in connection with a Release Event at any time prior to the date upon which the Discharge of Senior Indebtedness shall have occurred, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that the Liens securing the Subordinated Obligations with respect to such Collateral shall automatically be released without any further action by any party and such sale or disposition will be free and clear of the Liens securing the Subordinated Obligations and, if the sale or other disposition includes Equity Interests in any Obligor or any of its Subsidiaries, the Subordinated Agent further agrees, for and on behalf of itself and the Subordinated Lenders, that any guarantees by such Obligor or Subsidiary shall automatically be released without any
- 9 - further action by any party; provided that, in each case, (i) the Senior Agent also releases its Liens on such Collateral, (ii) the Proceeds of such disposition of such Collateral are applied, with respect to (x) any sale or other disposition of Collateral pursuant to clauses (a) and (b) in the definition of “Release Event” hereunder, to permanently repay (or otherwise reduce in the case of a credit bid) the Senior Indebtedness, or (y) any sale or other disposition of Collateral pursuant to clause (c) in the definition of “Release Event” hereunder, in accordance with the terms of the Senior NIA and (iii) the Subordinated Agent shall still, subject to the terms of this Subordination Agreement, have a security interest with respect to the Proceeds of such Collateral, except to the extent applied to repay the Senior Indebtedness in accordance with the preceding clause (ii) of this Section 2.d. The Subordinated Agent agrees, for and on behalf of itself and the Subordinated Lenders, without recourse to or warranty by the Subordinated Agent, that, in connection with any such sale or other disposition (i) the Senior Agent is authorized to file any and all UCC Lien releases and/or terminations of the Liens held by the Subordinated Agent or any Subordinated Lender in connection with such a sale or other disposition, and (ii) it will execute any and all Lien and guaranty releases or other documents reasonably requested by the Senior Agent in connection therewith and the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby irrevocably appoints the Senior Agent as its and their lawful attorney in fact to execute any and all such Lien releases and other documents. e. Waiver of Rights to Contest Senior Indebtedness. The Subordinated Agent hereby acknowledges and agrees, for and on behalf of itself and the Subordinated Lenders, that no covenant, agreement or restriction contained in the Subordinated Loan Documents or otherwise shall be deemed to restrict in any way the rights and remedies of the Senior Agent or the Senior Lenders with respect to the Collateral as set forth in this Subordination Agreement and the Senior Loan Documents. In addition, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, waives its and their right, and agrees that neither it nor any Subordinated Lender shall take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Senior Agent in any Collateral, the validity, priority, enforceability or allowance of any of the claims of the Senior Agent or any holder of Senior Indebtedness against any Obligor or the validity or enforceability of this Subordination Agreement or any of the provisions hereof. The Subordinated Agent agrees, for and on behalf of itself and the Subordinated Lenders, that neither it nor any Subordinated Lender will take any action that would interfere with any Exercise of Secured Creditor Remedies undertaken by the Senior Agent or any Senior Lender under the Senior Loan Documents, including any public or private sale, lease, exchange, transfer, or other disposition of any Collateral, whether by foreclosure or otherwise. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives any and all rights it or any Subordinated Lender may have as a junior lien creditor to contest, protest, object to, interfere with the manner in which the Senior Agent seeks to enforce the Liens in any Collateral (it being understood and agreed that the terms of this Subordination Agreement shall govern with respect to the Collateral even if any portion of the Liens securing all or any portion of the Senior Indebtedness are avoided, disallowed, set aside, or otherwise invalidated in any Insolvency Proceeding, judicial proceeding or otherwise). f. Acknowledgement of Liens. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, acknowledges and agrees that the Senior Agent, for the benefit of itself and the other Secured Parties, has been granted Liens upon all of the Collateral in which the Subordinated Agent has been granted Liens and the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby consents thereto. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that neither it nor any Subordinated Lender shall obtain a Lien on any asset or Collateral to secure all or any portion of the Subordinated Obligations unless concurrently therewith, the Senior Agent obtains a Lien on such asset or Collateral and the parties hereby agree that all such Liens are and will be subject to this Subordination Agreement. The subordination of Liens and claims by the Subordinated Agent and the Subordinated Lenders in favor of the Senior Agent and the Senior
- 10 - Lenders shall not be deemed to subordinate the Subordinated Agent’s Liens or claims to the Liens or claims of any other Person that is not a holder of Senior Indebtedness. g. New Liens. So long as the Discharge of Senior Indebtedness shall not have occurred, the parties hereto agree that no additional Liens shall be granted or permitted on any asset of any Borrower or any other Obligor to secure any Subordinated Obligation unless, subject to the terms of this Subordination Agreement, immediately after giving effect to such grant or concurrently therewith, a senior and prior Lien shall be granted on such asset to secure the Senior Obligations. To the extent that the foregoing provisions of this Section 2.g are not complied with for any reason, without limiting any other rights and remedies available to Senior Agent or the Senior Lenders, the Subordinated Agent, on behalf of the Subordinated Lenders, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.g shall be subject to the terms of this Subordination Agreement. h. Liens. The parties intend that all Collateral securing the Subordinated Obligations secure the Senior Obligations. Accordingly, subject to the other provisions of this Subordination Agreement, the parties will use commercially reasonable efforts to cooperate with respect to the foregoing. i. Waiver of Rights to Contest Subordinated Obligations. The Senior Agent, for and on behalf of itself and the Senior Lenders, waives its and their right, and agrees that neither it nor any Senior Lender shall take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Subordinated Agent in any Collateral, the validity, priority, enforceability or allowance of any of the claims of the Subordinated Agent or any holder of Subordinated Obligations against any Obligor or the validity or enforceability of this Subordination Agreement or any of the provisions hereof. 