SC 13E3

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 13E-3

RULE 13E-3 TRANSACTION STATEMENT

UNDER SECTION 13(E) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

 

COVETRUS, INC.

(Name of the Issuer)

 

 

Covetrus, Inc.

Corgi Bidco, Inc.

Corgi Merger Sub, Inc.

CD&R VFC Holdings, L.P.

CD&R Corgi Holdings, L.P.

Clayton, Dubilier & Rice Fund IX, L.P.

Clayton, Dubilier & Rice Fund IX-A, L.P.

CD&R Advisor Fund IX, L.P.

CD&R Associates IX, L.P.

CD&R Investment Associates IX, Ltd.

Clayton, Dubilier & Rice Fund XI, L.P.

CD&R Associates XI, L.P.

CD&R Investment Associates XI , Ltd.

Clayton, Dubilier & Rice, LLC

(Names of Persons Filing Statement)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

22304C100

(CUSIP Number of Class of Securities)

 

Covetrus, Inc.

7 Custom House Street

Portland, ME 04101

(888) 280-2221

Attn: Margaret B. Pritchard

 

Corgi Bidco, Inc.

Corgi Merger Sub, Inc.

CD&R VFC Holdings, L.P.

CD&R Corgi Holdings, L.P.

Clayton, Dubilier & Rice Fund IX, L.P.

Clayton, Dubilier & Rice Fund IX-A, L.P.

CD&R Advisor Fund IX, L.P.

CD&R Associates IX, L.P.

CD&R Investment Associates IX, Ltd.

Clayton, Dubilier & Rice Fund XI, L.P.

CD&R Associates XI, L.P.

CD&R Investment Associates XI , Ltd.

Clayton, Dubilier & Rice, LLC

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

(212) 407-5227

Attn: Rima Simson

(Name, Address, and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement)

With copies to

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

(212) 310-8000

Attn: Michael J. Aiello; Amanda Fenster

 

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

(212) 909-6000

Attn: Paul S. Bird

 

 

This statement is filed in connection with (check the appropriate box):

 

a.  ☒

The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.

 

b.  ☐

The filing of a registration statement under the Securities Act of 1933.

 

c.  ☐

A tender offer.

 

d.  ☐

None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies:  ☒

Check the following box if the filing is a final amendment reporting the results of the transaction:  ☐

CALCULATION OF FILING FEE

 

Transaction Valuation*   Amount of Filing Fee**
$3,045,288,412   $282,298.24

 

*

For purposes of calculating the fee only, as of June 17, 2022, this amount is based upon the sum of: (a) the product of 139,825,101 shares of common stock outstanding and the per share merger consideration of $21.00; (b) the product of 843,454 shares of common stock underlying outstanding options and $11.15 (which is the difference between the per share merger consideration of $21.00 and the weighted average exercise price of the outstanding options of $9.85); (c) the product of 3,780,018 shares of common stock underlying outstanding restricted stock units and the per share merger consideration of $21.00; and (d) the product of 960,781 shares of common stock underlying outstanding performance restricted stock units and the per share merger consideration of $21.00.

**

Determined by multiplying $3,041,065,868 by 0.0000927.

 

Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

Amount Previously Paid: $282,298.24

   Filing Party: Covetrus, Inc.

Form or Registration No.: Schedule 14A (File No. 001-38794)

   Date Filed: June 30, 2022

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction, passed upon the merits or fairness of this transaction or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

 

 

 


Introduction

This Transaction Statement on Schedule 13e-3 (“Transaction Statement”) is being filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), by (1) Covetrus, Inc. (“Covetrus” or the “Company”), (2) Corgi Bidco, Inc., a Delaware corporation (“Parent”), (3) Corgi Merger Sub, Inc. (“Merger Sub”), a Delaware corporation, (4) CD&R Corgi Holdings, L.P., a Cayman Islands exempted limited partnership, (5) Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership (“CD&R Fund XI”), (6) CD&R Associates XI, L.P., a Cayman Islands exempted limited partnership, (7) CD&R Investment Associates XI, Ltd., a Cayman Islands exempted company, (8) CD&R VFC Holdings, L.P., a Cayman Islands exempted limited partnership (“CD&R VFC Holdings”), (9) Clayton, Dubilier & Rice Fund IX, L.P., a Cayman Islands exempted limited partnership, (10) Clayton, Dubilier & Rice Fund IX-A, L.P., a Cayman Islands exempted limited partnership, (11) CD&R Advisor Fund IX, L.P., a Cayman Islands exempted limited partnership, (12) CD&R Associates IX, L.P., a Cayman Islands exempted limited partnership, (13) CD&R Investment Associates IX, Ltd., a Cayman Islands exempted company, and (14) Clayton, Dubilier & Rice, LLC, a Delaware limited liability company (“CD&R”) (each of (1) through (14) a “Filing Person,” and collectively, the “Filing Persons”). Parent and Merger Sub are subsidiaries of investment funds managed by CD&R. CD&R VFC Holdings, an affiliate of CD&R, owns approximately 24.15% of the issued and outstanding shares of Company common stock, par value $0.01 per share (which we refer to as a “share” or, collectively, “shares”).

This Transaction Statement relates to the Agreement and Plan of Merger, dated as of May 24, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Parent and Merger Sub. In connection with the Merger Agreement, each of CD&R Fund XI (an affiliate of CD&R), TPG Partners VIII, L.P. and TPG Healthcare Partners, L.P. have entered into equity commitment letters with Parent (the “Equity Commitment Letters”), pursuant to which they have agreed to provide equity commitments to Parent in an aggregate amount of $1.604 billion, and have entered into limited guarantees (as amended from time to time, the “Limited Guarantees”) with the Company with respect to the payment of a termination fee that may be payable by Parent to the Company under the Merger Agreement, as well as certain reimbursement obligations that may be owed by Parent pursuant to the Merger Agreement, in each case, subject to the terms of the Merger Agreement, the Equity Commitment Letters and the Limited Guarantees, as applicable.

Concurrently with the execution of the Merger Agreement on May 24, 2022, and as a condition and inducement to Parent, Merger Sub and the Company’s willingness to enter into the Merger Agreement, the Company, CD&R VFC Holdings and Parent entered into a Support and Rollover Agreement (the “Support and Rollover Agreement”) with respect to Company common stock owned of record or beneficially by CD&R VFC Holdings. Pursuant to the Support and Rollover Agreement, CD&R VFC Holdings has agreed to, and agreed to cause its applicable affiliates to, affirmatively vote or cause to be voted all of its shares of Company common stock (a) in favor of (“for”) (i) approval of the Merger (as defined below), (ii) the adoption of the Merger Agreement and (iii) each of the other actions contemplated by the Merger Agreement or necessary or desirable to further any other transactions contemplated by the Merger Agreement (including, for the avoidance of doubt, any proposal to adjourn the applicable meeting that the Board supports as long as such adjournment is in compliance with the terms of the Merger Agreement) and (b) against any action or agreement that could reasonably be expected to result in any of the conditions to the consummation of the Merger under the Merger Agreement not being fulfilled. In the event the Board (acting upon the recommendation of the Transaction Committee) or the Transaction Committee has made a change of recommendation against the Merger and the adoption of the Merger Agreement, CD&R VFC Holdings may vote its shares with respect to the above matters in any manner it chooses.

Further, pursuant to the Support and Rollover Agreement, CD&R VFC Holdings has agreed to transfer, directly or indirectly, its shares of Company common stock, which otherwise would be converted into the right to receive Merger Consideration in cash, to Parent (or its parent company), immediately prior to the Effective Time, in exchange for newly issued equity interests of Parent (or its parent company), with an aggregate value equal to the aggregate amount of the Merger Consideration that would have been payable to CD&R VFC Holdings in respect of its shares of Company common stock.


If the Merger Agreement is adopted by the Company’s stockholders and the other conditions under the Merger Agreement are either satisfied or waived, Merger Sub will be merged with and into the Company (which we refer to as the “Merger” and together with the other transactions contemplated by the Merger Agreement, the “Transactions”), the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence under Delaware law as the surviving corporation in the Merger (the “Surviving Corporation”) and as a wholly owned subsidiary of Parent. At the effective time of the Merger, each share of Company common stock issued and outstanding immediately prior to the effective time of the Merger (other than shares of Company common stock (i) owned by Parent or Merger Sub or any of their respective subsidiaries (including the shares to be transferred by CD&R VFC Holdings, directly or indirectly, to Parent immediately prior to the Effective Time), (ii) owned by Covetrus as treasury stock and (iii) owned by Covetrus stockholders who have perfected and not withdrawn a demand for appraisal rights in accordance with Section 262 of the Delaware General Corporation Law of the State of Delaware) will be converted into the right to receive $21.00 in cash, without interest thereon. Following the completion of the Merger, Covetrus will cease to be a publicly traded company and will become an indirect wholly owned subsidiary of Parent.

In addition, CD&R VFC Holdings agreed to not take certain actions, including not (i) tendering any of its shares of Company common stock into any tender or exchange offer, (ii) transferring any of its shares of Company common stock, (iii) granting any proxies or powers of attorney or (iv) taking any action that would make any representation or warranty of CD&R VFC Holdings contained in the Support and Rollover Agreement untrue or incorrect in any material respect or have the effect of preventing or disabling CD&R VFC Holdings from performing its obligations under the Support and Rollover Agreement in any material respect.

Concurrently with the filing of this Transaction Statement, the Company is filing with the SEC a proxy statement (the “Proxy Statement”) under Regulation 14A of the Exchange Act, pursuant to which the Company’s board of directors (the “Board”) is soliciting proxies from stockholders of the Company in connection with the Merger. The Proxy Statement is attached hereto as Exhibit (a)(1). A copy of the Merger Agreement is attached to the Proxy Statement as Annex A and is incorporated herein by reference. As of the date hereof, the Proxy Statement is in preliminary form, and is subject to completion or amendment. Terms used but not defined in this Transaction Statement have the meanings assigned to them in the Proxy Statement.

The transaction committee (the “Transaction Committee”) of the Board, consisting solely of non-management members of the Board that are unaffiliated with CD&R or its affiliates, evaluated the Merger in consultation with the Company’s management and legal and financial advisors. The Transaction Committee unanimously (i) approved and declared advisable the Merger Agreement and the consummation of the Transactions, including the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement, (ii) determined that the Merger is fair to, and in the best interests of, the Company and its stockholders and (iii) recommended to the Board to adopt and declare advisable the Merger Agreement and the Transactions, including the Merger, and recommend to the stockholders of the Company the adoption of the Merger Agreement. The Board, other than Ravi Sachdev and Sandra Peterson, who recused themselves due to their affiliation with CD&R, acting upon the recommendation of the Transaction Committee, unanimously (i) approved and declared advisable the Merger Agreement and the consummation of the Transactions, including the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement, (ii) determined that the Merger is fair to, and in the best interests of, the Company and its stockholders, (iii) directed that the Merger Agreement be submitted to a vote at a meeting of the stockholders of the Company and (iv) resolved to recommend that the stockholders of the Company adopt the Merger Agreement. Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement. The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3.

While each of the Filing Persons acknowledges that the Merger is a going private transaction for purposes of Rule 13e-3 under the Exchange Act, the filing of this Transaction Statement shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, that the Company is “controlled” by any of the Filing Persons and/or their respective affiliates.


All information contained in, or incorporated by reference into, this Transaction Statement concerning each Filing Person has been supplied by such Filing Person.

Item 1. Summary Term Sheet

Regulation M-A Item 1001

The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

Item 2. Subject Company Information

Regulation M-A Item 1002

(a) Name and address. Covetrus’ name, and the address and telephone number of its principal executive offices are:

Covetrus, Inc.

7 Custom House Street

Portland, ME 04101

(888) 280-2221

(b) Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Questions and Answers About the Special Meeting and the Merger—What do I need to do now? How many votes do I have?”

“The Special Meeting—Record Date and Quorum”

“Market Price and Dividend Data”

(c) Trading market and price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Market Price and Dividend Data”

(d) Dividends. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Market Price and Dividend Data”

“The Merger Agreement—Covenants Regarding Conduct of Business by Covetrus Prior to Merger”

(e) Prior public offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Other Important Information Regarding the Company—Prior Public Offerings”


(f) Prior stock purchases. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Other Important Information Regarding the Company—Certain Transactions in the Shares of Common Stock”

Item 3. Identity and Background of Filing Person

Regulation M-A Item 1003

The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

(a) – (b) Name and Address of Each Filing Person; Business and Background of Entities.

“Summary Term Sheet—The Parties”

“Parties to the Merger”

“Other Important Information Regarding the Company—Directors and Executive Officers of the Company”

“Other Important Information Regarding the CD&R Entities”

“Where You Can Find More Information”

(c) Business and Background of Natural Persons.

“Other Important Information Regarding the Company—Directors and Executive Officers of the Company”

“Other Important Information Regarding the CD&R Entities”

“Where You Can Find More Information”

Item 4. Terms of the Transaction

Regulation M-A Item 1004

(a) Material terms.

(1) Tender offers. Not applicable.

(2) Mergers or Similar Transactions.

(i) The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”

“The Merger Agreement—Effective Time of the Merger”

“The Merger—Payment of Merger Consideration”

“The Merger Agreement—Conditions to the Merger”


(ii) The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Payment of Merger Consideration”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”

(iii) The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”

“The Merger—Certain Financial Projections Utilized in Connection with the Merger”

(iv) The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger Agreement—Obligations with Respect to this Proxy Statement, Schedule 13e-3 and the Special Meeting”

“The Special Meeting—Vote Required for Approval”

(v) The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Certain Effects of the Merger”

(vi) The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“The Merger—Accounting Treatment”

(vii) The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“The Merger—Material U.S. Federal Income Tax Consequences of the Merger”


(c) Different terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Certain Effects of the Merger”

“The Merger—Interests of Executive Officers and Directors of the Company in the Merger”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”

“Support and Rollover Agreement”

(d) Appraisal rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Questions and Answers About the Special Meeting and the Merger”

“Appraisal Rights”

(e) Provisions for unaffiliated security holders. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“The Merger—Provisions for Unaffiliated Stockholders”

(f) Eligibility for listing or trading. Not applicable.

Item 5. Past Contacts, Transactions, Negotiations and Agreements

Regulation M-A Item 1005

(a)(1) – (2) Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”

“The Merger—Certain Effects of the Merger”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“Other Important Information Regarding the Company—Certain Transactions in the Shares of Common Stock”

(b) – (c) Significant corporate events; Negotiations or contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”


“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“The Merger—Financing of the Merger”

“The Merger—Limited Guarantees”

“The Merger Agreement”

“Support and Rollover Agreement”

Annex A—Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc.

Annex B—Support and Rollover Agreement, dated as of May 24, 2022, by and among Covetrus, Inc., CD&R VFC Holdings, L.P. and Corgi BidCo, Inc.