3. Bailee for Perfection. a. The Senior Agent and the Subordinated Agent each agree to hold or control that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees), to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC or other applicable law (such Collateral being referred to as the “Pledged Collateral”), as bailee and as a non-fiduciary agent for the Subordinated Agent or the Senior Agent, as applicable (such bailment and agency being intended, among other things, to satisfy the requirements of Sections 8-301(a)(2), 9- 313(c), 9-104, 9-105, 9-106, and 9-107 of the UCC), solely for the purpose of perfecting the security interest granted under the Subordinated Loan Documents or the Senior Loan Documents, as applicable, subject to the terms and conditions of this Section 3. Unless and until the Discharge of Senior Indebtedness, the Subordinated Agent agrees to promptly notify the Senior Agent of any Pledged Collateral held by it or by any Subordinated Lender, and, at any time prior to the Discharge of Senior Indebtedness, the Subordinated Agent or such Subordinated Lender holding any Pledged Collateral shall promptly deliver to the Senior Agent any such Pledged Collateral held by it, together with any necessary endorsements (or otherwise allow the Senior Agent to obtain control of such Pledged Collateral). b. The Senior Agent shall have no obligation whatsoever to the Subordinated Agent or any Subordinated Lender to ensure that the Pledged Collateral is genuine or owned by any Obligor or to preserve rights or benefits of any Person except as expressly set forth in this Section 3. The Subordinated Agent shall have no obligation whatsoever to the Senior Agent or any Senior Lender to ensure that the Pledged Collateral is genuine or owned by any Obligor or to preserve rights or benefits of any Person except as expressly set forth in this Section 3. The duties or responsibilities of the Senior Agent
- 11 - under this Section 3 shall be limited solely to holding or controlling the Pledged Collateral as bailee and agent in accordance with this Section 3 and delivering the Pledged Collateral upon a Discharge of Senior Indebtedness as provided in clause (d) of this Section 3. The duties or responsibilities of the Subordinated Agent under this Section 3 shall be limited solely to holding or controlling the Pledged Collateral as bailee and agent in accordance with this Section 3 and delivering the Pledged Collateral to the Senior Agent as provided in clause (a) of this Section 3. c. The Senior Agent acting pursuant to this Section 3 shall not have by reason of the Senior Loan Documents, the Subordinated Loan Documents, or this Subordination Agreement a fiduciary relationship in respect of the Subordinated Agent or any Subordinated Lender. The Subordinated Agent acting pursuant to this Section 3 shall not have by reason of the Senior Loan Documents, the Subordinated Loan Documents, or this Subordination Agreement a fiduciary relationship in respect of the Senior Agent or any Senior Lender. d. Upon the Discharge of Senior Indebtedness, the Senior Agent shall deliver the remaining Pledged Collateral (if any) together with any necessary endorsements, first, to the Subordinated Agent to the extent the Subordinated Obligations remain outstanding as confirmed in writing by the Subordinated Agent, and, to the extent that the Subordinated Agent confirms no Subordinated Obligations are outstanding, second, to the Obligors to the extent no Senior Indebtedness and no Subordinated Obligations remain outstanding (in each case, so as to allow such Person to obtain possession or control of such Pledged Collateral). e. Upon the Discharge of Senior Indebtedness, the Senior Agent shall deliver change notices (or similar documents) necessary to transfer control of deposit accounts from the Senior Agent, first, to the Subordinated Agent to the extent the Subordinated Obligations remain outstanding as confirmed in writing by the Subordinated Agent, and, to the extent that the Subordinated Agent confirms no Subordinated Obligations are outstanding, second, to the Obligors to the extent no Senior Indebtedness or the Subordinated Obligations remain outstanding (in each case, so as to allow such Person to obtain control of such deposit accounts). Except as expressly set forth in the foregoing sentence and notwithstanding anything to the contrary contained in this Section 3, the Senior Agent shall have no obligation to (i) assign any deposit account control agreement with a third party to the Subordinated Agent to the extent that the terms of such deposit account control agreement prohibit any such assignment or otherwise require the consent of such third party that is not granted or (ii) take any action to assist the Subordinated Agent with respect to the replacement of any such deposit account control agreement that cannot be so assigned. 4. Permitted Payments. a. Subordinated Obligations Payment Restrictions. Until the Discharge of Senior Indebtedness shall have occurred, no payment or distribution of any kind or character (whether of principal, interest, fees or other amounts and whether in cash, securities, assets, by set-off, or otherwise, including any payment that may be payable by reason of the payment of any other Indebtedness of the Obligors being subordinated to the payment of the Subordinated Obligations) on account of any Subordinated Obligations shall be made by or on behalf of the Obligors, and (subject to Section 2(c)) neither the Subordinated Agent nor any Subordinated Lender will accept, ask for, demand, sue for, take, receive or accelerate any such payment, directly or indirectly, from or on behalf of any of the Obligors; provided, however, that, subject to any requirements or conditions set forth in this Section 4, and subject to Sections 5 and 7 of this Subordination Agreement, the Obligors may pay, and the Subordinated Agent, on behalf of the Subordinated Lenders, may receive payment in cash of reasonable out-of-pocket costs and expenses (including reasonable out-of-pocket legal fees and expenses) due and payable in accordance with the terms
- 12 - of the Subordinated Loan Documents so long as no Default (as defined in the Senior NIA) or Event of Default has occurred and is continuing. b. No Prepayment or Acceleration of Subordinated Obligations. Except as expressly set forth in Section 4.a of this Subordination Agreement, until the Discharge of Senior Indebtedness shall have occurred, the Subordinated Agent agrees, for and on behalf of itself and the Subordinated Lenders, that neither it nor any Subordinated Lender shall take, accept or receive any payment or prepayment of the principal of any Subordinated Obligations, any payments resulting from any breach or default under any of the Subordinated Loan Documents, any prepayment as a result of the acceleration of any amounts due under any Subordinated Loan Document, or any other direct or indirect payments or distributions whatsoever on account of the Subordinated Obligations, unless, in the case of any other payment or prepayment, the Senior Agent (acting at the direction of the relevant Senior Lenders) has otherwise agreed. c. In the event that, notwithstanding the terms of the foregoing Section 4.a of this Subordination Agreement, the Obligors shall make any prohibited payment to the Subordinated Agent or any Subordinated Lender or the Subordinated Agent or any Subordinated Lender shall otherwise receive any prohibited payment, then and in such event, the turn-over and other obligations of the Subordinated Agent and the Subordinated Lenders set forth in Section 7 shall apply. 5. Insolvency Proceeding. a. Continuing Priority. This Subordination Agreement is intended to be enforceable as a subordination agreement notwithstanding the commencement of any Insolvency Proceeding, including under Bankruptcy Code Section 510 and any comparable provision of otherwise applicable law. In the event of any Insolvency Proceeding relative to any Obligor or any arrangement, adjustment, composition or relief of any Obligor or such Obligor’s debts or any marshaling of the assets of any Obligor, then, in each case, (i) all Senior Indebtedness shall first be paid in full in cash before any payment is made on the Subordinated Obligations; and (ii) any payment or distribution of any kind or character (whether in cash, securities, assets, by set-off, or otherwise) to which the Subordinated Agent or any Subordinated Lender would be entitled but for the provisions of this Section 5.a (including any payment or distribution which may be payable or deliverable to any Subordinated Lender by reason of the payment of any other Indebtedness of such Obligor or its Subsidiaries being subordinated to payment of the Subordinated Obligations) shall be paid or delivered by the Person making such payment or distribution, including, but not limited to, a trustee in bankruptcy, a receiver, a liquidating trustee, or otherwise, directly to the Senior Agent to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid. In the event that, in the circumstances contemplated by this Section 5.a, and notwithstanding the foregoing provisions of this Section 5.a, the Subordinated Agent or any Subordinated Lender shall have received any payment or distribution of any kind or character (whether in cash, securities, assets, by setoff, or otherwise) that it is not entitled to receive under the foregoing provisions, then and in such event such payment or distribution shall be segregated and held in trust for the benefit of and immediately shall be paid over to the Senior Agent in accordance with Section 7 of this Subordination Agreement. b. Reinstatement. If the Senior Agent, any Senior Lender or any other holder of any Senior Indebtedness is required in any Insolvency Proceeding relating to any Obligor or otherwise to turn over or otherwise pay any amount previously received by such Person as payment in respect of the Senior Indebtedness (a “Recovery”) to the Obligor’s estate or to any creditor or representative of an Obligor or any other Person, then the Senior Indebtedness shall be reinstated to the extent of such Recovery. If this Subordination Agreement shall have been terminated prior to such Recovery, this Subordination Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement. All rights,
- 13 - interests, agreements, and obligations of the Senior Agent, the Senior Lenders, the Subordinated Agent and the Subordinated Lenders under this Subordination Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, consummation, conversion, or dismissal of any Insolvency Proceeding by or against any Obligor or any other Person and irrespective of any other circumstance which otherwise might constitute a defense available to, or a discharge of any Obligor or any other Person in respect of the Senior Indebtedness. No priority or right of the Senior Agent, the Senior Lenders or any other holder of Senior Indebtedness shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Obligor or any other Person or by the noncompliance by any Person with the terms, provisions, or covenants of the Senior Loan Documents or the Subordinated Loan Documents, regardless of any knowledge thereof which the Senior Agent, the Senior Lenders or any holder of Senior Indebtedness may have. c. DIP Financing. If any Obligor shall be subject to any Insolvency Proceeding and the Senior Agent or any Senior Lender shall desire to permit the use of cash collateral (within the meaning of Section 363 of the Bankruptcy Code) or to provide (or permit any other Person to provide) any such Obligor with financing (collectively, “DIP Financing”) under Section 363 or Section 364 of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding) to be secured by all or any portion of the Collateral, then the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that neither it nor any Subordinated Lender will raise any objection to such DIP Financing or request adequate protection (other than adequate protection in the form of (x) a Lien that is subordinated to the Lien of the Senior Agent and the Senior Lenders and/or to the lien of the provider of such DIP Financing at least to the extent set forth in this Subordination Agreement (to the extent the Senior Agent and the Senior Lenders are granted adequate protection Liens), or (y) an expense of administration claim that is subordinated to the expense of administration claims of the Senior Agent and the Senior Lenders at least to the same extent set forth in this Subordination Agreement) or any other relief in connection with its or their interest in any such Collateral and hereby otherwise waives any right it or the Subordinated Lenders may otherwise have to adequate protection of its or their interest in the Collateral, and each Subordinated Lender will be deemed to have consented to, and hereby consents in advance to, any such use of cash collateral (within the meaning of Section 363 of the Bankruptcy Code) and any such DIP Financing; provided that (A) in the case of a DIP Financing, the Subordinated Agent is not required as a condition to such DIP Financing to release its Lien on the Collateral as the same may exist at the time of such DIP Financing and (B) any Subordinated Lender may seek adequate protection as permitted by this Section 5. The Subordinated Agent hereby agrees, for and on behalf of itself and the Subordinated Lenders, that the Liens of the Subordinated Agent or any Subordinated Lender in the Collateral shall be subordinated to (i) the liens securing such DIP Financing (and all obligations relating thereto), (ii) any replacement liens granted for the benefit of the Senior Agent and (iii) any “carve out” agreed to by the Senior Agent, in each case to the extent and upon the terms and conditions specified in this Subordination Agreement. d. Other Waivers. Until the Discharge of Senior Indebtedness has occurred, without the Senior Agent’s written consent to the contrary, the Subordinated Agent agrees, for and on behalf of itself and the Subordinated Lenders, that neither it nor any Subordinated Lender shall (i) seek relief from the automatic stay of Section 362 of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding) or any other stay in any Insolvency Proceeding in respect of any portion of the Collateral without the prior written consent of the Senior Agent, (ii) directly or indirectly propose or support any plan of reorganization or file any motion or pleading (or otherwise vote) in support of any motion or plan that is not supported by the Senior Agent and the Senior Lenders (unless such plan or motion provides for the Discharge of Senior Indebtedness) or that would challenge the enforceability of the Senior Indebtedness or the Liens on the Collateral securing same or that would otherwise be in contravention of this Subordination Agreement, (iii) directly or indirectly oppose any relief requested or supported by the Senior Agent (x) seeking relief from the automatic stay with respect to all or any portion of the Collateral or (y) in connection with any sale or other disposition free and clear of the Subordinated Agent’s and the
- 14 - Subordinated Lenders’ Liens under Section 363(f) of the Bankruptcy Code or any other similar provision of applicable law (and the Subordinated Agent hereby consents, for and on behalf of itself and the Subordinated Lenders, to any such relief requested or supported by the Senior Agent), it being understood that any “credit bid” by the Subordinated Agent, for and on behalf of the Subordinated Lenders, as permitted by this Subordination Agreement, shall not be deemed to be in opposition of relief requested or supported by the Senior Agent, provided, that such “credit bid” shall provide for the Discharge of Senior Indebtedness, (iv) object to any professional expense or other similar carve-out agreed to by the Senior Agent, (v) object to any sale of all or any portion of the Collateral or any related bidding procedures in accordance with Sections 363 or 365 of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding), or in accordance with a court order entered in an Insolvency Proceeding, (vi) seek or request any adequate protection of its Liens (other than as permitted by Section 5.c above) or (vii) oppose or seek to challenge any claim by the Senior Agent or any Senior Lender for allowance of Senior Obligations consisting of post-petition interest, fees or expenses to