(e) Agreements involving the subject company’s securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Background of the Merger”

“The Merger—Plans for the Company After the Merger”

“The Merger—Financing of the Merger”

“The Merger—Limited Guarantees”

“The Merger Agreement”

“Support and Rollover Agreement”

“The Special Meeting—Vote Required for Approval”

“Other Important Information Regarding the Company—Certain Transactions in the Shares of Common Stock”

Annex A—Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc.

Annex B—Support and Rollover Agreement, dated as of May 24, 2022, by and among Covetrus, Inc., CD&R VFC Holdings, L.P. and Corgi BidCo, Inc.


Item 6. Purposes of the Transaction and Plans or Proposals.

Regulation M-A Item 1006

(b) Use of securities acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Plans for the Company After the Merger”

“The Merger—Certain Effects of the Merger”

“The Merger—Consequences if the Merger is Not Completed”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“Market Price and Dividend Data”

“Delisting and Deregistration of Common Stock”

(c)(1) – (8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Plans for the Company After the Merger”

“The Merger—Certain Effects of the Merger”

“The Merger—Consequences if the Merger Is Not Completed”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“The Merger—Financing of the Merger”

“The Merger—Limited Guarantees”

“Support and Rollover Agreement”

“The Merger Agreement—Organizational Documents; Directors and Officers”


“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”

“The Merger Agreement—Covenants Regarding Conduct of Business by Covetrus Prior to Merger”

“Market Price and Dividends Data”

“Other Important Information Regarding the Company—Directors and Executive Officers of the Company”

“Delisting and Deregistration of Common Stock”

Annex A—Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc.

Item 7. Purposes, Alternatives, Reasons and Effects

Regulation M-A Item 1013

(a) Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Plans for the Company After the Merger”

“The Merger—Certain Effects of the Merger”

(b) Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”


(c) Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”

“The Merger—Certain Financial Projections Utilized in Connection with the Merger”

“The Merger—Certain Effects of the Merger”

Annex C—Opinion of Goldman Sachs & Co. LLC

(d) Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Plans for the Company After the Merger”

“The Merger—Certain Effects of the Merger”

“The Merger—Consequences if the Merger is Not Completed”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“The Merger—Material U.S. Federal Income Tax Consequences of the Merger”

“The Merger—Accounting Treatment”

“The Merger—Financing of the Merger”

“The Merger—Fees and Expenses”

“The Merger—Payment of Merger Consideration”

“The Merger Agreement—Organizational Documents; Directors and Officers”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”


“The Merger Agreement—Covenants Regarding Conduct of Business by Covetrus Prior to Merger”

“Market Price and Dividend Data”

“Delisting and Deregistration of Common Stock”

Annex A—Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc.

Item 8. Fairness of the Transaction

Regulation M-A Item 1014

(a) – (b) Fairness; Factors considered in determining fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“The Merger—Certain Effects of the Merger”

Annex C—Opinion of Goldman Sachs & Co. LLC

(c) Approval of security holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger Agreement—Obligations with Respect to this Proxy Statement, Schedule 13e-3 and the Special Meeting”

“The Merger Agreement—Conditions to the Merger”

“The Special Meeting—Vote Required for Approval”

Annex A—Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc.


(d) Unaffiliated representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Provisions for Unaffiliated Stockholders”

(e) Approval of directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”

Discussion Materials prepared by Goldman Sachs & Co. LLC and reviewed by the Transaction Committee and the Board (other than the Recused Directors (as defined in the Proxy Statement)), dated May 23, 2022, are attached hereto as Exhibit (c)(2) and are incorporated herein by reference.

“The Merger—Interests of Directors and Executive Officers in the Merger”

“Proposal 1: The Merger Agreement Proposal”

(f) Other offers. Not applicable.

Item 9. Reports, Opinions, Appraisals and Negotiations

Regulation M-A Item 1015

(a) – (c) Report, opinion or appraisal; Preparer and summary of the report, opinion or appraisal; Availability of documents. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Opinion of Goldman Sachs & Co. LLC”

“Where You Can Find More Information”

Annex C—Opinion of Goldman Sachs & Co. LLC


Discussion Materials prepared by Goldman Sachs & Co. LLC and reviewed by the Transaction Committee and the Board (other than the Recused Directors (as defined in the Proxy Statement)), dated May 23, 2022, are attached hereto as Exhibit (c)(2) and are incorporated herein by reference.

The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of Covetrus during its regular business hours by any interested equity security holder of Covetrus or representative who has been so designated in writing.

Item 10. Source and Amounts of Funds or Other Consideration

Regulation M-A Item 1007

(a) – (b) Source of funds; Conditions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Financing of the Merger”

“Support and Rollover Agreement’

“The Merger—Limited Guarantees”

“The Merger Agreement—Financing Cooperation”

Debt Commitment Letter, dated May 24, 2022, by and among Corgi Bidco, Inc. and Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd., is attached hereto as Exhibit (b)(1) and is incorporated herein by reference.

Joinder to the Debt Commitment Letter, dated June 15, 2022, by and among Corgi Bidco, Inc. and The Toronto-Dominion Bank, New York Branch, Santander Bank, N.A., ING Capital LLC, Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd., is attached hereto as Exhibit (b)(2) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between Clayton, Dubilier & Rice Fund XI, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(3) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between TPG Partners VIII, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(4) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between TPG Healthcare Partners, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(5) and is incorporated herein by reference.

(c) Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Fees and Expenses”

“The Merger Agreement—Termination of the Merger Agreement”

“The Merger Agreement—Effect of Termination”


“The Merger Agreement—Termination Fees”

“The Merger Agreement—Expenses”

(d) Borrowed funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Financing of the Merger”

“The Merger Agreement—Financing Cooperation”

Debt Commitment Letter, dated May 24, 2022, by and among Corgi Bidco, Inc. and Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd., is attached hereto as Exhibit (b)(1) and is incorporated herein by reference.

Joinder to the Debt Commitment Letter, dated June 15, 2022, by and among Corgi Bidco, Inc. and The Toronto-Dominion Bank, New York Branch, Santander Bank, N.A., ING Capital LLC, Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd., is attached hereto as Exhibit (b)(2) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between Clayton, Dubilier & Rice Fund XI, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(3) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between TPG Partners VIII, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(4) and is incorporated herein by reference.

Equity Commitment Letter, dated May 24, 2022, by and between TPG Healthcare Partners, L.P. and Corgi Bidco, Inc., is attached hereto as Exhibit (b)(5) and is incorporated herein by reference.

Support and Rollover Agreement, dated as of May 24, 2022, by and among Covetrus, Inc., CD&R VFC Holdings, L.P. and Corgi BidCo, Inc. is attached hereto as Exhibit (d)(5) and is incorporated herein by reference.

Item 11. Interest in Securities of the Subject Company

Regulation M-A Item 1008

(a) Securities ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Interests of Directors and Executive Officers in the Merger”

”Other Important Information Regarding the Company—Security Ownership of Certain Beneficial Owners and Management”

(b) Securities transactions. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Other Important Information Regarding the Company—Certain Transactions in the Shares of Common Stock”


Item 12. The Solicitation or Recommendation

Regulation M-A Item 1012

(d) Intent to tender or vote in a going-private transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

“Intent to Vote in Favor of the Merger”

“The Special Meeting—CD&R VFC Holdings’ Obligation to Vote in Favor of the Merger”

“The Special Meeting—Vote Required for Approval”

“Support and Rollover Agreement”

Annex B—Support and Rollover Agreement, dated as of May 24, 2022, by and among Covetrus, Inc., CD&R VFC Holdings, L.P. and Corgi BidCo, Inc.

(e) Recommendations of others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Position of the CD&R Entities as to the Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Purpose and Reasons of the CD&R Entities for the Merger”

Item 13. Financial Information

Regulation M-A Item 1010

(a) Financial statements. The audited consolidated financial statements of the Company for the fiscal years ended December 31, 2021, 2020 and 2019 are incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 28, 2022 (see “Item 8. Financial Statements and Supplementary Data” beginning on page 48). The unaudited consolidated financial statements of the Company for the three months ended March 31, 2022 are incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2022, filed on May 5, 2022 (see “Item 1. Condensed Consolidated Financial Statements” beginning on page 4).

The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“The Merger—Certain Effects of the Merger”


“The Merger—Certain Financial Projections Utilized in Connection with the Merger”

“Other Important Information Regarding the Company—Book Value per Share”

“Where You Can Find More Information”

(b) Pro forma information. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“The Merger—Certain Financial Projections Utilized in Connection with the Merger”

Item 14. Persons/Assets, Retained, Employed, Compensated or Used

Regulation M-A Item 1009

(a) – (b) Solicitations or recommendations; Employees and corporate assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Special Meeting and the Merger”

“The Merger—Background of the Merger”

“The Merger—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger”

“The Merger—Purpose and Reasons of the Company for the Merger”

“The Merger—Fees and Expenses”

“The Merger—Interests of Directors and Executive Officers in the Merger”

“The Special Meeting—Solicitation of Proxies”

Item 15. Additional Information

Regulation M-A Item 1011

(b) Golden Parachute Compensation. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Merger—Certain Effects of the Merger”

“The Merger—Interests of Directors and Executive Officers in the Merger—Golden Parachute Compensation”

“The Merger Agreement—Treatment of Outstanding Equity Awards; Company ESPP”

“The Merger Agreement—Merger Consideration Received by Covetrus Stockholders”

“The Special Meeting—Date, Time and Place of the Special Meeting”

“The Special Meeting—Purpose of the Special Meeting”

“Proposal 2: Merger-Related Compensation Proposal”


(c) Other material information. The information set forth in the Proxy Statement, including all annexes thereto, is incorporated herein by reference.

Item 16. Exhibits

Regulation M-A Item 1016

(a)(1) Preliminary Proxy Statement of Covetrus, Inc. (the “Proxy Statement”) (incorporated herein by reference to the Schedule 14A filed concurrently with the SEC).

(a)(2) Form of Proxy Card.*

(a)(3) Letter to Covetrus, Inc. Stockholders (incorporated herein by reference to the Proxy Statement).

(a)(4) Notice of Special Meeting of Stockholders (incorporated herein by reference to the Proxy Statement).

(a)(5) Press Release, dated May 25, 2022 (filed as Exhibit 99.1 to Covetrus, Inc.’s Current Report on Form 8-K, filed May 25, 2022 and incorporated herein by reference).

(b)(1) Debt Commitment Letter, dated May 24, 2022, by and among Corgi Bidco, Inc. and Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd.

(b)(2) Joinder to the Debt Commitment Letter, dated June 15, 2022, by and among Corgi Bidco, Inc. and The Toronto-Dominion Bank, New York Branch, Santander Bank, N.A., ING Capital LLC, Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, UBS AG, Stamford Branch, UBS Securities LLC, Bank of Montreal, BMO Capital Markets Corp. and Mizuho Bank Ltd.

(b)(3) Equity Commitment Letter, dated May 24, 2022, by and between Clayton, Dubilier & Rice Fund XI, L.P. and Corgi Bidco, Inc.

(b)(4) Equity Commitment Letter, dated May 24, 2022, by and between TPG Partners VIII, L.P. and Corgi Bidco, Inc.

(b)(5) Equity Commitment Letter, dated May 24, 2022, by and between TPG Healthcare Partners, L.P. and Corgi Bidco, Inc.

(c)(1) Opinion of Goldman Sachs & Co. LLC, dated May 24, 2022 (incorporated herein by reference to Annex C of the Proxy Statement).

(c)(2) Discussion Materials prepared by Goldman Sachs & Co. LLC and reviewed by the Transaction Committee and the Board (other than the Recused Directors (as defined in the Proxy Statement)), dated May 23, 2022.

(d)(1) Agreement and Plan of Merger, dated as of May 24, 2022, by and among Corgi Bidco, Inc., Corgi Merger Sub, Inc., and Covetrus, Inc. (incorporated herein by reference to Annex A of the Proxy Statement).

(d)(2) Limited Guarantee, dated May 24, 2022, by Clayton, Dubilier & Rice Fund XI, L.P. in favor of Covetrus, Inc.

(d)(3) Limited Guarantee, dated May 24, 2022, by TPG Partners VIII, L.P. in favor of Covetrus, Inc.

(d)(4) Limited Guarantee, dated May 24, 2022, by TPG Healthcare Partners, L.P. in favor of Covetrus, Inc.

 

 

* 

To be filed by amendment


(d)(5) Support and Rollover Agreement, dated as of May 24, 2022, by and among Covetrus, Inc., CD&R VFC Holdings, L.P. and Corgi BidCo, Inc. (filed as Exhibit 10.1 to Covetrus, Inc.’s Current Report on Form 8-K, filed May 25, 2022 and incorporated herein by reference).

(d)(6) Investment Agreement, dated April 30, 2020, by and among Covetrus, Inc. and CD&R VFC Holdings, L.P. (filed as Exhibit 10.1 to Covetrus, Inc.’s Current Report on Form 8-K, filed May 1, 2020 and incorporated herein by reference).

(d)(7) Investment Agreement – Limited Waiver, dated as of May 19, 2022, by and among Covetrus, Inc. and CD&R VFC Holdings, L.P. (filed as Exhibit 10.1 to Covetrus, Inc.’s Current Report on Form 8-K, filed May 20, 2022 and incorporated herein by reference).

(f) Section 262 of the General Corporation Law of the State of Delaware (incorporated herein by reference to Annex D of the Proxy Statement).

(g) None.

107 Filing Fee Table.

* To be filed by amendment


SIGNATURE

After due inquiry and to the best of each of the undersigned’s knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated as of June 30, 2022.

 

COVETRUS, INC.
By:  

/s/ Margaret B. Pritchard

  Name: Margaret B. Pritchard
  Title:   General Counsel and Secretary
CORGI BIDCO, INC.
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CORGI MERGER SUB, INC.
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R CORGI HOLDINGS, L.P.
By: CD&R Investment Associates XI, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R VFC HOLDINGS, L.P.
By: CD&R Investment Associates IX, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary


CLAYTON, DUBILIER & RICE FUND IX, L.P.
By: CD&R Associates IX, Ltd.
Its: General Partner
By: CD&R Investment Associates IX, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CLAYTON, DUBILIER & RICE FUND IX-A, L.P.
By: CD&R Associates IX, Ltd.
Its: General Partner
By: CD&R Investment Associates IX, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R ADVISOR FUND IX, L.P.
By: CD&R Associates IX, Ltd.
Its: General Partner
By: CD&R Investment Associates IX, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R ASSOCIATES IX, L.P.
By: CD&R Investment Associates IX, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary


CD&R INVESTMENT ASSOCIATES IX, LTD.
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CLAYTON, DUBILIER & RICE FUND XI, L.P.
By: CD&R Associates XI, Ltd.
Its: General Partner
By: CD&R Investment Associates XI, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R ASSOCIATES XI, L.P.
By: CD&R Investment Associates XI, Ltd.
Its: General Partner
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CD&R INVESTMENT ASSOCIATES XI, LTD.
By:  

/s/ Rima Simson

  Name: Rima Simson
  Title:   Vice President, Treasurer and Secretary
CLAYTON, DUBILIER & RICE, LLC
By:  

/s/ Jillian C. Griffiths

  Name: Jillian C. Griffiths
  Title:  Chief Financial Officer
EX-99.(b)(1)

Exhibit (b)(1)

Execution Version

 

DEUTSCHE BANK AG NEW
YORK BRANCH

DEUTSCHE BANK
SECURITIES INC.
1 Columbus Circle

New York, New York 10019

  

UBS AG, STAMFORD BRANCH
600 Washington Boulevard
Stamford, Connecticut 06901

 

UBS SECURITIES LLC
1285 Avenue of the Americas
New York, New York 10019

BANK OF MONTREAL

BMO CAPITAL

MARKETS CORP.
151 West 42nd Street
New York, New York 10036

  

MIZUHO BANK, LTD.