the extent such interest, fees and other charges are paid solely from a DIP Financing provided by such Senior Agent or any Senior Lender or from proceeds of such Collateral (as defined in the Senior NIA), without regard to the existence of the Lien of the Subordinated Agent on the Collateral (as defined in the Senior NIA). The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, waives any claim it or they may now or hereafter have against the Senior Agent or any Senior Lender arising out of the election of the Senior Agent or any Senior Lender, in any case instituted under the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding), of the application of Section 1111(b)(2) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding). The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that it will not, directly or indirectly, assert or support the assertion of, and hereby waives any right that it may have to assert or support the assertion of, any surcharge or claim for costs or expenses of preserving or disposing of any Collateral senior to or on a parity with the Liens on the Collateral (as defined in the Senior NIA) securing the Senior Obligations of the Senior Agent or any Senior Lender under Section 506(c) or the “equities of the case” exception of Section 552(b) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding) as against the Senior Agent or any Senior Lender or with respect to any of the Collateral. e. Voting. Neither Subordinated Agent nor any Subordinated Lender may support or vote in favor of any plan of reorganization (and each shall be deemed to have voted to reject any plan of reorganization) unless such plan (a) pays off, in cash in full, all Senior Obligations or (b) is accepted by the class of holders of Senior Obligations voting thereon in accordance with Section 1126(c) of the Bankruptcy Code. 6. Modifications of Indebtedness. a. Amendments to the Senior Loan Documents and the Subordinated Loan Documents. (1) Senior Indebtedness. All Senior Indebtedness at any time incurred by any Obligor shall be deemed to have been incurred, and all Senior Indebtedness held by any Senior Lender or other holder of Senior Indebtedness shall be deemed to have been extended, acquired or obtained, as applicable, in reliance upon this Subordination Agreement, and, to the extent not otherwise required herein, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives (i) notice of acceptance, or proof of reliance, by the Senior Agent, the Senior Lenders or any other holder of Senior Indebtedness of this Subordination Agreement, and (ii) notice of the existence, renewal, extension, accrual, creation, or non-payment of all or any part of the Senior Indebtedness. Nothing contained in this Subordination Agreement shall preclude the Senior Agent, the Senior Lenders or any holder of Senior Indebtedness from discontinuing the extension of credit to any Obligor (whether under
- 15 - the Senior NIA or otherwise) or from taking (without notice to the Subordinated Agent, any Subordinated Lender, any Obligor, or any other Person) any other action in respect of the Senior Indebtedness or the Collateral which the Senior Agent, such Senior Lender or such holder is otherwise entitled to take with respect to the Senior Indebtedness or the Collateral. Anything in the Subordinated Loan Documents to the contrary notwithstanding, the Senior Agent and the Senior Lenders shall have the right, without notice to or consent from the Subordinated Agent or any Subordinated Lender, to amend, supplement or modify the Senior Indebtedness, in any manner whatsoever, including any renewals, extensions or shortening of time of payments (even if such shortening causes any Senior Indebtedness to be due on demand or otherwise) and any increase in the amount of the Senior Indebtedness and/or any making available of additional extensions of credit as part of the Senior Indebtedness (regardless of whether such additional extensions of credit are of a new or different type than the extensions of credit available to the Obligors under the Senior Loan Documents), and the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, consents and agrees to any such amendment, supplement or modification; provided, any Senior Agent not party hereto agrees in writing to the terms of this Subordination Agreement on behalf of itself and the Senior Lenders. (2) Subordinated Obligations. All Subordinated Obligations at any time incurred by any Obligor shall be deemed to have been incurred, and all Subordinated Obligations held by the Subordinated Agent or any Subordinated Lender or other holder of Subordinated Obligations shall be deemed to have been extended, acquired or obtained, as applicable, in reliance upon this Subordination Agreement, and, to the extent not otherwise required herein, the Senior Agent for and on behalf of itself and the other Secured Parties hereby waives notice of acceptance, or proof of reliance, by the Subordinated Agent or any Subordinated Lender or any other holder of Subordinated Obligations of this Subordination Agreement; provided, that any Subordinated Agent not party hereto agrees in writing to the terms of this Subordination Agreement on behalf of itself and the Subordinated Lenders. Without the prior written consent of the Senior Agent, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees not to amend, restate, supplement or modify, in whole or in part, any terms or provisions of any Subordinated Loan Document (i) to cause the Effective Yield thereon to be in excess of 15% per annum, (ii) to shorten the scheduled maturity date thereof, modify (or have the effect of a modification of) the prepayment or event of default provisions thereof, (iii) to make the terms thereof of materially more restrictive to any Obligor, (iv) in a manner that is adverse in any respect to the rights of the Senior Agent or Senior Lenders hereunder or under the Senior Loan Documents or to restrict the ability of any Obligor to satisfy its obligations thereunder, (v) in a manner that is inconsistent with this Subordination Agreement or (vi) to restrict amendments to the Senior Loan Documents except as set forth in (1) above. b. Notice of Acceptance and Other Waivers. To the fullest extent permitted by applicable law, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations made or extended under the Senior NIA, or the creation or existence of any Senior Indebtedness; (iii) notice of the amount of the Senior Indebtedness; (iv) notice of any adverse change in the financial condition of any Obligor or of any other fact that might increase the Subordinated Agent’s or any Subordinated Lender’s risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to any instrument among the Senior Loan Documents; (vi) notice of any default or Event of Default under the Senior Loan Documents or otherwise relating to the Senior Indebtedness; and (vii) all other notices (except if such notice is specifically required to be given to the Subordinated Agent under this Subordination Agreement) and demands to which the Subordinated Agent or any Subordinated Lender might otherwise be entitled. (1) To the fullest extent permitted by applicable law, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, waives the right by statute or otherwise to