1271 Avenue of the Americas
New York, New York 10020

CONFIDENTIAL

May 24, 2022

Corgi BidCo, Inc.

c/o Clayton, Dubilier & Rice

375 Park Avenue, 18th Floor

New York, New York 10152

Attention: Michael G. Babiarz

and

c/o TPG Capital, L.P.

345 California Street

San Francisco, California 94104

Attention: Spencer Stenmark

Project Corgi

Commitment Letter

Ladies and Gentlemen:

You have advised us that Corgi BidCo, Inc., a newly formed Delaware corporation (“AcquisitionCo” or “you”), formed at the direction of Clayton, Dubilier & Rice, LLC (“CD&R”) and TPG Capital, L.P. (“TPG” and, together with their respective affiliates, the “Sponsors”), intends to acquire (the “Acquisition”), directly or indirectly, all of the issued and outstanding equity interests of the entity previously identified to us by you as “Corgi” (the “Target”) pursuant to the Acquisition Agreement (as defined in Exhibit A hereto). You have further advised Deutsche Bank Securities Inc. (“DBSI”), Deutsche Bank AG New York Branch (“DBNY” and, together with DBSI, “DB”), UBS AG, Stamford Branch (“UBS AG”), UBS Securities LLC (“UBS Securities” and, together with UBS AG, “UBS”), Bank of Montreal (“BMO”), BMO Capital Markets Corp. (“BMOCM” and together with BMO, “BofM”) and Mizuho Bank Ltd. (“Mizuho


and, together with DB, UBS, BofM and any Additional Committing Lenders (as defined below), the “Committed Bank Lenders”; the Committed Bank Lenders together with any Sponsor Relationship Lender (as defined in the Fee Letter (as defined below)), the “Committed Lenders”, “we” or “us”) that, in connection with the foregoing, you intend to consummate the other Transactions described in the Transaction Description attached hereto as Exhibit A (the “Transaction Description”). Capitalized terms used but not defined herein shall have the meanings assigned to them in the Transaction Description, the Summaries of Principal Terms and Conditions attached hereto as Exhibit B (the “First Lien Facilities Term Sheet”) and Exhibit C (the “Second Lien Facility Term Sheet”; together with the First Lien Facilities Term Sheet, the “Term Sheets”) and the Summary of Additional Conditions attached hereto as Exhibit D (the “Summary of Additional Conditions”; together with this commitment letter, the Transaction Description and the Term Sheets, collectively, the “Commitment Letter”).

You have further advised each of the Committed Lenders that, in connection therewith, it is intended that the financing for the Transactions will include (a) the first lien secured credit facilities (the “First Lien Facilities”) described in the First Lien Facilities Term Sheet, in an aggregate principal amount of up to $1,825.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any First Lien Term Loan Flex Increase (as defined in the Fee Letter)), consisting of (x) a $1,525.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any First Lien Term Loan Flex Increase) first lien secured term loan facility (the “First Lien Term Loan Facility”) and (y) a $300.0 million first lien secured cash flow-based revolving credit facility (the “First Lien Revolving Facility”), and (b) a $425.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any Second Lien Flex Increase (as defined in the Fee Letter)) second lien secured term loan facility (the “Second Lien Facility”) described in the Second Lien Facility Term Sheet. The First Lien Facilities and the Second Lien Facility are each individually referred to herein as a “Facility” and collectively referred to herein as the “Facilities”. As used herein, the term “Closing Date” shall mean the date of the initial funding under the Facilities to finance the Transactions.

In connection with the foregoing, each of DBNY, UBS AG, BMO and Mizuho is pleased to advise you of its several, but not joint, commitment to provide, and each hereby commits to provide, 25% of the First Lien Facilities (including without limitation, any First Lien Term Loan Flex Increase) and each of UBS AG, DBNY, BMO and Mizuho is pleased to advise you of its several, but not joint, commitment to provide, and each hereby commits to provide, 25% of the Second Lien Facility (including without limitation, any Second Lien Flex Increase), in each case, subject only to the conditions expressly set forth in the second sentence of the Funding Conditions Provision (as defined below), in the Summary of Additional Conditions and, as applicable, (solely in the case of the First Lien Facilities) under the heading “Conditions Precedent to Initial Extensions of Credit” in the First Lien Facilities Term Sheet, and (solely in the case of the Second Lien Facility) under the heading “Conditions Precedent to Initial Extension of Credit” in the Second Lien Facility Term Sheet.

 

2


It is agreed that:

(i) DBSI, UBS Securities, BMOCM and Mizuho will act as joint lead arrangers and joint bookrunners for the First Lien Facilities (in such capacity, the “Lead First Lien Facilities Arrangers”), and

(ii) UBS Securities, DBSI, BMOCM and Mizuho will act as joint lead arrangers and joint bookrunners for the Second Lien Facility (in such capacity, the “Lead Second Lien Facility Arrangers”; together with the Lead First Lien Facilities Arrangers, the “Lead Arrangers”);

provided, however, that (i) DBSI shall have “left” placement in any and all marketing materials or other documentation used in connection with the First Lien Facilities and shall hold the leading role, rights and responsibilities conventionally associated with such “left” placement, including maintaining sole “physical books” in respect of the First Lien Facilities and (ii) UBS Securities shall have “left” placement in any and all marketing materials or other documentation used in connection with the Second Lien Facility and shall hold the leading role, rights and responsibilities conventionally associated with such “left” placement, including maintaining sole “physical books” in respect of the Second Lien Facility.

You may, on or prior to the date that is 15 business days after the date of this Commitment Letter, appoint additional agents, co-agents, lead arrangers, bookrunners, managers or arrangers (any such agent, co-agent, lead arranger, bookrunner, manager or arranger, an “Additional Committing Lender”) or confer other titles in respect of any Facility in a manner and with economics determined by you in consultation with the Lead Arrangers party hereto as of the date hereof (it being understood that, to the extent you appoint Additional Committing Lenders or confer other titles in respect of any Facility, (x) except in the case of the Second Lien Facility, if commitments with respect to an Alternate Second Lien Facility (as defined below) shall have been, or shall substantially concurrently be, entered into among you and one or more financial institutions, each such Additional Committing Lender will assume a portion of the commitments of each Facility (other than, with respect to the Second Lien Facility, Sponsor Relationship Lender commitments pursuant to the Preferential Allocation (as defined in the Fee Letter)) on a pro rata basis (and the commitments of the Committed Lenders party hereto as of the date hereof with respect to such portion will be reduced ratably) and (y) the economics allocated to the Committed Lenders party hereto as of the date hereof in respect of the relevant Facilities will be reduced ratably by the amount of the economics allocated to such appointed entities upon the execution by such financial institution of customary joinder documentation and, thereafter, each such financial institution shall constitute a “Committed Lender” hereunder and under the Fee Letter); provided that (i) fees will be allocated to each such appointed entity on a pro rata basis in respect of the commitments it is assuming or on such other basis as you and the Lead Arrangers party hereto as of the date hereof may agree and (ii) except in the case of the Second Lien Facility, if commitments with respect to an Alternate Second Lien Facility shall have been, or shall substantially concurrently be, entered into among you and one or more financial

 

3


institutions, in no event shall the Lead Arrangers party hereto as of the date hereof be entitled to less than 60% of the economics of the relevant Facility (excluding, with respect to the Second Lien Facility, any economics allocated to Sponsor Relationship Lenders pursuant to the Preferential Allocation). No compensation (other than that expressly contemplated by this Commitment Letter and the Fee Letter and other than in connection with any additional appointments referred to above and other than in connection with Sponsor Relationship Lender commitments) will be paid to any Lender in connection with the Facilities unless you and the “lead left” Lead Arranger in respect of the applicable Facility so agree; provided that such additional compensation may not be paid to such “lead left” Lead Arranger or any of its affiliates without the consent of the other Committed Bank Lenders.

Notwithstanding anything to the contrary contained herein, (x) you may, on or prior to the date that is 20 business days after the date of this Commitment Letter, arrange to have one or more financial institutions or investors commit to provide financing (whether secured on a pari passu lien basis with the Second Lien Facility, a junior basis or unsecured) in lieu of all or a portion of the Second Lien Facility (notwithstanding a willingness on the part of a Committed Lender to provide the Second Lien Facility or such financing in lieu of the Second Lien Facility) (such in lieu facility, the “Alternate Second Lien Facility” and your right to arrange to have one or more other financial institutions commit to provide the Alternate Second Lien Facility in lieu of the Second Lien Facility, the “Alternate Second Lien Facility Option”) and (y) if you exercise the Alternate Second Lien Facility Option in part, following a reduction pursuant to the final sentence of this paragraph, the remaining commitments of the Committed Lenders in respect of the Second Lien Facility shall not be less than $150.0 million; provided that (w) any such Alternate Second Lien Facility shall have a final maturity date not earlier than 91 days after the First Lien Term Loan Maturity Date (as defined in Exhibit B hereto), (x) no Alternate Second Lien Facility shall have any scheduled amortization until all amounts outstanding under the First Lien Term Loan Facility have been paid in full, (y) (i) such Alternate Second Lien Facility shall be secured by a lien on a junior basis to the First Lien Facilities pursuant to an intercreditor agreement with terms consistent with the Intercreditor Agreement and (ii) in the case that the Alternate Second Lien Facility is exercised in respect of a portion of the Second Lien Facility, such Alternate Second Lien Facility shall be secured by a lien on a pari passu basis with the Second Lien Facility pursuant to an intercreditor agreement with terms consistent with the Intercreditor Agreement and (z) if any such Alternate Second Lien Facility contains a financial maintenance covenant, such financial maintenance covenant is also included in the First Lien Facilities Documentation (as defined in Exhibit B hereto) for the benefit of the First Lien Lenders (as defined in Exhibit B hereto). You shall promptly notify the “lead left” Lead Second Lien Facility Arrangers, on behalf of the Committed Lenders, upon entering into commitments with respect to any Alternate Second Lien Facility. Upon providing the notice referred to in the immediately preceding sentence, you shall have no further obligations hereunder or under the Fee Letter with respect to the amount of the Second Lien Facility equal to the amount of commitments obtained in respect of the Alternate Second Lien Facility (including with respect to the payment of the Second Lien Underwriting Fee (as defined in the Fee Letter) (other than the Initial Second Lien

 

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Underwriting Fee (as defined in the Fee Letter)) or the Second Lien Upfront Fee (as defined in the Fee Letter)) and the Committed Lenders commitments with respect to the Second Lien Facility in an amount equal to the aggregate amount of commitments obtained with respect to such Alternate Second Lien Facility shall immediately and irrevocably terminate.

The Committed Bank Lenders reserve the right, prior to or after the execution of definitive documentation for the Facilities (which we agree will be initially drafted by your counsel), to syndicate all or a portion of the Committed Bank Lenders’ commitments hereunder to a group of financial institutions (together with the Committed Bank Lenders, the “Lenders”) identified by the Committed Bank Lenders in consultation with you and reasonably acceptable to them and you (in the case of the First Lien Term Loan Facility and the Second Lien Facility, such consent not to be unreasonably withheld, and in the case of the First Lien Revolving Facility, such consent not to be unreasonably withheld for an assignment to a Commercial Bank (as defined in Exhibit B hereto)), it being understood that the Committed Bank Lenders will not syndicate to those persons identified by you or either Sponsor in writing to the Committed Bank Lenders (or to their affiliates so designated in writing) on or prior to the date hereof or to any competitors of the Target or its subsidiaries or to any affiliates of such competitors, or to any person whose principal investment strategy is investing in distressed debt or the pursuance of loan-to-own strategies and that is identified from time to time in writing by either Borrower (as defined in Exhibit B hereto) or either Sponsor to the applicable Administrative Agent (such persons, collectively, the “Disqualified Institutions”) (provided that, on or after the Closing Date, either Borrower may designate additional entities with the consent of the applicable Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed)); provided that, notwithstanding each Committed Bank Lender’s right to syndicate the Facilities and receive commitments with respect thereto, it is agreed that any syndication, assignment or receipt of commitments in respect of all or any portion of a Committed Bank Lender’s commitments hereunder prior to the initial funding under the Facilities shall not be a condition to such Committed Bank Lender’s commitments nor reduce such Committed Bank Lender’s commitments hereunder with respect to any of the Facilities (provided, however, that, notwithstanding the foregoing, assignments of a Committed Bank Lender’s commitments, which are effective simultaneously with the funding of such commitments by the assignee, shall be permitted) and, unless you otherwise agree in writing, each Committed Bank Lender shall retain exclusive control over all rights and obligations with respect to its commitments, including all rights with respect to consents, modifications, waivers and amendments, until the Closing Date has occurred. Without limiting your obligations to assist with syndication efforts as set forth below, it is understood that the Committed Bank Lenders’ commitments hereunder are not subject to or conditioned on the syndication of the Facilities. The Committed Bank Lenders intend to commence syndication efforts promptly upon the execution of this Commitment Letter and as part of their syndication efforts, it is their intent to have Lenders commit to the Facilities prior to the Closing Date (subject to the limitations set forth in the second preceding sentence). You agree actively to assist the Committed Bank Lenders (and to use your commercially reasonable efforts to cause the Sponsors and, to the extent practicable, appropriate and not in contravention

 