- 16 - require the Senior Agent, any Senior Lender or any holder of Senior Indebtedness to institute suit against any Obligor or to exhaust any rights and remedies which the Senior Agent, any Senior Lender or any holder of Senior Indebtedness has or may have against any Obligor. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, further waives any defense arising by reason of any disability or other defense (other than the defense that the Discharge of Senior Indebtedness has occurred (subject to the provisions of Section 5.b)) of any Obligor or by reason of the cessation from any cause whatsoever of the liability of such Obligor in respect thereof. (2) To the fullest extent permitted by applicable law, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives: (i) any rights to assert against the Senior Agent, the Senior Lenders or any other holder of Senior Indebtedness any defense (legal or equitable), set-off, counterclaim, or claim which the Subordinated Agent or any Subordinated Lender may now or at any time hereafter have against any Obligor or any other party liable to the Senior Agent, the Senior Lenders, any other holder of Senior Indebtedness; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of any Senior Indebtedness, any Subordinated Obligations or any security for either; (iii) any defense arising by reason of any claim or defense based upon an election of remedies by the Senior Agent, the Senior Lenders or any other holder of Senior Indebtedness; and (iv) the benefit of any statute of limitations affecting the Subordinated Agent’s or any Subordinated Lender’s obligations hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Senior Indebtedness shall similarly operate to defer or delay the operation of such statute of limitations applicable to the Subordinated Agent’s or any Subordinated Lender’s obligations hereunder. (3) Until such time as the Discharge of Senior Indebtedness shall have occurred, (i) the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives and postpones any right of subrogation it has or may have as against any Obligor with respect to any Senior Indebtedness; and (ii) in addition, the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby waives and postpones any right to proceed against any Obligor or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective of whether direct or indirect, liquidated or contingent), with respect to any Senior Indebtedness. (4) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS SUBORDINATION AGREEMENT, THE SUBORDINATED AGENT AND EACH SUBORDINATED LENDER, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY SENIOR AGENT, SENIOR LENDERS OR ANY OTHER HOLDER OF SENIOR INDEBTEDNESS, EVEN THOUGH THAT ELECTION OF REMEDIES HAS DESTROYED THE SUBORDINATED AGENT’S OR ANY SUBORDINATED LENDER’S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST ANY OBLIGOR BY THE OPERATION OF ANY APPLICABLE LAW. (5) None of the Senior Agent, any Senior Lender or any other holder of Senior Indebtedness or any of their respective affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or any Proceeds or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or Proceeds thereof or, except as provided in Section 2 hereof, to take any other action whatsoever with regard to the Collateral or any part or Proceeds thereof. If the Senior Agent or any Senior Lender honors (or fails to honor) a request by the Obligors for an extension of credit pursuant to the Senior NIA or any of the other Senior Loan Documents, whether the Senior Agent or any Senior Lender has knowledge that the honoring of (or failure
- 17 - to honor) any such request would constitute a default under the terms of the Subordinated Loan Documents or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if the Senior Agent or any Senior Lender otherwise should exercise any of its contractual rights or remedies under the Senior Loan Documents (subject to the express terms and conditions hereof), neither the Senior Agent nor any Senior Lender shall have any liability whatsoever to the Subordinated Agent or any Subordinated Lender as a result of such action, omission, or exercise. The Senior Agent and the Senior Lenders will be entitled to manage and supervise their loans and extensions of credit under the Senior Loan Documents as the Senior Agent and the Senior Lenders may, in their sole discretion, deem appropriate, and the Senior Agent, each Senior Lender and each other holder of Senior Indebtedness may manage their loans and extensions of credit without regard to any rights or interests that the Subordinated Agent or any Subordinated Lender may have in the Collateral or otherwise except as otherwise expressly set forth in this Subordination Agreement. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that none of the Senior Agent, any Senior Lender or any other holder of Senior Indebtedness shall incur any liability as a result of a sale, lease, license, application or other disposition of all or any portion of the Collateral or any part or Proceeds thereof conducted in accordance with applicable law and the terms of this Subordination Agreement. The Senior Agent, each Senior Lender and each holder of Senior Indebtedness may, from time to time, enter into agreements and settlements with Obligors as it may determine in its sole discretion without impairing any of the subordinations, priorities, rights or obligations of the parties under this Subordination Agreement, including substituting Collateral, releasing any Lien and releasing any Obligor. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, waives any and all rights it may have to require the Senior Agent, any Senior Lender or any holder of Senior Indebtedness to marshal assets, to exercise rights or remedies in a particular manner or order, or to forbear from exercising such rights and remedies in any particular manner or order. c. Refinancings. Any of the Senior Obligations and the Subordinated Obligations and the agreements or indentures governing them may be Refinanced, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the refinancing transaction under any Senior Loan Document or any Subordinated Loan Document) of any Secured Party (as defined in the Senior NIA or the Subordinated Credit Agreement, as applicable), all without affecting the priorities provided for herein or the other provisions hereof; provided, however, that (i) the holders of any such Refinancing indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing (to the extent they are not already so bound) to the terms of this Subordination Agreement pursuant to such Refinancing documents or agreements (including amendments or supplements to this Subordination Agreement) as each Original Senior Agent or Original Subordinated Agent, as applicable, shall reasonably request and in form and substance reasonably acceptable to such Original Senior Agent or Original Subordinated Agent, as applicable, and (ii) the terms of such Senior Obligations or the Subordinated Obligations, as applicable, as so Refinanced would not be prohibited by Section 6.a hereof if incorporated in the applicable documentation being Refinanced (any Refinancing of such Senior Obligations or the Subordinated Obligations, as applicable, meeting the foregoing requirements of this Section 6.c, a “Permitted Refinancing”). In connection with any Permitted Refinancing contemplated by this Section 6.c, this Subordination Agreement may be amended at the request and sole expense of the Borrower, and without the consent of any Secured Party (as defined in the Senior NIA or the Subordinated Credit Agreement, as applicable), (a) to add parties (or any authorized agent or trustee therefor) providing any such Refinancing, (b) to confirm that such Refinancing indebtedness in respect of any Senior Obligations shall have the same rights and priorities in respect of any Collateral (as defined in the Subordinated Loan Documents) in relation to the Senior Obligations and the Subordinated Obligations as the indebtedness being Refinanced, all on the terms provided for herein immediately prior to such Refinancing and (c) to confirm that such Refinancing indebtedness in respect of any Subordinated Obligations shall have the same rights and priorities in respect of any Collateral (as defined in the Senior Loan Documents) in relation to the Senior Obligations and the Subordinated Obligations as the indebtedness being Refinanced, all on the terms provided for herein immediately prior to such Refinancing.