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of the terms of the Acquisition Agreement, the Target to actively assist the Committed Bank Lenders) in completing a timely syndication that is reasonably satisfactory to them and you. Such assistance shall be limited to, until the earlier to occur of (i) a Successful Syndication (as defined in the Fee Letter) and (ii) 30 days after the Closing Date, your using commercially reasonable efforts to (a) ensure that any syndication efforts benefit from the existing lending and investment banking relationships of you, the Sponsors and, to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, the Target, (b) facilitate direct contact between appropriate members of senior management, representatives and advisors of you and the Sponsors, on the one hand, and the proposed Lenders, on the other hand (and your using commercially reasonable efforts, to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, to provide contact between senior management, representatives and advisors of the Target, on the one hand, and the proposed Lenders, on the other hand), in all such cases at times mutually agreed upon, (c) assist, and your using commercially reasonable efforts, to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, to cause the Target to assist, in the preparation of a customary confidential information memorandum for the Facilities (the “Confidential Information Memorandum”) and other customary and reasonably available marketing materials to be used in connection with the syndications (all of which shall be in form substantially similar to confidential information memoranda and marketing materials prepared by companies sponsored by the Sponsors) and your using commercially reasonable efforts to provide such Confidential Information Memorandum (other than the portions thereof customarily provided by financing arrangers, and limited, in the case of information relating to the Target and its subsidiaries, to Required Information (as defined in the Acquisition Agreement)) to us no less than 10 consecutive business days prior to the Closing Date (or such shorter period reasonably acceptable to the Lead Arrangers) (provided that (i) if such 10 consecutive business day period shall not have ended on or prior to August 19, 2022, then such 10 consecutive business day period shall not commence prior to September 6, 2022 and (ii) if such 10 consecutive business day period shall not have ended on or prior to December 22, 2022, then such 10 consecutive business day period shall not commence prior to January 3, 2023), (d) prior to the launch of syndication, procure a public corporate credit rating and a public corporate family rating (but in each case, no specific rating) in respect of the Borrowers from Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moodys”), respectively, and procure public ratings (but no specific ratings) for each of the First Lien Term Loan Facility and the Second Lien Facility from each of S&P and Moody’s, (e) host, with the Committed Bank Lenders, no more than one meeting to be mutually agreed upon of prospective Lenders at a time and location to be mutually agreed upon (it being understood that any such meeting may take place via videoconference or web conference) and (f) to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, ensure that there shall be no competing issues of debt securities or syndicated credit facilities of Holdings (as defined in Exhibit A hereto), the Company, AcquisitionCo, the Target or any of their respective subsidiaries being offered, placed or arranged (other than (x) prior to the Closing Date, any Alternate Second Lien Facility, any replacements, extensions and renewals of existing indebtedness that matures prior to the date that is 60 days following the Expiration Date (as defined

 

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below), short-term working capital facilities, capital leases, purchase money indebtedness and equipment financings, in each case, entered into in the ordinary course of business, other indebtedness to be mutually agreed and any other indebtedness of the Target or its subsidiaries permitted to be incurred pursuant to the Acquisition Agreement and (y) following the Closing Date, any indebtedness permitted to be incurred under the Facilities Documentation (as defined below) (other than any Incremental First Lien Facilities (as defined in Exhibit B hereto) and any Incremental Second Lien Facility (as defined in Exhibit C hereto), including any in-lieu indebtedness in respect thereof and any other indebtedness incurred pursuant to a ratio incurrence test) if the offering, placement or arrangement of such debt securities or syndicated credit facilities would have, in the reasonable judgment of Lead Arrangers holding at least a majority of the commitments hereunder, a detrimental effect upon the primary syndication of the Facilities. For the avoidance of doubt, you will not be required to provide any information (x) to the extent that the provision thereof could reasonably be expected to violate any attorney-client privilege, law, rule or regulation or any fiduciary duty or obligation of confidentiality (not created in contemplation hereof) binding upon, or waive any privilege that may be asserted by, you, the Sponsors, the Target or your or their respective affiliates (provided that in the case of any confidentiality obligation binding on you or your affiliates, you shall use commercially reasonable efforts to notify us, to the extent feasible, if any such information that we have specifically identified and requested is being withheld as a result of any such obligation of confidentiality and shall use commercially reasonable efforts to disclose such information in a manner that does not breach such confidentiality obligations or such attorney-client privilege) or (y) that consists of trade secrets, customer-specific data or competitively sensitive information of the Target or its subsidiaries that is not required to be provided pursuant to the Acquisition Agreement. Notwithstanding anything to the contrary contained in this Commitment Letter or the Fee Letter, but without limiting your obligations to assist with syndication efforts as set forth herein, it is understood that none of the foregoing obligations set forth in this paragraph, including, without limitation, the commencement or completion of the syndication of the Facilities or the obtaining of ratings or your compliance with your obligations to assist with syndication efforts as set forth herein shall constitute a condition to the availability of the Facilities on the Closing Date or at any time thereafter.

The Lead Arrangers will, in consultation with you, manage all aspects of any syndication of the Facilities, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate (which institutions shall be reasonably acceptable to you), the allocation of the commitments among the Lenders and the amount and distribution of fees among the Lenders. To assist the Lead Arrangers in their syndication efforts, you agree promptly to provide (and to use commercially reasonable efforts to cause the Sponsors and, to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, the Target to provide) to the Committed Bank Lenders all customary and reasonably available information with respect to you, the Sponsors, the Target and its subsidiaries and the Transactions, including all financial information and projections (such projections, together with any financial estimates,

 

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budgets, forecasts and other forward-looking information, the “Projections”), as the Committed Bank Lenders may reasonably request in connection with the structuring, arrangement and syndication of the Facilities. You hereby represent and warrant that (with respect to information relating to the Target and its subsidiaries and their respective businesses to your knowledge), (a) all written information and written data of the Target and its subsidiaries and their respective businesses other than the Projections and information of a general economic or general industry nature (the “Information”) that has been or will be made available to the Committed Bank Lenders by or on behalf of you or any of your representatives, taken as a whole, does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all supplements thereto) and (b) the Projections in the Confidential Information Memorandum have been or will be prepared in good faith based upon assumptions that you believe to be reasonable at the time delivered by you based on information provided by you, the Sponsors, the Target and your and their respective representatives; it being understood that the Projections are as to future events and are not to be viewed as facts, the Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, that no assurance can be given that any particular Projections will be realized and that actual results during the period or periods covered by any such Projections may differ significantly from the projected results and such differences may be material and are not a guarantee of performance. You agree that if, at any time prior to the Closing Date and, thereafter, until the earlier to occur of (i) a Successful Syndication and (ii) 30 days after the Closing Date, you become aware that any of the representations in the preceding sentence would be incorrect (to your knowledge with respect to information relating to the Target and its subsidiaries and their respective businesses) in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will use commercially reasonable efforts to promptly supplement the Information and the Projections so that such representations will be correct (to your knowledge with respect to information relating to the Target and its subsidiaries and their respective businesses) in all material respects under those circumstances, it being understood in each case that such supplementation shall cure any breach of such representations and warranties. In arranging and syndicating the Facilities, the Committed Bank Lenders will be entitled to use and rely primarily on the Information and the Projections without responsibility for independent verification thereof. Notwithstanding anything to the contrary contained in this Commitment Letter or the Fee Letter, none of the making of any representation or warranty under this paragraph, any supplement thereto, or the accuracy of any such representation or warranty shall constitute a condition precedent to the availability and initial funding of the Facilities on the Closing Date.

Notwithstanding anything herein to the contrary, the only financial statements that shall be required to be provided to the Committed Lenders or the Lead Arrangers in connection with the syndication of the Facilities shall be those required to be delivered pursuant to paragraph 5 of the Summary of Additional Conditions.

 

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You hereby acknowledge that (a) the Committed Bank Lenders will make available on a confidential basis Information and Projections to the proposed syndicate of Lenders by posting such Information and Projections on IntraLinks, SyndTrak Online, Debtdomain or similar electronic means to be used in connection with the syndication of each Facility and (b) certain of the Lenders (each, a “Public Lender”) may wish to receive only information and documentation that (i) is publicly available (or could be derived from publicly available information), (ii) is not material with respect to you, the Target or your or its respective subsidiaries or securities for purposes of United States federal and state securities laws or (iii) constitutes information of a type that would be publicly available if you or the Target were a public reporting company (in each case, as determined by you in good faith, which determination shall be conclusive) (collectively, the “Public Side Information”). If reasonably requested by the Committed Bank Lenders, you will use commercially reasonable efforts to assist the Committed Bank Lenders, and will use commercially reasonable efforts, to the extent practicable, appropriate and not in contravention of the terms of the Acquisition Agreement, to cause the Target to assist us, in preparing a customary additional version of the Confidential Information Memorandum to be used by Public Lenders. The information to be included in the additional version of the Confidential Information Memorandum will contain only Public Side Information. It is understood that in connection with your assistance described above, an authorization letter, in form substantially similar to authorization letters delivered by companies sponsored by the Sponsors, will be included in any Confidential Information Memorandum, which letter authorizes the distribution of the Confidential Information Memorandum to prospective Lenders, containing a representation to the Lead Arrangers that the public-side version contains only Public Side Information (and, in each case, a “10b-5” representation to the Lead Arrangers customary for companies sponsored by the Sponsors), which Confidential Information Memorandum shall exculpate you, the Sponsors, the Target and your and their respective affiliates and us and our affiliates with respect to any liability related to the use of the Confidential Information Memorandum or any related marketing material by the recipients thereof. You agree to use commercially reasonable efforts to identify that portion of the Information that may be distributed to the Public Lenders as “PUBLIC”, which, at the minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof. You agree that by your marking such materials “PUBLIC”, you shall be deemed to have authorized the Lead Arrangers (subject to the confidentiality and other provisions of this Commitment Letter) to treat such materials as information that is Public Side Information (it being understood that you shall not be under any obligation to mark any particular portion of the Information as “PUBLIC”). You agree that, subject to the confidentiality and other provisions of this Commitment Letter, the Lead Arrangers on your behalf may distribute the following documents to all prospective lenders in the form provided to you and to your counsel a reasonable time prior to their distribution, unless you or your counsel advise the Lead Arrangers in writing (including by email) within a reasonable time prior to their intended distribution that such material should only be distributed to prospective lenders that are not Public Lenders (each, a “Private Lender”): (a) the Term Sheets; (b) drafts and final definitive documentation with respect to the Facilities (excluding, if applicable, any specifically identified schedules thereof); (c) administrative materials prepared by the Committed Bank Lenders for prospective

 

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Lenders (such as a lender meeting invitation, allocations and funding and closing memoranda); and (d) notification of changes in the terms of the Facilities. If you advise the Committed Bank Lenders that any of the foregoing items should be distributed only to Private Lenders, then none of the Lead Arrangers and the Committed Bank Lenders will distribute such materials to Public Lenders without your consent.

As consideration for the commitments of the Committed Lenders hereunder and their agreement to perform the services described herein, you agree to pay (or cause to be paid) the fees set forth in the Term Sheets and in the Fee Letter dated as of the date hereof and delivered herewith with respect to the Facilities (the “Fee Letter”). Once paid, such fees shall not be refundable under any circumstances.

The commitments of the Committed Lenders hereunder and their agreement to perform the services described herein and the initial funding under the Facilities on the Closing Date are subject solely to the conditions expressly set forth in the next sentence of this paragraph, in the Summary of Additional Conditions and, as applicable, (solely in the case of the First Lien Facilities) under the heading “Conditions Precedent to Initial Extensions of Credit” in the First Lien Facilities Term Sheet and (solely in the case of the Second Lien Facility) under the heading “Conditions Precedent to Initial Extension of Credit” in the Second Lien Facility Term Sheet. In addition to the immediately preceding sentence, the commitments of the Committed Lenders hereunder and the initial funding under the Facilities on the Closing Date are subject solely to the execution (as applicable) and delivery by the Borrowers, the Guarantors (as defined in the relevant Term Sheets) and the officers thereof, as the case may be, of definitive First Lien Facilities Documentation and Second Lien Facility Documentation (as defined in Exhibit C hereto), as applicable (collectively, the “Facilities Documentation”), customary closing certificates (including customary evidences of authority, charter documents and customary officers’ incumbency certificates), customary lien searches reasonably requested by the First Lien Administrative Agent (as defined in Exhibit B hereto) at least 30 days prior to the Closing Date and customary legal opinions with respect to the Facilities, in each case consistent with this Commitment Letter and the Fee Letter; provided that, notwithstanding anything in this Commitment Letter, the Fee Letter, the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (i) the only representations and warranties the making of which shall be a condition to the availability of the Facilities on the Closing Date shall be (A) the Specified Representations (as defined below) and (B) the representations and warranties relating to the Target and its subsidiaries made by the Target in the Acquisition Agreement as are material to the interests of the Lenders (in their capacities as such), but only to the extent that you (and any of your affiliates that is a party to the Acquisition Agreement) have the right to terminate your (and their) obligations under the Acquisition Agreement (or otherwise decline to consummate the Acquisition), in each case, without liability to any of you, the Sponsors or any of your or their respective affiliates as a result of a breach of such representations and warranties in such agreement (the “Company Representations”), (ii) the terms of the Facilities Documentation shall be in a form such that they do not impair the availability of the Facilities on the Closing Date if the conditions expressly set forth in this sentence, in the

 

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Summary of Additional Conditions and, as applicable, (solely in the case of the First Lien Facilities) under the heading “Conditions Precedent to Initial Extensions of Credit” in the First Lien Facilities Term Sheet and (solely in the case of the Second Lien Facility) under the heading “Conditions to Initial Extensions of Credit” in the Second Lien Facility Term Sheet are satisfied or waived, and (iii) to the extent any lien search, insurance certificate and/or Collateral (as defined in Exhibit B hereto) or any security interest therein (other than (x) the pledge and perfection of security interests in the pledged certificated stock of wholly-owned U.S.-organized entities (including the delivery of such share certificates (if any)) to the extent required under the First Lien Facilities Term Sheet; provided that stock certificates, if any, of the Target and its subsidiaries will only be required to be delivered on the Closing Date to the extent received by you from the Target, so long as you have used commercially reasonable and safe efforts to obtain them on the Closing Date and (y) other assets pursuant to which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code) is not provided on the Closing Date after your use of commercially reasonable efforts to do so, the delivery of such lien search, insurance certificate and/or Collateral (and perfection of security interests therein) shall not constitute a condition precedent to the availability of the Facilities on the Closing Date but shall be required to be delivered and perfected after the Closing Date (and in any event, in the case of the pledge and perfection of Collateral not otherwise required on the Closing Date, within 90 days after the Closing Date plus any extensions granted by the First Lien Administrative Agent in its sole discretion (which shall automatically also be deemed an extension by the Second Lien Administrative Agent)) pursuant to arrangements to be mutually agreed. For purposes hereof, “Specified Representations” means the representations and warranties made by the Borrowers in the Facilities Documentation and set forth in the Term Sheets relating to: corporate or other organizational existence; power and authority related to entry into and performance of the Facilities Documentation; the due authorization, execution, delivery and enforceability of the Facilities Documentation; the incurrence of the loans, the provision of guarantees and the granting of security interests, as applicable, contemplated herein not violating the constitutional documents of the Borrowers and, to the extent applicable, the Guarantors; solvency of the Company and its subsidiaries on a consolidated basis on the Closing Date after giving effect to the Transactions (solvency to be defined in a manner consistent with the solvency definition set forth in Annex I to Exhibit D hereto); creation, validity and perfection of security interests in the collateral to be perfected on the Closing Date (subject to the foregoing provisions of this paragraph relating to Collateral); U.S. Federal Reserve margin regulations; the use of loan proceeds not violating the PATRIOT Act; and the U.S. Investment Company Act. There shall be no conditions (implied or otherwise) to the commitments of the Committed Lenders hereunder, including compliance with the terms of this Commitment Letter, the Fee Letter or the Facilities Documentation, other than those expressly stated to be conditions to the initial funding under the Facilities on the Closing Date in the second sentence of this paragraph, in the Summary of Additional Conditions and, as applicable, (solely in the case of the First Lien Facilities) under the heading “Conditions Precedent to Initial Extensions of Credit” in the First Lien Facilities Term Sheet and (solely in the case of the Second Lien Facility) under the heading “Conditions Precedent to Initial Extension of Credit” in the Second Lien Facility Term Sheet. Without limiting the conditions precedent provided herein to

 

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funding the consummation of the Acquisition with the proceeds of the Facilities, the Lead Arrangers will cooperate with you as reasonably requested in coordinating the timing and procedures for the funding of the Facilities in a manner consistent with the Acquisition Agreement. This paragraph is referred to as the “Funding Conditions Provision”.