- 18 - 7. Payments Received by any Subordinated Lender. Except as permitted in Section 4 hereof, if at any time prior to the date upon which the Discharge of Senior Indebtedness shall have occurred, the Subordinated Agent or any Subordinated Lender receives (i) any Collateral or proceeds of any Collateral or (ii) any payment or distribution on account of the Subordinated Obligations, the Subordinated Agent or such Subordinated Lender shall be deemed to receive and hold the same in trust as trustee for the benefit of the Senior Agent and shall forthwith deliver (and with any cost and expense incurred in connection therewith being added to the Subordinated Obligations) such payment, distribution, or proceeds to the Senior Agent in precisely the form received (except for the endorsement or assignment by the Subordinated Agent or any Subordinated Lender where necessary), for application on any of the Senior Indebtedness, whether then due or yet to become due. In the event of the failure of the Subordinated Agent or any Subordinated Lender to make any such endorsement or assignment to the Senior Agent, the Senior Agent and any of its officers or agents are hereby irrevocably authorized to make such endorsement or assignment and the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, hereby irrevocably appoints the Senior Agent as its lawful attorney in fact for the purpose of enabling the Senior Agent to make such endorsement or assignment in the name of the Subordinated Agent or any Subordinated Lender. 8. Application of Proceeds. a. Nature of Senior Indebtedness. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, acknowledges and agrees that no application of any Payment Collateral or Cash Collateral by the Senior Agent or the release of any Lien by the Senior Agent upon any portion of the Collateral in connection with any disposition of assets pursuant to Section 4.15 of the Original NIA shall constitute the Exercise of Secured Creditor Remedies under this Subordination Agreement. b. Application of Proceeds of Collateral. All Collateral and all Proceeds, received by any of the Senior Agent, the Senior Lenders or the Subordinated Agent or the Subordinated Lenders in connection with any Exercise of Secured Creditor Remedies shall be applied: first, to the payment of the fees, costs and expenses of the Senior Agent in connection with such Exercise of Secured Creditor Remedies, second, to the payment of the Senior Indebtedness in accordance with the Senior Loan Documents until the Discharge of Senior Indebtedness shall have occurred, third, to the payment of the fees, costs and expenses of the Subordinated Agent and the other Subordinated Obligations in accordance with the Subordinated Credit Agreement and the Subordinated Loan Documents, and fourth, the balance, if any, to the Obligors or to whosoever may be lawfully entitled to receive the same or as court of competent jurisdiction may direct. 9. Senior Indebtedness Unconditional. All rights of the Senior Agent hereunder, and all agreements and obligations of the Subordinated Agent, each Subordinated Lender and each Obligor (to the extent applicable) hereunder, shall remain in full force and effect irrespective of: (i) any lack of validity or enforceability of any Senior Loan Document; (ii) any change in the time, place or manner of payment of, or in any other term of, all or any portion of the Senior Indebtedness, or any amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any Senior Loan Document;
- 19 - (iii) any exchange, release, voiding, avoidance or non perfection of any security interest in any Collateral or any other collateral, or any release, amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of all or any portion of the Senior Indebtedness or any guarantee or guaranty thereof; or (iv) any exercise or delay in or refrain from exercising any right or remedy, any election of remedies, any taking or failure to take any Liens or additional Liens, as well as any other circumstances that otherwise might constitute a defense available to, or a discharge of, any Obligor in respect of the Senior Indebtedness, or of the Subordinated Agent, any Subordinated Lender, or any Obligor, to the extent applicable, in respect of this Subordination Agreement. 10. Subordinated Obligations Unconditional. Subject to compliance with the terms of this Subordination Agreement, all rights of the Subordinated Agent and the Subordinated Lenders hereunder, and all agreements and obligations of the Senior Agent and the Obligors (to the extent applicable) hereunder, shall remain in full force and effect irrespective of: (i) any lack of validity or enforceability of any Subordinated Loan Document; (ii) any change in the time, place or manner of payment of, or in any other term of, all or any portion of the Subordinated Obligations, or any amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any Subordinated Loan Document; (iii) any exchange, release, voiding, avoidance or non-perfection of any security interest in any Collateral or any other collateral, or any release, amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of all or any portion of the Subordinated Obligations or any guarantee or guaranty thereof; or (iv) any other circumstances that otherwise might constitute a defense available to, or a discharge of, any Obligor in respect of the Subordinated Obligations, or of the Senior Agent, or any Obligor, to the extent applicable, in respect of this Subordination Agreement. 11. [Reserved]. 12. Representations. The Senior Agent represents and warrants to the Subordinated Agent and the Subordinated Lenders that (a) it has the requisite power and authority to enter into, execute, deliver, and carry out the terms of this Subordination Agreement on behalf of itself and the other Secured Parties and (b) this Subordination Agreement, when executed and delivered, will constitute the valid and legally binding obligation of the Senior Agent enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles. The Subordinated Agent represents and warrants to the Senior Agent and the Senior Lenders that (i) it has the requisite power and authority under the Subordinated Credit Agreement to enter into, execute, deliver, and carry out the terms of this Subordination Agreement on behalf of itself and the Subordinated Lenders, and (ii) this Subordination Agreement, when executed and delivered, will constitute the valid and legally binding obligation of the Subordinated Agent enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles. 13. Amendments. No amendment or waiver of any provision of this Subordination Agreement nor consent to any departure by any party hereto shall be effective unless it is in a written
- 20 - agreement executed by the Senior Agent and the Subordinated Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 14. Instrument Legends. The Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, agrees that each of the Subordinated Loan Documents and the face of any other instrument evidencing the Subordinated Obligations or any portion thereof or any security therefor shall include the legend set forth below (or language to a similar effect approved by the Senior Agent), and copies thereof shall be delivered to the Senior Agent. Any instrument evidencing any of the Subordinated Obligations or any portion thereof which is hereafter executed will, on the date thereof, be inscribed with a similar legend. “Notwithstanding anything herein to the contrary, the lien and security interest granted to the Subordinated Agent pursuant to or in connection with this Agreement, the terms of [any Security Document] [this Agreement], and the exercise of any right or remedy by the Subordinated Agent [t]hereunder are subject to the provisions of the Intercreditor and Subordination Agreement, dated as of July 20, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Subordination Agreement”), among Appgate Funding, as the Senior Agent, and SIS Holdings, L.P., as the Subordinated Agent. In the event of any conflict between the terms of the Subordination Agreement and this Agreement [or any Security Document], the terms of the Subordination Agreement shall control.” 