You agree (a) to indemnify and hold harmless the First Lien Administrative Agent, the Second Lien Administrative Agent (as defined in Exhibit C hereto; together with the First Lien Administrative Agent, the “Administrative Agents”), the Lead Arrangers, each of the Committed Lenders and their respective affiliates and controlling persons and the respective officers, directors, employees, agents, members and successors of each of the foregoing, but excluding (x) any of the foregoing in its capacity, if applicable, as financial advisor to the Target or any of its direct or indirect equity holders or affiliates in connection with the Transactions (each, a “Sell-Side Advisor”) and any Related Person (as defined below) of such Sell-Side Advisor in such capacity, (y) any of the foregoing in its capacity, if applicable, as a Private Equity Affiliate (as defined below) in connection with the Transactions and any Related Person of such Private Equity Affiliate in such capacity and (z) any Investor (as defined in Exhibit A hereto) in its capacity as such and any Related Person of such Investor in such capacity (each, other than such excluded parties, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and expenses, joint or several, of any kind or nature whatsoever to which such Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the Fee Letter, the Transactions, the Facilities or any related transaction or any claim, litigation, investigation or proceeding, actual or threatened, relating to any of the foregoing (any of the foregoing, a “Proceeding”), regardless of whether such Indemnified Person is a party thereto and whether or not such Proceedings are brought by you, your equity holders, affiliates, creditors or any other person, and to reimburse such Indemnified Person within 30 days after receipt of a written request together with reasonably detailed backup documentation for any reasonable, documented and invoiced out-of-pocket legal expenses of one firm of counsel for all Indemnified Persons and, if necessary, one firm of local counsel in each appropriate jurisdiction, in each case for all Indemnified Persons (and, in the case of an actual or perceived conflict of interest where the Indemnified Person affected by such conflict informs you of such conflict and thereafter, after receipt of your consent (which shall not be unreasonably withheld), retains its own counsel, of another firm of counsel for such affected Indemnified Person) and other reasonable, documented and invoiced out-of-pocket expenses incurred in connection with investigating or defending any of the foregoing; provided that the foregoing indemnity will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or expenses (i) to the extent they have resulted from the willful misconduct, bad faith or gross negligence of such Indemnified Person or any Related Person of such Indemnified Person (as determined by a court of competent jurisdiction in a final and non-appealable decision), (ii) to the extent arising from a material breach of the obligations of such Indemnified Person or any Related Person of such Indemnified Person under this Commitment Letter or the Facilities Documentation (as determined by a court of competent jurisdiction in a final non-appealable decision), (iii) arising out of, or in connection with, any Proceeding that does not arise from an act or omission by you or any of your affiliates and that is brought by an Indemnified Person

 

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against any other Indemnified Person other than any Proceeding against the relevant Indemnified Person in its capacity or in fulfilling its role as an agent, arranger or similar role under any of the Facilities or (iv) to the extent they have resulted from any agreement governing any settlement that is effected without your prior written consent (which consent shall not be unreasonably withheld) and (b) to reimburse the Committed Lenders from time to time, upon presentation of a summary statement, for all reasonable, documented and invoiced out-of-pocket expenses (including, but not limited to, expenses of the Committed Lenders’ due diligence investigation (and with respect to third-party diligence expenses, to the extent any such expenses have been previously approved by you, such approval not to be unreasonably withheld), syndication expenses and reasonable, documented and invoiced fees, disbursements and other charges of counsel to each Administrative Agent identified in the Term Sheets and, for the avoidance of doubt, not of counsel to any Committed Lender or Lead Arranger individually and of a single local counsel to the Administrative Agents in each relevant material jurisdiction, except allocated costs of in-house counsel), in each case incurred by the Committed Lenders in connection with the Facilities and the preparation of this Commitment Letter, the Fee Letter and the Facilities Documentation (collectively, the “Expenses”); provided that, except as set forth in the Fee Letter, you shall not be required to reimburse any of the Expenses in the event the Closing Date does not occur. Notwithstanding any other provision of this Commitment Letter, (i) no Indemnified Person or any other party hereto (or their respective affiliates and representatives) shall be liable for any damages arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems (including IntraLinks, SyndTrak Online or Debtdomain), except to the extent such damages have resulted from the willful misconduct, bad faith or gross negligence of such Indemnified Person or any Related Person of such Indemnified Person or such other party, affiliate or representative (as determined by a court of competent jurisdiction in a final and non-appealable decision), and (ii) none of you, the Sponsors, any Investor, the Target or any Indemnified Person shall be liable for any indirect, special, punitive or consequential damages in connection with your or their activities related to the Facilities or this Commitment Letter; provided that nothing contained in this clause (ii) shall limit your indemnity or reimbursement obligations to the extent such indirect, special, punitive or consequential damages are included in any third-party claim in connection with which such Indemnified Person is entitled to indemnification hereunder. For purposes hereof, a “Related Person” of an Indemnified Person (or any Sell-Side Advisor, Private Equity Affiliate or Investor) means, if such Indemnified Person (or such Sell-Side Advisor, Private Equity Affiliate or Investor) is an Administrative Agent, a Lead Arranger or a Committed Lender or any of its affiliates and controlling persons, or any of its or their respective officers, directors, employees, agents, members and successors, any of such Administrative Agent, Lead Arranger or Committed Lender and its affiliates and controlling persons, or any of its or their respective officers, directors, employees, agents, members and successors.

Your indemnity and reimbursement obligations hereunder will be in addition to any liability which you may otherwise have and will be binding upon and inure to the benefit of any of your successors and assigns and the Indemnified Persons (and not of any other person).

 

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You acknowledge that the Committed Lenders and their affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other persons in respect of which you, the Sponsors, the Target and your and their respective affiliates may have conflicting interests regarding the transactions described herein and otherwise. Neither the Committed Lenders nor any of their affiliates will use confidential information obtained from or on behalf of you, the Sponsors or the Target by virtue of the transactions contemplated by this Commitment Letter or their other relationships with you in connection with the performance by them of services for other persons, and neither the Committed Lenders nor any of their affiliates will furnish any such information to other persons. You also acknowledge that neither the Committed Lenders nor any of their affiliates have any obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by them from other persons.

Each of the parties hereto acknowledges that DB (or an affiliate thereof), UBS and Mizuho (or one of its affiliates) have been retained by you (or one of your affiliates) as financial advisors (in such capacity, the “Buy-Side Financial Advisors”) in connection with the Acquisition. Each of the parties hereto agrees to such retention, and further agrees not to assert any claim it might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from the engagement of the Buy-Side Financial Advisors, on the one hand, and our and our affiliates’ relationships with you as described and referred to herein, on the other.

As you know, each Committed Bank Lender, together with its affiliates, is a full service securities firm engaged, either directly or through its affiliates, in various activities, including securities trading, commodities trading, investment management, research, financing and brokerage activities and financial planning and benefits counseling for both companies and individuals. In the ordinary course of these activities, the Committed Bank Lenders and their respective affiliates may actively engage in commodities trading or trade the debt and equity securities (or related derivative securities) and financial instruments (including bank loans and other obligations) of you, the Sponsors, the Target and other companies that may be the subject of the arrangements contemplated by this Commitment Letter for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities. Each Committed Bank Lender and its affiliates may also co-invest with, make direct investments in and invest or co-invest client monies in or with funds or other investment vehicles managed by other parties, and such funds or other investment vehicles may trade or make investments in securities of you, the Sponsors, the Target or other companies that may be the subject of the arrangements contemplated by this Commitment Letter or engage in commodities trading with any thereof.

The Committed Lenders and their respective affiliates may have economic interests that conflict with those of the Target and you. You agree that the Committed Lenders will act under this Commitment Letter as independent contractors and that nothing in this Commitment Letter or the Fee Letter or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty

 

14


between the Committed Lenders or any of their respective affiliates and you, the Sponsors and the Target, your and their respective equity holders or your and their respective affiliates with respect to the transactions contemplated by this Commitment Letter and the Fee Letter. You acknowledge and agree that (i) the transactions contemplated by this Commitment Letter and the Fee Letter are arm’s-length commercial transactions between the Committed Lenders and their respective affiliates, on the one hand, and you and the Sponsors, on the other, (ii) in connection therewith and with the process leading to such transactions, each Committed Lender and its applicable affiliates (as the case may be) is acting solely as a principal and not as agents or fiduciaries of you, the Sponsors, your and their respective management, equity holders, creditors or any other person, (iii) the Committed Lenders and their applicable affiliates (as the case may be) have not assumed an advisory or fiduciary responsibility or any other obligation in favor of you with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether the Committed Lenders or any of their respective affiliates have advised or are currently advising you, the Sponsors or the Target on other matters), except the obligations expressly set forth in this Commitment Letter and the Fee Letter and (iv) you have consulted your own legal and financial advisors to the extent you deemed appropriate. You further acknowledge and agree that you are responsible for making your own independent judgment with respect to such transactions and the process leading thereto. Please note that the Committed Lenders and their affiliates do not provide tax, accounting or legal advice. You hereby waive and release any claims that you may have against the Committed Lenders (in their capacity as such) and their applicable affiliates (as the case may be) with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated by this Commitment Letter. It is understood that this paragraph shall not apply to or modify or otherwise affect any arrangement with any Sell-Side Advisor, or any financial advisor separately retained by you, the Sponsors, the Target or any of your or their respective affiliates in connection with the Transactions, in its capacity as such.

This Commitment Letter and the commitments hereunder shall not be assignable by you (other than to a Borrower, or to one or more other entities established in connection with the Transactions organized in the United States, any state thereof or the District of Columbia and controlled by the Sponsors, with all obligations and liabilities of AcquisitionCo hereunder being assumed by such Borrower or such other entity or entities upon the effectiveness of such assignment) without the prior written consent (which may be through electronic means) of the Committed Lenders, not to be unreasonably withheld (and any attempted assignment without such consent shall be null and void), are intended to be solely for the benefit of the parties hereto (and the Sponsors and the Indemnified Persons), are not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto (and the Sponsors and the Indemnified Persons) and are not intended to create a fiduciary relationship among the parties hereto. Any provision of this Commitment Letter that provides for, requires or otherwise contemplates any consent, approval, agreement, determination or consultation by you (or any Borrower referred to in any Term Sheet) on or prior to the Closing Date, shall also be construed as providing for, requiring or otherwise contemplating consent, approval, agreement, determination or consultation by the Sponsors (unless the Sponsors otherwise

 

15


notify the parties hereto). This Commitment Letter and the commitments hereunder shall not be assignable by any Committed Lender without the prior written consent of AcquisitionCo, except in accordance with the 5th or 7th paragraph of this Commitment Letter or pursuant to the next sentence. Any and all obligations of, and services to be provided by, the Committed Lenders hereunder (including, without limitation, their commitments) may be performed and any and all rights of the Committed Lenders hereunder may be exercised by or through any of their affiliates or branches; provided that with respect to the commitments, any assignments thereof to an affiliate will not relieve the Committed Lenders from any of their obligations hereunder unless and until such affiliate shall have funded the portion of the commitment so assigned. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by each of the Committed Lenders and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile transmission, e-mail or other electronic transmission (e.g., a “pdf”, “tiff” or DocuSign) shall be effective as delivery of a manually executed counterpart hereof. For purposes hereof, the words “execution,” “execute,” “executed,” “signed,” “signature” and words of like import shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formulations on electronic platforms, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transaction Act. This Commitment Letter and the Fee Letter (i) are the only agreements that have been entered into among the parties hereto with respect to the Facilities and (ii) supersede all prior understandings, whether written or oral, among us with respect to the Facilities and set forth the entire understanding of the parties hereto with respect thereto.

Each of the parties hereto agrees that (i) this Commitment Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law)) with respect to the subject matter contained herein, including an agreement to negotiate in good faith the Facilities Documentation by the parties hereto in a manner consistent with this Commitment Letter for the purpose of executing and delivering the Facilities Documentation substantially simultaneously with the closing of the Acquisition, it being acknowledged and agreed that the funding of the Facilities is subject to the applicable conditions precedent set forth in the second sentence of the Funding Conditions Provision and in Exhibit D of the Commitment Letter and (ii) the Fee Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law)) of the parties thereto with respect to the subject matter set forth therein.

 

16


THIS COMMITMENT LETTER AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION; PROVIDED THAT, NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT ANY DETERMINATIONS AS TO (A) WHETHER ANY REPRESENTATIONS AND WARRANTIES MADE BY OR ON BEHALF OF, OR WITH RESPECT TO, THE TARGET OR ANY OF ITS SUBSIDIARIES IN THE ACQUISITION AGREEMENT HAVE BEEN BREACHED, (B) WHETHER YOU (AND ANY OF YOUR AFFILIATES THAT IS A PARTY TO THE ACQUISITION AGREEMENT) CAN TERMINATE YOUR (AND THEIR) OBLIGATIONS UNDER THE ACQUISITION AGREEMENT (OR OTHERWISE DECLINE TO CONSUMMATE THE ACQUISITION), IN EACH CASE, WITHOUT LIABILITY TO ANY OF YOU, THE SPONSORS OR ANY OF YOUR OR THEIR RESPECTIVE AFFILIATES, (C) WHETHER A COMPANY MATERIAL ADVERSE EFFECT (AS DEFINED IN THE ACQUISITION AGREEMENT) HAS OCCURRED, AND (D) WHETHER THE ACQUISITION HAS BEEN CONSUMMATED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION AGREEMENT, SHALL, IN EACH CASE, BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW (AS DEFINED IN THE ACQUISITION AGREEMENT) OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OR CHOICE OF LAW PRINCIPLES THEREOF.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Commitment Letter and the Fee Letter, or the transactions contemplated hereby, and agrees that, to the extent permitted by law, all claims in respect of any such action or proceeding shall be heard and determined in such New York State court or in such Federal court, (b) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or

 

17


proceeding arising out of or relating to this Commitment Letter, the Fee Letter or the transactions contemplated hereby, in any such New York State court or in any such Federal court, (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and (d) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto agrees to commence any such action, suit, proceeding or claim either in the United States District Court for the Southern District of New York or in the Supreme Court of the State of New York, New York County, in each case, located in the Borough of Manhattan.