15. Additional Remedies. If the Subordinated Agent or any Subordinated Lender violates any of the terms of this Subordination Agreement, in addition to any remedies in law, equity, or otherwise, the Senior Agent may restrain such violation in any court of law and may, in its own or in any Obligor’s name, interpose this Subordination Agreement as a defense in any action by the Subordinated Agent or any Subordinated Lender. Upon the Senior Agent’s written request, the Subordinated Agent and each Subordinated Lender will promptly take all actions which the Senior Agent reasonably believes appropriate to carry out the purposes and provisions of this Subordination Agreement and such cost and expense incurred in connection therewith shall be added to the Subordinated Obligations. If the Senior Agent or any Senior Lender violates any of the terms of this Subordination Agreement, in addition to any remedies in law, equity, or otherwise, the Subordinated Agent may restrain such violation in any court of law and may, in its own or in any Obligor’s name, interpose this Subordination Agreement as a defense in any action by the Senior Agent or any Senior Lender. Upon the Subordinated Agent’s written request, the Senior Agent and each Senior Lender will promptly take all actions which the Subordinated Agent reasonably believes appropriate to carry out the purposes and provisions of this Subordination Agreement and such cost and expense incurred in connection therewith shall be added to the Senior Obligations. 16. Information Concerning Financial Condition. The Senior Agent hereby assumes, for and on behalf of itself and the other Secured Parties, and the Subordinated Agent, for and on behalf of itself and the Subordinated Lenders, shall, without imposing any duty not expressly set forth in the Subordinated Credit Agreement or Subordinated Loan Documents, be responsible for keeping itself informed of the financial condition of Obligors and of all other circumstances bearing upon the risk of nonpayment of the Senior Indebtedness or the Subordinated Obligations, and the Senior Agent and the Subordinated Agent hereby agrees that no party has and shall have a duty to advise any other party of information known to it regarding such condition or any such circumstances. In the event the Senior Agent or the Subordinated Agent, in its sole discretion, undertakes, at any time or from time to time, to provide any such information to such other party to this Subordination Agreement, it shall be under no obligation (a) to provide any such information to such other party or any other party on any subsequent occasion, (b) to undertake any investigation, or (c) to disclose any information which, pursuant to its commercial finance practices, the Senior Agent or the Subordinated Agent wishes to maintain confidential.
- 21 - 17. No Warranties or Liability. The Senior Agent acknowledges and agrees, for and on behalf of itself and the other Secured Parties, and the Subordinated Agent acknowledges and agrees, for and on behalf of itself and the Subordinated Lenders, that it has not made any warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the Senior Indebtedness or the Subordinated Obligations or any liens or security interests held in connection therewith. Except as otherwise provided in this Subordination Agreement, the Senior Agent and the Subordinated Agent will be entitled to manage and supervise their respective extensions of credit to any Obligor in accordance with law and their usual practices, modified from time to time as they deem appropriate. 18. Third Party Beneficiaries. This Subordination Agreement is solely for the benefit of the Senior Agent, the Senior Lenders, the Representative, the Subordinated Agent and the Subordinated Lenders and their respective successors and assigns, and neither any Obligor nor any other Persons are intended to be a third party beneficiary hereunder or to have any right, benefit, priority or interest under, or because of the existence of, or to have any right to enforce, this Subordination Agreement. The Senior Agent and the Subordinated Agent shall have the right to modify or terminate this Subordination Agreement at any time without notice to or approval of any Obligor or any other Person. 19. No Impairment. Nothing in this Subordination Agreement is intended to or shall impair, as between Obligors and the Subordinated Lenders, the obligation of Obligors, which is absolute and unconditional, to pay the Subordinated Obligations as and when the same shall become due and payable in accordance with its terms, or affect the relative rights of the Subordinated Lenders and creditors of Obligors other than the Senior Agent and the Senior Lenders. Notwithstanding anything to the contrary herein or in any Senior Loan Document or any Subordinated Loan Document, the Obligors shall not be required to act or refrain from acting pursuant to any Subordinated Loan Document with respect to any Collateral (as defined in the Senior NIA) in any manner that would cause a default under any Senior Loan Document or which is in violation of this Subordination Agreement. 20. Subrogation. Solely after the Discharge of Senior Indebtedness shall have occurred, the Subordinated Agent and the Subordinated Lenders shall be subrogated to the rights of the Senior Agent and the Senior Lenders to the extent that distributions otherwise payable to the Subordinated Agent and the Subordinated Lenders have been applied to the payment of the Senior Indebtedness in accordance with the provisions of this Subordination Agreement, it being understood that the provisions of this Subordination Agreement are, and are intended solely, for the purposes of defining the rights of the Subordinated Agent and the Subordinated Lenders, on the one hand, and the Senior Agent and the Senior Lenders, on the other hand. The Senior Agent and the Senior Lenders shall have no obligation or duty to protect the Subordinated Agent’s or any Subordinated Lender’s rights of subrogation arising pursuant to this Subordination Agreement or under any applicable law, nor shall the Senior Agent, the Senior Lenders or any other holder of Senior Indebtedness be liable for any loss to, or impairment of, any subrogation rights held by the Subordinated Agent or any Subordinated Lender. 21. Notices. All demands, notices, and other communications provided for hereunder shall be in writing and: if to the Subordinated Agent or any Subordinated Lender, mailed or sent by telecopy or emailed (at such email address as the Subordinated Agent or such Subordinated Lender may designate in accordance herewith), addressed to it as follows: 2333 Ponce De Leon Boulevard, Suite 900 Coral Gables, Florida 33134 Attn: Rene Rodriguez ([intentionally omitted]), in his capacity at Medina Capital, Victor Semah ([intentionally omitted]), in his capacity at Medina Capital
- 22 - with a copy to: BC Partners Inc. 650 Madison Avenue, 23rd Floor New York, NY 10022 Attn: David Leland ([intentionally omitted]), Benjamin Phillips ([intentionally omitted]) and if to the Senior Agent, mailed or sent by telecopy or e-mail thereto, addressed to it as follows: 2 Alhambra Plaza STE PH-1-B Coral Gables, FL 33134 Attn: Manuel D. Medina ([intentionally omitted]) Tony Jimenez ([intentionally omitted]) or as to any party at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 21. All such demands, notices and other communications shall be effective, when mailed, three Business Days after deposit in the mails, postage prepaid, when sent by telecopy, when receipt is acknowledged by the receiving telecopy equipment (or at the opening of the next Business Day if receipt is after normal business hours), or when delivered, as the case may be, addressed as aforesaid. Notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment). 22. Consent to Jurisdiction; Waiver of Jury Trial and Other Waivers. The Subordinated Agent and the Senior Agent each consents to the jurisdiction of any state or federal court located within the County of New York, State of New York; provided, however, that any suit seeking enforcement of the priorities set forth herein against any Collateral or other property may be brought, at the Senior Agent’s option, in the courts of any jurisdiction where such Collateral or other property may be found. The Subordinated Agent and the Senior Agent each waives personal service of any and all process upon it, and consents that all service of process be made in the manner set forth in Section 21 of this Subordination Agreement for notices. The Subordinated Agent and the Senior Agent each waives, to the fullest extent each may effectively do so, any defense or objection based upon forum non conveniens and any defense or objection to venue of any action instituted within the County of New York, State of New York. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS SUBORDINATION AGREEMENT. 23. Governing Law. This Subordination Agreement shall be governed by, and construed in accordance with, the law of the State of New York applicable to contracts made and to be performed in the State of New York. 24. Successors and Assigns. a. This Subordination Agreement shall be binding upon and shall inure to the benefit of the parties’ respective successors and assigns, subject to the provisions hereof. All references to any Obligor shall include any Obligor as debtor-in-possession and any receiver or trustee for such Obligor in any Insolvency Proceeding.