This Commitment Letter is delivered to you on the understanding that none of the Fee Letter and its terms or substance, or this Commitment Letter and its terms or substance, shall be disclosed, directly or indirectly, to any other person or entity (including other lenders, underwriters, placement agents, advisors or any similar persons) except (a) to the Sponsors, the Investors (including any potential co-investors) and to your and their respective officers, directors, employees, attorneys, accountants and advisors on a confidential and need-to-know basis, (b) if the Committed Lenders consent to such proposed disclosure (such consent not to be unreasonably withheld, conditioned or delayed), (c) pursuant to the order of any court or administrative agency in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process or, to the extent requested or required by governmental and/or regulatory authorities (in which case, you agree, to the extent practicable and not prohibited by law, to notify us of the proposed disclosure in advance of such disclosure and if you are unable to notify us in advance of such disclosure, such notice shall be delivered to us promptly thereafter to the extent permitted by law) or (d) to the extent necessary in connection with the exercise of any remedy or enforcement of any rights hereunder or under the Fee Letter; provided that (i) you may disclose this Commitment Letter and the contents hereof to the Target and its officers, directors, employees, attorneys, accountants and advisors on a confidential and need-to-know basis, (ii) you may disclose this Commitment Letter and the contents hereof (x) in any proxy or other public filing relating to the Transactions, and (y) in the Confidential Information Memorandum in a manner to be mutually agreed upon, (iii) you may disclose this Commitment Letter and the contents hereof to potential lenders and other debt holders (including any prospective Additional Committing Lender, any Sponsor Relationship Lender and any prospective lenders in respect of any Alternate Second Lien Facility), and potential equity investors and their respective officers, directors, employees, attorneys, accountants, advisors and other representatives on a confidential and need-to-know basis and to rating agencies in connection with obtaining ratings for the Borrowers and the Facilities, (iv) you may disclose the fees contained in the Fee Letter as part of a generic disclosure of aggregate sources and uses related to fee amounts to the extent customary or required in marketing materials, any proxy or other public filing, and in the Confidential Information Memorandum, (v) to the extent portions thereof have been redacted in a customary manner (including, without limitation, redaction of fee amounts), you may disclose the Fee Letter and the contents thereof to the Target and its officers, directors, employees, attorneys, accountants and advisors on a confidential and need-to-know basis

 

18


and (vi) you may disclose the Fee Letter and the contents thereof to any prospective Additional Committing Lender, prospective Sponsor Relationship Lender or prospective equity investor and their respective officers, directors, employees, attorneys, accountants, advisors and other representatives on a confidential and need-to-know basis. The obligations under this paragraph with respect to this Commitment Letter shall terminate automatically after the Facilities Documentation for the Facilities shall have been executed and delivered by the parties thereto. To the extent not earlier terminated, the provisions of this paragraph with respect to this Commitment Letter shall automatically terminate on the second anniversary hereof.

You agree that you will permit us to review and approve (such approval not to be unreasonably withheld, conditioned or delayed) any reference to us or any of our affiliates in connection with the Facilities or the transactions contemplated hereby contained in any press release or similar written public disclosure prior to public release; provided that no such prior review and approval shall be required if such reference is limited to customarily identifying us or any of our applicable affiliates as a financing source for the Transactions.

The Committed Lenders and their affiliates will use all information provided to them or such affiliates by or on behalf of you hereunder or in connection herewith solely for the purpose of providing the services that are the subject of this Commitment Letter and shall treat confidentially all such information; provided that nothing herein shall prevent any Committed Lender from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case such Committed Lender, to the extent not prohibited by applicable law, agrees (except with respect to any routine or ordinary course audit or examination conducted by bank examiners or any governmental bank regulatory authority or self-regulatory authority exercising examination or regulatory authority) to inform you promptly thereof), (b) upon the request or demand of any regulatory authority or self-regulatory authority having jurisdiction over such Committed Lender or any of its affiliates (in which case such Committed Lender, to the extent practicable and not prohibited by law, agrees (except with respect to any routine or ordinary course audit or examination conducted by bank examiners or any governmental bank regulatory authority or self-regulatory authority exercising examination or regulatory authority) to inform you promptly thereof), (c) to the extent that such information is or becomes publicly available other than by reason of disclosure by any of the Committed Lenders or any of their affiliates or any of the Committed Lenders’ and such affiliates’ respective officers, directors, employees, attorneys, accountants, advisors and other representatives in violation of any confidentiality obligations owing to you, the Sponsors, any Investor, the Target or any of your or their respective subsidiaries (including those obligations set forth in this paragraph), (d) to the extent that such information is received by such Committed Lender or its affiliates (other than Excluded Affiliates (as defined below)) from a third party that is not, to such Committed Lender’s or its affiliates’ knowledge, subject to confidentiality obligations owing to you, the Sponsors, any Investor, the Target or any of your or their respective subsidiaries, (e) to the extent that such information was

 

19


already in such Committed Lender’s or its affiliates’ (other than Excluded Affiliates) possession on a non-confidential basis without a duty of confidentiality owing to you, the Sponsors, any Investor, the Target or any of your or their respective affiliates being violated, or is independently developed by such Committed Lender or its affiliates (other than Excluded Affiliates), (f) to such Committed Lender’s affiliates (other than Excluded Affiliates) and such Committed Lender’s and such affiliates’ respective trustees, officers, directors, employees, attorneys, accountants, advisors and other representatives (collectively, the “Representatives”) who need to know such information in connection with the Transactions and are informed of the confidential nature of such information and who agree to be bound by the terms of this paragraph (or language substantially similar to this paragraph) (provided, that such Committed Lender shall be responsible for its Representatives, its affiliates and its affiliates’ Representatives), (g) to potential or prospective Lenders, participants or assignees and any direct or indirect contractual counterparties to any swap or derivative transaction relating to the Borrowers and their obligations under any Facility (in each case, other than a Disqualified Institution), in each case who agree to be bound by the terms of this paragraph (or language substantially similar to this paragraph), (h) subject to your prior approval of the information to be disclosed (such approval not to be unreasonably withheld), to rating agencies in connection with obtaining ratings for the Borrowers, the First Lien Term Loan Facility and the Second Lien Facility, (i) for purposes of establishing a “due diligence defense”, (j) to the extent necessary in connection with the exercise of any remedy or enforcement of any rights hereunder or under the Fee Letter, (k) unless such person has been notified to hold such information in confidence from the other parties hereto, to any other party hereto or (l) to the extent you consent to such proposed disclosure; provided, however, that, no such disclosure shall be made by the Committed Lenders to (i) any of their affiliates that is engaged as a principal primarily in private equity, mezzanine financing or venture capital or any of such affiliate’s respective officers, directors, employees, attorneys, accountants, advisors and other representatives (a “Private Equity Affiliate”) or (ii) any of their affiliates or any of such affiliate’s respective officers, directors, employees, attorneys, accountants, advisors and other representatives that is a Sell-Side Advisor (together with the Private Equity Affiliates, in each case, other than a limited number of senior employees who are required, in accordance with industry regulations or the applicable Committed Lender’s internal policies and procedures to act in a supervisory capacity and the applicable Committed Lender’s internal legal, compliance, risk management, credit or investment committee members, the “Excluded Affiliates”). Each Committed Lender shall be principally liable to the extent any confidentiality restrictions set forth herein are violated by one or more of its affiliates or any of its or its affiliates’ Representatives to whom such Committed Lender has disclosed information pursuant to clause (f) in the proviso in the first sentence of this paragraph. The Committed Lenders’ obligations under this paragraph shall automatically terminate and be superseded by the confidentiality provisions in the definitive documentation relating to the Facilities upon the initial funding of the applicable Facility thereunder, if and to the extent the Committed Lenders are party thereto, and shall in any event terminate upon the second anniversary of the date hereof.

 

20


The syndication, “market flex”, reimbursement and compensation provisions (if applicable in accordance with the terms hereof and the Fee Letter), indemnification, waiver of indirect, special, punitive or consequential damages, confidentiality (except to the extent set forth herein), jurisdiction, governing law, venue, absence of fiduciary relationship and waiver of jury trial provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether the Facilities Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the Committed Lenders’ commitments hereunder; provided that your obligations under this Commitment Letter, other than those relating to the confidentiality of the Fee Letter, syndication of the Facilities and provision of information, shall automatically terminate and be superseded by the Facilities Documentation upon the initial funding thereunder and the payment of all amounts owing at such time hereunder and under the Fee Letter, and you shall be automatically released from all liability in connection therewith at such time.

We hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub.L.107-56 (signed into law October 26, 2001, as amended from time to time, the “PATRIOT Act”) and the Customer Due Diligence Requirements for Financial Institutions issued by the U.S. Department of Treasury Financial Crimes Enforcement Network under the Bank Secrecy Act (such rule published May 11, 2016 and effective May 11, 2018, as amended from time to time, the “CDD Rule”), each of the Committed Lenders and each other Lender is required to obtain, verify and record information that identifies each Borrower and each Guarantor, which information includes the name, address, tax identification number and other information regarding each Borrower and each Guarantor that will allow any of the Committed Lenders or such Lender to identify such Borrower and such Guarantor in accordance with the PATRIOT Act and the CDD Rule. This notice is given in accordance with the requirements of the PATRIOT Act and the CDD Rule and is effective as to the Committed Lenders and each Lender.

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms of this Commitment Letter and of the Fee Letter by returning to the First Lien Administrative Agent, on behalf of the Committed Lenders, executed counterparts hereof and of the Fee Letter not later than 11:59 p.m., New York City time, on May 25, 2022. The Committed Lenders’ commitments hereunder and agreements contained herein will expire at such time in the event that the First Lien Administrative Agent has not received such executed counterparts in accordance with the immediately preceding sentence. This Commitment Letter and the commitments and undertakings of each of the Committed Lenders hereunder shall automatically terminate upon the first to occur of (i) the date the Acquisition Agreement is terminated by you or otherwise validly terminated in accordance with its terms prior to the consummation of the Transactions, (ii) December 2, 2022 (the “Expiration Date”) (provided, if the Termination Date under and as defined in the Acquisition Agreement is automatically extended under Section 8.2(a) of the Acquisition Agreement to February 24, 2023, then the Expiration Date shall

 

21


automatically be extended to March 3, 20231), unless each of the Committed Lenders shall, in their discretion, agree to an extension and (iii) the consummation of the Transactions with or without the funding of the Facilities. You shall have the right to terminate this Commitment Letter and the commitments of the Committed Lenders hereunder with respect to the Facilities (or a portion thereof (x) pro rata among the Committed Lenders under any given Facility or (y) on a non-pro rata basis if any Committed Lender at any time would qualify as a Defaulting Lender (as defined in the Precedent Facility (as defined in the First Lien Facilities Term Sheet)) at any time upon written notice to the Committed Lenders from you, subject to your surviving obligations as set forth in the third to last paragraph of this Commitment Letter and in the Fee Letter.

[Remainder of this page intentionally left blank]

 

1 

Reflects the fifth Business Day following the nine-month anniversary of the date of this Commitment Letter.

 

22


The Committed Lenders are pleased to have been given the opportunity to assist you in connection with the financing for the Transactions.

 

Very truly yours,

 

[signature pages follow]


DEUTSCHE BANK AG NEW YORK BRANCH

By:

 

/s/ William C. Frauen

 

Name: William C. Frauen

 

Title: Managing Director

 

By:

 

/s/ Celine Catherin

 

Name: Celine Catherin

 

Title: Managing Director

DEUTSCHE BANK SECURITIES INC.

 

By:   /s/ William C. Frauen
  Name: William C. Frauen
  Title: Managing Director
By:   /s/ Celine Catherin
  Name: Celine Catherin
  Title: Managing Director

[Signature Page to Project Corgi Commitment Letter]


UBS AG, STAMFORD BRANCH

By:

 

/s/ David Juge

 

Name: David Juge

 

Title: Managing Director

 

By:

 

/s/ Kevin Pluff

 

Name: Kevin Pluff

 

Title: Managing Director

 

UBS SECURITIES LLC

By:

 

/s/ David Juge

 

Name: David Juge

 

Title: Managing Director

 

By:

 

/s/ Kevin Pluff

 

Name: Kevin Pluff

 

Title: Managing Director

 

[Signature Page to Project Corgi Commitment Letter]


BANK OF MONTREAL
By:   /s/ Eric Oppenheimer
  Name: Eric Oppenheimer
  Title: Managing Director

 

BMO CAPITAL MARKETS CORP.
By:   /s/ Colin Bathgate
  Name: Colin Bathgate
  Title: Managing Director

[Signature Page to Project Corgi Commitment Letter]


MIZUHO BANK, LTD.
By:   /s/ Raymond Ventura
  Name: Raymond Ventura
  Title: Managing Director

[Signature Page to Project Corgi Commitment Letter]


Accepted and agreed to as of the date first above written:

 

CORGI BIDCO, INC.

By:

 

/s/ Rima Simson

 

Name: Rima Simson

 

Title: Vice President, Treasurer and Secretary

[Signature Page to Project Corgi Commitment Letter]


CONFIDENTIAL    EXHIBIT A

Project Corgi

Transaction Description

Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in the Commitment Letter to which this Exhibit A is attached (the “Commitment Letter”) or in the other Exhibits to the Commitment Letter.

The Sponsors, together with (at the Sponsors’ election) one or more other investors arranged by and designated by the Sponsors (collectively with the Sponsor, the “Investors”), intend to consummate the Acquisition (as defined below). In connection with the foregoing, the Sponsors have established or intend to establish (1) a newly formed U.S. limited partnership (“TopCo”), (2) a newly formed Delaware limited partnership and a wholly-owned subsidiary of TopCo (“HoldCo”), (3) a newly formed Delaware limited partnership and a wholly-owned subsidiary of HoldCo (“Holdings”), (4) a newly formed Delaware limited partnership and a wholly-owned subsidiary of Holdings (the “Company”), (5) Corgi BidCo, Inc., a newly formed Delaware corporation and a wholly-owned subsidiary of the Company (“AcquisitionCo”), (6) a newly formed Delaware limited liability company and a wholly-owned subsidiary of the Company (“U.S. BidCo I”), (7) a newly formed Delaware limited liability company and a wholly-owned subsidiary of the Company (“U.S. BidCo II”), (8) a newly formed company incorporated under the laws of England and Wales and a wholly-owned subsidiary of the Company (“U.K. BidCo”) and (9) Corgi Merger Sub, Inc., a newly formed Delaware corporation and a wholly-owned subsidiary of AcquisitionCo (“Merger Sub”).