- 23 - b. Any Senior Lender may, from time to time, without notice to the Subordinated Agent or any Subordinated Lender, assign or transfer any or all of the Senior Indebtedness or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Indebtedness shall, subject to the terms hereof, be and remain Senior Indebtedness for purposes of this Subordination Agreement, and every assignee or transferee of any of the Senior Indebtedness or of any interest therein shall be entitled to rely upon and be the third party beneficiary of the subordination provided under this Subordination Agreement and shall be subject to and entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto. c. In connection with any assignment or transfer of any or all of the Senior Indebtedness, the Subordinated Agent and each applicable Subordinated Lender agrees to execute and deliver an agreement identical to this Subordination Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any such assignee or transferee and, in addition, will execute and deliver an agreement identical to this Subordination Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any third person who succeeds to or refinances, replaces or substitutes for any or all of the Senior Lenders’ financing of any of Obligors, whether such successor or replacement financing occurs by transfer, assignment, “takeout” or any other means or vehicle and such cost and expense incurred by the Subordinated Agent and each applicable Subordinated Lender in connection therewith shall be added to the Subordinated Obligations. d. Any Subordinated Lender may, from time to time, without notice to the Senior Agent or any Senior Lender, assign or transfer any or all of the Subordinated Obligations or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Subordinated Obligations shall, subject to the terms hereof, be and remain Subordinated Obligations for purposes of this Subordination Agreement, and every assignee or transferee of any of the Subordinated Obligations or of any interest therein shall (i) be bound by the subordination provided under this Subordination Agreement (ii) be subject to and entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto, and (iii) execute and deliver to the Senior Agent a written acknowledgment of receipt of a copy of this Subordination Agreement and the written agreement by such person to be bound by the terms of this Subordination Agreement. 25. Integrated Agreement. This Subordination Agreement sets forth the entire understanding of the parties with respect to the within matters and may not be modified or amended except upon a writing signed by all parties. 26. Authority. Each of the parties hereto certifies that such party has all necessary authority to execute this Subordination Agreement. 27. Counterparts. This Subordination Agreement may be executed in one or more counterparts, each one of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Subordination Agreement by facsimile or electronic transmission shall be equally effective as delivery of an original executed counterpart. 28. Headings. The headings contained in this Subordination Agreement are for convenience only and shall not affect the interpretation of this Subordination Agreement. 29. Severability. Any provision of this Subordination Agreement that is prohibited by law or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
- 24 - prohibition or unenforceability, without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. To the extent permissible, the parties waive any law that prohibits any provision of this Subordination Agreement or renders any provision hereof unenforceable. 30. Conflicts. To the extent that there is a conflict or inconsistency between any provision hereof, on the one hand, and any provision of any Subordinated Loan Document or any Senior Loan Document, on the other hand, this Subordination Agreement shall control and prevail. 31. Termination. This Subordination Agreement shall continue in full force and effect until the Discharge of Senior Indebtedness shall have occurred and shall thereafter be revived to the extent provided for in Section 5.b. [Remainder of this page intentionally left blank]
Intercreditor and Subordination Agreement IN WITNESS WHEREOF, the Original Senior Agent, for and on behalf of itself and the other Secured Parties, and the Original Subordinated Agent have caused this Subordination Agreement to be duly executed and delivered as of the date first above written. APPGATE FUNDING, LLC, as Original Senior Agent By: Name: Title:
Intercreditor and Subordination Agreement SIS Holdings, L.P., as the Original Subordinated Agent BY: SIS HOLDINGS GP, LLC, its General Partner By: Name: Title:
Intercreditor and Subordination Agreement ACKNOWLEDGMENT Each of the Original Obligors hereby acknowledges that it has received a copy of the foregoing Intercreditor and Subordination Agreement and consents thereto, agrees to recognize all rights granted thereby to the Senior Agent, the Senior Lenders, the Subordinated Agent and the Subordinated Lenders and will not do any act or perform any obligation which is not in accordance with the agreements set forth therein. Each of the Original Obligors further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under this Subordination Agreement. This Acknowledgment has been delivered and accepted at and shall be deemed to have been made in the State of New York, and shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the laws of the State of New York. ACKNOWLEDGED AS OF THE DATE FIRST WRITTEN ABOVE: OBLIGORS: Appgate Cybersecurity, Inc. By: ___________________________________ Name: Title: Appgate, Inc. By: ___________________________________ Name: Title: Cryptzone Worldwide, Inc. By: ___________________________________ Name: Title:
Intercreditor and Subordination Agreement Cryptzone International Holdings, Inc. By: ___________________________________ Name: Title: Cryptzone North America, Inc. By: ___________________________________ Name: Title: Immunity, Inc. By: ___________________________________ Name: Title: Immunity Federal Services, LLC By: ___________________________________ Name: Title:
Intercreditor and Subordination Agreement Immunity Products, LLC By: ___________________________________ Name: Title: Immunity Services, LLC By: ___________________________________ Name: Title: Easy Solutions Enterprises Corp. By: ___________________________________ Name: Title: Easy Solutions, Inc. By: ___________________________________ Name: Title:
Intercreditor and Subordination Agreement Catbird Networks, Inc. By: ___________________________________ Name: Title:
G-1 EXHIBIT G EXCLUDED ACCOUNTS [omitted in accordance with Regulation S-K Item 601(a)(5)]