In connection with the foregoing, it is intended that:

 

a)

The Investors will, directly or indirectly (including through one or more holding companies), make cash equity contributions to Holdings (the “Equity Contribution”) in an aggregate amount that, when combined with the value of the equity of management and existing equity holders of the Target and its subsidiaries retained, rolled over or otherwise invested in TopCo in connection with the Transactions (as defined below), equals at least 35.0% of the pro forma capitalization of TopCo and its subsidiaries (to be defined as the sum of (I) 100% of the aggregate principal amount of funded third party debt for borrowed money of the Borrowers (subject to adjustment as provided below), plus (II) the total amount of equity (including any equity retained, rolled over or otherwise invested as provided above) of TopCo and its subsidiaries) as of the Closing Date after giving effect to the Transactions (for purposes of this determination, (1) debt shall be less the amount of cash on the balance sheet of the Target and its subsidiaries after giving effect to the Transactions and (2) excluding for purposes of this determination increased levels of debt (x) from any borrowing under the First Lien Revolving Facility on or after the Closing Date not utilized to finance Transaction Costs (as defined below) (including any borrowing used to finance working capital purposes (including any refinancing of indebtedness incurred for

 

A-1


  working capital purposes)) and (y) as a result of all original issue discount and/or upfront fees in respect of the Facilities (including any First Lien Term Loan Flex Increase and any Second Lien Flex Increase) other than the First Lien Upfront Fee and the Second Lien Upfront Fee payable under, and as defined in, the Fee Letter), which amount, together with proceeds from the Facilities (and/or an Alternate Second Lien Facility), shall be used inter alia to consummate the Acquisition, to fund the Refinancing (as defined below), to pay fees, premiums and expenses incurred in connection with the Transactions (such fees, premiums and expenses, together with the Acquisition Consideration (as defined below) and the Refinancing, the “Transaction Costs”) and for any other purpose not prohibited under the Facilities; provided that, immediately after the consummation of the Transactions on the Closing Date, the Sponsors will, directly or indirectly, control a majority of the economic and voting interests in AcquisitionCo; provided, further, that, to the extent any stockholder or other equity holder of the Target has exercised appraisal rights in connection with the Transactions, then on the Closing Date the Investors may elect to issue one or more equity commitment letters in an aggregate amount not less than the amount of consideration that would otherwise be paid under the Acquisition Agreement in respect of the shares or other equity interests subject to such appraisal rights (the “Appraisal Shares”) and, for purposes of this Commitment Letter, an aggregate amount of such equity commitment letters up to, but not in excess of, the amount of consideration that would otherwise be paid under the Acquisition Agreement in respect of the Appraisal Shares shall be included in the amount and percentage of the Equity Contribution from and after the Closing Date as if such amount was funded in cash (with it being understood that, on or prior to the date of the final resolution of all such appraisal rights, the lesser of (a) the amount necessary to satisfy such appraisal rights in full and (b) the full amount committed under such equity commitment letters shall be drawn and funded, directly or indirectly, in cash to the Target in the form of common equity, or other equity on terms reasonably acceptable to the Lead Arrangers) (the “Post-Closing Equity Contribution”).

 

b)

Pursuant to the Agreement and Plan of Merger (together with the Target’s disclosure schedules delivered in connection therewith, and as further amended, supplemented, waived or otherwise modified from time to time in accordance with paragraph 1 of the Summary of Additional Conditions, collectively, the “Acquisition Agreement”), among, inter alia, AcquisitionCo, Merger Sub and Covetrus, Inc., AcquisitionCo will, directly or indirectly, acquire all of the issued and outstanding equity interests of the Target (such acquisition, the “Acquisition”) and Merger Sub will merge with and into the Target, with the Target surviving such merger. Pursuant to the Acquisition, the Target’s equity holders shall have the right to receive the amounts required to consummate the Acquisition (collectively, the “Acquisition Consideration”) in accordance with the terms of the Acquisition Agreement.

 

A-2


c)

The Borrowers will obtain or cause to be obtained the Facilities, consisting of (1) up to $1,525.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any First Lien Term Loan Flex Increase) under the First Lien Term Loan Facility, and (2) up to $300.0 million under the First Lien Revolving Facility, and (3) up to $425.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any Second Lien Flex Increase) under the Second Lien Facility, in each case, on the closing date of the Acquisition.

 

d)

All amounts outstanding on the Closing Date (other than contingent obligations and letters of credit that are cash collateralized, backstopped or “grandfathered” as having been issued under the First Lien Facilities) under that certain Credit Agreement, dated as of February 7, 2019 (as amended, supplemented, waived or otherwise modified from time to time, the “Existing Credit Agreement”), among the Target, the lenders party thereto, and JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, will be repaid, redeemed, defeased, terminated or otherwise discharged (or notice for the repayment, redemption, defeasance, termination or discharge thereof will be given) (the “Refinancing”). In connection with the Acquisition, the Borrowers may directly or indirectly distribute, contribute or lend funds to the borrowers under such facilities in order to consummate the Refinancing, which loans may be forgiven, contributed or distributed at the Borrowers’ discretion.

The transactions described above and the payment of related fees, premiums and expenses are collectively referred to herein as the “Transactions”.

 

A-3


CONFIDENTIAL    EXHIBIT B

Project Corgi

First Lien Facilities

Summary of Principal Terms and Conditions

All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this term sheet is attached, including the other Exhibits thereto.

 

Borrowers:    (i) Initially, Merger Sub and, following the Acquisition, the Target as the survivor of the merger contemplated thereby (the “Corgi I Borrower”), (ii) U.S. BidCo I (the “Corgi II Borrower”) and (iii) U.S. BidCo II (the “Corgi III Borrower” and, together with the Corgi I Borrower and the Corgi II Borrower, the “Borrowers”). The Company may, in its sole discretion, designate one or more of its direct or indirect wholly-owned U.S. subsidiaries as co-borrowers, on a joint and several basis; provided that any such designation will be subject to delivery of all necessary “know your customer” documentation and information in a manner consistent with the Precedent Facility.
Transactions:    As set forth in Exhibit A to the Commitment Letter.
Agents:    DBNY will act as sole and exclusive administrative agent and collateral agent (in such capacity, the “First Lien Administrative Agent”) in respect of the First Lien Facilities for a syndicate of financial institutions reasonably acceptable to the Company (together with the Committed Lenders, the “First Lien Lenders”), and will perform the duties customarily associated with such roles.
First Lien Lead Arrangers:    DBSI, UBS Securities, BMOCM and Mizuho will act as joint lead arrangers and joint bookrunners for the First Lien Facilities (in such capacity, the “First Lien Lead Arrangers”), and will perform the duties customarily associated with such roles.
First Lien Facilities:   

(A) A first lien secured term loan facility in an aggregate principal amount of up to $1,525.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any First Lien Term Loan Flex Increase) (the “First Lien Term Loan Facility”; the loans thereunder, the “First Lien Term Loans”).

 

B-1


  

(B) A first lien secured cash flow-based revolving credit facility in an aggregate principal amount of up to $300.0 million (the “First Lien Revolving Facility” and, together with the First Lien Term Loan Facility, the “First Lien Facilities”). First Lien Lenders with commitments under the First Lien Revolving Facility are collectively referred to as “First Lien Revolving Lenders”; the commitments thereunder are collectively referred to as the “First Lien Revolving Commitments”; and the loans thereunder are collectively referred to as “First Lien Revolving Loans”; and together with the First Lien Term Loans, the “First Lien Loans”.

 

The First Lien Revolving Facility shall be available to the Borrowers and shall be available to be drawn in U.S. dollars, Canadian dollars, Euros, Pound Sterling, Swiss Francs and other currencies as may be mutually agreed by the Company and the First Lien Revolving Lenders.

Swingline Loans:    In connection with the First Lien Revolving Facility, DBNY (in such capacity, the “Swingline Lender”) will make available to the Borrowers a swingline facility under which the Borrowers may make short-term borrowings (on same-day notice) of up to $65.0 million. Except for purposes of calculating the Commitment Fee described in Annex I to this Term Sheet, any such swingline borrowings will reduce availability under the First Lien Revolving Facility on a dollar-for-dollar basis.
  

Each First Lien Revolving Lender shall, promptly upon request by the Swingline Lender, fund to the Swingline Lender its pro rata share of any swingline borrowings.

 

If any First Lien Revolving Lender becomes a Defaulting Lender (to be defined consistent with the Precedent Facility (as defined under the heading “Security” below)), then the swingline exposure of such Defaulting Lender will automatically be reallocated among the non-Defaulting Lenders pro rata in accordance with their First Lien Revolving Commitments up to an amount such that the revolving credit exposure of each such non-Defaulting Lender does not exceed its First Lien Revolving Commitments. In the event such reallocation does not fully cover the exposure of such Defaulting Lender, the Swingline Lender may require the Borrowers to repay such “uncovered” exposure in respect of the swingline loans.

 

B-2


Incremental First Lien Facilities:    The First Lien Facilities will permit the Borrowers to add additional term loans under the First Lien Term Loan Facility or one or more incremental term loan facilities, which, for the avoidance of doubt, may take the form of delayed draw term loans, to be included in the First Lien Facilities (each, an “Incremental First Lien Term Facility”; the loans thereunder, the “Incremental First Lien Term Loans”) and/or add additional revolving credit facility commitments or letter of credit facility commitments under the First Lien Revolving Facility or one or more revolving credit facility commitments or letter of credit facility commitments to be included in the First Lien Facilities (each, an “Incremental First Lien Revolving Facility”; together with any Incremental First Lien Term Facility, the “Incremental First Lien Facilities”) in an aggregate principal amount for all such increases and incremental facilities not to exceed the sum of (a) an unlimited amount if, after giving effect to the incurrence of such amount, either (x) the Total First Lien Leverage Ratio (as defined below) is equal to or less than 5.50:1.00 (and assuming all such amounts (including amounts incurred as described in the final paragraph under the heading “Incremental First Lien Facilities”) were secured on a first lien secured basis, whether or not so secured and calculated as if any Incremental First Lien Revolving Facility being initially provided on any date of determination were fully drawn on such date, but excluding amounts incurred in accordance with the following clause (b)) or (y) the pro forma Total First Lien Leverage does not exceed the Total First Lien Leverage Ratio in effect prior to such transactions (and assuming all such amounts (including amounts incurred as described in the final paragraph under the heading “Incremental First Lien Facilities”) were secured on a first lien secured basis, whether or not so secured and calculated as if any Incremental First Lien Revolving Facility being initially provided on any

 

B-3


  date of determination were fully drawn on such date, but excluding amounts incurred in accordance with the following clause (b)) (the amount available under this clause (a), the “First Lien Ratio Incremental Facility”) and (b) the sum of (i) the greater of (x) $280.0 million and (y) an amount equal to pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available and (ii) an amount equal to the available capacity under the basket set forth in Subsection 8.1(b)(xiii) of the Precedent Facility (the amount available under this clause (b), the “First Lien Cash Capped Incremental Facility”); provided that (x) at the Company’s option, capacity under the First Lien Ratio Incremental Facility shall be deemed to be used before capacity under the First Lien Cash Capped Incremental Facility and (y) loans may be incurred under the First Lien Ratio Incremental Facility, the First Lien Cash Capped Incremental Facility, the First Lien Revolving Facility, any other revolving credit facility and/or any other applicable basket that is not based on a Total First Lien Leverage Ratio incurrence test, and proceeds from any such incurrence may be utilized in a single transaction or series of related transactions by first calculating the amount available to be incurred under the First Lien Ratio Incremental Facility by disregarding any concurrent utilization of the First Lien Cash Capped Incremental Facility, the First Lien Revolving Facility, any other revolving credit facility and/or any other applicable basket that is not based on a Total First Lien Leverage Ratio incurrence test (provided that any portion of any Incremental First Lien Facility incurred under the First Lien Cash Capped Incremental Facility may be reclassified, as the Company may elect from time to time, as having been incurred under the First Lien Ratio Incremental Facility if the Company meets the ratio under the First Lien Ratio Incremental Facility at such time on a pro forma basis); provided further that (i) no existing First Lien Lender will be required to participate in any such Incremental First Lien Facility, (ii) no payment or bankruptcy event of default exists, or would exist after giving effect thereto, (iii) the termination date of any Incremental First Lien Revolving Facility shall be

 

B-4


   no earlier than, and no scheduled mandatory commitment reduction in respect thereof shall be required prior to the termination date of, the First Lien Revolving Facility, (iv) the final maturity date and the weighted average life to maturity of any such Incremental First Lien Term Facility shall not be earlier than, or shorter than, as the case may be, the maturity date or the weighted average life to maturity, as applicable, of the First Lien Term Loan Facility (subject to exceptions for customary bridge financings and escrow or similar arrangements); provided, that in the case of the foregoing clauses (iii) and (iv), (1) up to the greater of (x) $280.0 million and (y) an amount equal to 100% of pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available in the aggregate and (2) any indebtedness incurred in connection with an acquisition or other investment permitted under the First Lien Facilities Documentation (as defined under the heading “Documentation” below) in either case of Incremental First Lien Revolving Facilities, Incremental First Lien Term Loans, Specified Refinancing Term Loans (as defined in the Precedent Facility, “Refinancing First Lien Term Facilities”), First Lien Incremental Equivalent Debt (as defined below) and Permitted Debt Exchange Notes (as defined in the Precedent Facility) may have a maturity date and weighted average life to maturity that is earlier than, or shorter than, as the case may be, the maturity date or the weighted average life to maturity, as applicable, of the First Lien Term Loan Facility (such indebtedness, “First Lien Earlier Maturity Debt”), (v) the interest rates applicable to any Incremental First Lien Facilities, and (subject to clause (iv) above) the amortization schedule applicable to any Incremental First Lien Term Facility shall be determined by the Company and the lenders thereunder; provided that with respect to any broadly syndicated Incremental First Lien Term Facility in an aggregate principal amount in excess of the greater of (x) $555.0 million and (y) an amount equal to 200% of pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available (the “MFN Threshold Amount”) incurred pursuant to the First Lien

 

B-5


   Ratio Incremental Facility in the form of floating rate term loans denominated in U.S. dollars that is secured on a pari passu basis by the Collateral (as defined under the heading “Security” below) securing the First Lien Facilities (x) that is made on or prior to the date that is 6 months after the Closing Date, (y) with a maturity date of or earlier than the First Lien Term Loan Maturity Date (as defined under the heading “Final Maturity and Amortization” below) and (z) is not incurred in connection with an acquisition or other investment permitted under the First Lien Facilities Documentation, any refinancing of any other indebtedness or a dividend recapitalization, if the applicable interest rate relating to the Incremental First Lien Term Facility exceeds the applicable interest rate relating to the existing First Lien Term Loan Facility by more than 100 basis points, the applicable interest rate relating to the existing First Lien Term Loan Facility (the “Existing First Lien Interest Rate”) shall be increased to the extent necessary so that the Existing First Lien Interest Rate is equal to the applicable interest rate relating to such Incremental First Lien Term Facility minus 100 basis points (the “Adjusted First Lien Interest Rate”, and the number of basis points by which the Existing First Lien Interest Rate is increased, the “Increased Amount”); provided further that in determining such applicable interest rates, (x) original issue discount (“OID”) or upfront fees (but, in each case, exclusive of any arrangement or structuring or any other fees payable in connection therewith (other than, in the case of a syndicated Incremental First Lien Term Facility or the existing First Lien Term Loan Facility, if any such fees are shared with all First Lien Lenders providing such syndicated Incremental First Lien Term Facility or the existing First Lien Term Loan Facility, as applicable)) (which upfront fees shall be deemed to constitute a like amount of OID) paid by the Borrowers to the First Lien Lenders under the Incremental First Lien Term Facility and the existing First Lien Term Loan Facility, as applicable, in the initial primary syndication thereof shall be included and equated to interest rate (with OID and upfront fees being equated to interest rate based on an assumed four-year life to maturity) and (y) any amendments to the

 

B-6


   applicable margin or rate on the existing First Lien Term Loan Facility that became effective subsequent to the Closing Date but prior to the effective time of such Incremental First Lien Term Facility shall also be included in such calculations; provided further that if (1) Term SOFR (as defined in Annex I to this Term Sheet) or ABR (as defined in Annex I to this Term Sheet) in respect of such Incremental First Lien Term Facility includes an interest rate floor greater than the interest rate floor applicable to the existing First Lien Term Loan Facility, such increased amount shall be equated to interest margin for purposes of determining whether an increase to the applicable interest margin under the existing First Lien Term Loan Facility shall be required, to the extent an increase in the interest rate floor in the existing First Lien Term Loan Facility would cause an increase in the interest rate then in effect thereunder, and in such case the interest rate floor (but not the interest rate margin) applicable to the existing First Lien Term Loan Facility shall be increased by such increased amount to the extent necessary to adjust the applicable Existing First Lien Interest Rate to be equal to the applicable Adjusted First Lien Interest Rate, (2) Term SOFR or ABR in respect of such Incremental First Lien Term Facility includes an interest rate floor lower than the interest rate floor applicable to the existing First Lien Term Loan Facility or does not include any interest rate floor, to the extent a reduction in the interest rate floor in the existing First Lien Term Loan Facility would cause a reduction in the interest rate then in effect thereunder, the difference between the interest rate floor applicable to the existing First Lien Term Loan Facility and the interest rate floor applicable to such Incremental First Lien Term Facility (which shall be deemed to equal 0% for any Incremental First Lien Term Facility without any interest rate floor), but which in any event shall not exceed the maximum amount by which a reduction in the interest rate floor applicable to the existing First Lien Term Loan Facility would cause a reduction in the interest rate then in effect thereunder, shall reduce the applicable interest margin of such Incremental First Lien Term Facility for purposes of determining whether an increase in the Existing First Lien Interest Rate shall be

 

B-7


   required and (3) the existing First Lien Term Loan Facility includes a pricing grid, the interest margins in such pricing grid which are not in effect at the time such Incremental First Lien Term Facility becomes effective shall in each case be increased by an amount equal to the Increased Amount, (vi) in the case of any new First Lien Lender under an Incremental First Lien Revolving Facility that would have commitments under the First Lien Revolving Facility, such new First Lien Lender shall be subject to the consent of the parties whose consent would be required in connection with an assignment of First Lien Revolving Commitments or First Lien Revolving Loans under the heading “Assignments and Participations” below (such consent not to be unreasonably withheld, conditioned or delayed) and (vii) any Incremental First Lien Facility shall be on terms and pursuant to documentation reasonably satisfactory to the Company.
   The First Lien Facilities Documentation will include “limited condition transaction” provisions consistent with the Precedent Facility.
   As used herein, the “Total First Lien Leverage Ratio” means the ratio of total first lien secured net debt for borrowed money that is secured by first priority liens on the Collateral (as defined under the heading “Security” below) (calculated (x) net of (1) unrestricted cash and cash equivalents (it being understood that unrestricted cash and cash equivalents shall be measured as of the most recent fiscal month of the Company for which consolidated financial statements are available) other than the proceeds of any indebtedness that are not intended to be used for working capital purposes (other than to the extent such proceeds are intended to be promptly applied), if applicable, borrowed at the time of determination and (2) cash and cash equivalents which cash collateralize letters of credit issued on behalf of the Company or any of its restricted subsidiaries, including the cash proceeds of any indebtedness being incurred at the time of determination and (y) excluding (i) any debt secured by a junior lien on the Collateral or that is contractually subordinated in right of payment to the

 

B-8


   First Lien Term Loans, (ii) any outstanding First Lien Revolving Loans and other revolving loans used to finance the working capital needs of the Company and its subsidiaries (as determined by the Company in good faith), (iii) any unreimbursed outstanding drawn amounts under funded letters of credit (provided that such amounts shall not be counted as debt until five business days after such amounts were drawn), (iv) obligations under or in respect of any Special Purpose Financing (as defined in the Precedent Facility), (v) indebtedness or other obligations arising from any cash management or related services and (vi) financing leases and any other lease obligations (the foregoing clauses (x) and (y), collectively, the “Debt Adjustments”) to trailing four-quarter EBITDA (to be defined as set forth under the heading “Documentation” below and in any event shall include, without duplication, (x) adjustments (which, for the avoidance of doubt, will not be subject to any caps) for pro forma “run rate” cost savings, operating expense reductions, revenue or operating enhancements and synergies (including revenue synergies, including those related to new business and customer wins, the modification or renegotiation of contracts and other arrangements and pricing adjustments and increases) relating to the Transactions or operational changes or other initiatives that are projected by the Company in good faith to result from actions that have been taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Company) within 36 months after the Closing Date or the consummation of any such operational change or other initiatives, respectively, net of the amount of the actual benefits realized during such period from such actions, (y) additions of the type reflected in any of (i) the Sponsors’ financial model, dated as of May 9, 2022, (ii) the Quality of Earnings report of PricewaterhouseCoopers LLP, dated as of May 6, 2022, (iii) the Confidential Information Memorandum and (iv) any other quality of earnings analysis prepared by independent certified public accountants of nationally recognized standing or any other accounting firm reasonably acceptable to the First Lien Administrative Agent (it being understood that any “Big Four”

 

B-9


   accounting firms are acceptable) and delivered to the First Lien Administrative Agent in connection with an acquisition or other investment permitted under the First Lien Facilities Documentation and (z) solely with respect to the Company’s technology business, (i) the amortization of Capitalized Software Expenditures (to be defined in a manner consistent with the EP Credit Agreement) and (ii) an addback for internal software development costs that are expensed during the period but which could have been capitalized in accordance with GAAP, “EBITDA”).
   The First Lien Facilities will permit the Borrowers to utilize availability under the Incremental First Lien Facilities amount to issue first or junior lien secured notes or loans (including loans under the Second Lien Facility) (subject to (A) the Intercreditor Agreement (as defined under the heading “Security” below) or (B) other intercreditor terms to be agreed (such terms referred to in clauses (A) and (B), the “Intercreditor Terms”)) or unsecured notes or loans, with the amount of such secured or unsecured notes or loans incurred and outstanding pursuant to the First Lien Cash Capped Incremental Facility reducing the aggregate principal amount available for the Incremental First Lien Facilities pursuant to the First Lien Cash Capped Incremental Facility (“First Lien Incremental Equivalent Debt”); provided that, such secured or unsecured notes or loans (i)(x) other than with respect to any revolving credit facility, do not mature prior to the maturity date of, or have a shorter weighted average life to maturity than, loans under the First Lien Term Loan Facility (subject to exceptions for First Lien Earlier Maturity Debt, customary bridge financings and escrow or similar arrangements) or (y) in the case of any revolving credit facility, do not mature prior to the maturity date of the First Lien Revolving Facility, (ii) shall not (subject to exceptions for escrow or similar arrangements consistent with those in the Precedent Facility) be secured by any lien on any asset of any Borrower or any Guarantor (as defined under the heading “Guarantees” below) that does not also secure the First Lien Facilities, or be guaranteed by any person other than the Guarantors and (iii) in the case of any such secured notes or loans, shall be subject to an intercreditor agreement consistent with the Intercreditor Terms above.

 

B-10


First Lien Refinancing Facilities:    The First Lien Facilities Documentation will include “refinancing facilities” provisions consistent with the Precedent Facility.
Purpose:    (A) The proceeds of borrowings under the First Lien Term Loan Facility will be used by the Borrowers, on or after the Closing Date, together with the proceeds of borrowings of the First Lien Revolving Loans, the proceeds of borrowings under the Second Lien Facility (and/or an Alternate Second Lien Facility) and the proceeds of the Equity Contribution, solely to finance Transaction Costs.
   (B) The First Lien Revolving Loans may be incurred and Letters of Credit (as defined under the heading “Letters of Credit” below) may be issued on or after the Closing Date (subject, in the case of First Lien Revolving Loans on the Closing Date, to the limitation set forth under the heading “Availability” below) and the proceeds thereof may be used to finance Transaction Costs or for working capital, capital expenditures, general corporate purposes and any other purpose not prohibited by the First Lien Facilities Documentation.
Availability:    (A) The First Lien Term Loan Facility will be available in a single drawing on the Closing Date. Amounts borrowed under the First Lien Term Loan Facility that are repaid or prepaid may not be reborrowed.
   (B) Up to $65.0 million of First Lien Revolving Loans (exclusive of letter of credit usage) may be made available on the Closing Date to fund fees and expenses in connection with the Transactions, finance capital expenditures and for other general corporate purposes, plus such additional amounts as are necessary (i) to fund “flex” OID under the Facilities, (ii) for ordinary course working capital purposes (including to refinance any indebtedness incurred for working capital purposes) and (iii) to fund any purchase price adjustments in

 

B-11


   accordance with the terms of the Acquisition Agreement. Additionally, First Lien Revolving Loans may be made available on the Closing Date for any other purpose up to the amount of cash and cash equivalents held by foreign subsidiaries of the Target and for which the repatriation of such funds may (i) result in adverse tax consequences to Topco or one of its subsidiaries (as determined by the Company in good faith) or (ii) (1) be prohibited or delayed by or violate or conflict with applicable law, (2) be restricted by applicable organizational documents or any agreement, (3) be subject to other organizational or administrative impediments or (4) conflict with the fiduciary duties of the applicable directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any applicable officer, director or manager. Additionally, Letters of Credit may be issued on the Closing Date in order to backstop or replace letters of credit outstanding on the Closing Date under any facilities no longer available to the Target or its subsidiaries as of the Closing Date. Otherwise, First Lien Revolving Loans and Letters of Credit under the First Lien Revolving Facility will be available at any time prior to the final maturity of the First Lien Revolving Facility (including, subject to the limitation described in this paragraph, on the Closing Date), in minimum principal amounts to be agreed upon. Amounts repaid under the First Lien Revolving Facility may be reborrowed.
Interest Rates and Fees:    As set forth in Annex I to this Term Sheet.
Default Rate:    With respect to overdue principal, the applicable interest rate plus 2.00% per annum, with respect to overdue interest, the applicable interest rate for the principal of the related loan plus 2.00% per annum, and with respect to any other overdue amount, the interest rate applicable to ABR loans plus 2.00% per annum.
Letters of Credit:    $65.0 million in the aggregate under the First Lien Revolving Facility will be available to the Borrowers for the purpose of issuing letters of credit (the “Letters of Credit”). Letters of Credit will be issued by the Committed Lenders (or their respective affiliates, as

 

B-12


   applicable) and other Lenders who agree to act as issuing lenders and that are reasonably acceptable to the Company and the First Lien Administrative Agent (each, an “Issuing Lender”); provided that none of DBNY or UBS AG shall be required to issue any letter of credit that is not a standby letter of credit; provided, further, that unless otherwise agreed by the applicable Lender, each Committed Lender’s (or its applicable affiliate’s) Letter of Credit commitment will not be greater than its proportionate share of the letter of credit sublimit based on its commitments under the Revolving Facility on the Closing Date. Each Letter of Credit shall expire not later than the earlier of (a) 12 months after its date of issuance or such longer period of time as may be agreed by the applicable Issuing Lender and (b) the fifth business day prior to the final maturity of the First Lien Revolving Facility; provided that any Letter of Credit may provide for renewal thereof for additional periods of up to 12 months or such longer period of time as may be agreed by the applicable Issuing Lender (which in no event shall extend beyond the date referred to in clause (b) above). Letters of Credit shall be available to be issued in the same currencies as are available to be borrowed under the First Lien Revolving Facility.
   Drawings under any Letter of Credit shall be reimbursed by the Borrowers (whether with its own funds or with the proceeds of borrowings under the First Lien Revolving Facility) within one business day after written notice of such drawing is received by the Company from the relevant Issuing Lender; it being understood and agreed that, if after giving effect to any drawing under any Letter of Credit, the amount of unused First Lien Revolving Commitments is less than the amount of such drawing, the Borrowers may borrow First Lien Revolving Loans for the purpose of reimbursing such drawing, so long as, after giving effect to such borrowing and reimbursement, the sum of the outstandings under the First Lien Revolving Facility (including First Lien Revolving Loans, the Letters of Credit outstandings and the swingline borrowings thereunder) does not exceed the total First Lien Revolving Commitments. To the extent that the Borrowers do not reimburse the Issuing Lender within the time period specified above, the First Lien Revolving Lenders shall be irrevocably obligated to reimburse the Issuing Lender pro rata based upon their respective First Lien Revolving Commitments.

 

B-13


   If any First Lien Revolving Lender becomes a Defaulting Lender then the Letter of Credit exposure of such Defaulting Lender will automatically be reallocated among the non-Defaulting Lenders pro rata in accordance with their First Lien Revolving Commitments up to an amount such that the revolving credit exposure of each such non-Defaulting Lender does not exceed its First Lien Revolving Commitments. In the event that such reallocation does not fully cover the exposure of such Defaulting Lender, the relevant Issuing Lender may require the Borrowers to cash collateralize such “uncovered” exposure in respect of each outstanding Letter of Credit.
Final Maturity and Amortization:    (A) The First Lien Term Loan Facility will mature on the date that is seven years after the Closing Date (the “First Lien Term Loan Maturity Date”) and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the First Lien Term Loan Facility, commencing with the second full fiscal quarter following the Closing Date, with the balance payable on the First Lien Term Loan Maturity Date; provided that the First Lien Facilities Documentation shall provide the right of individual First Lien Lenders to agree to extend the maturity of their First Lien Term Loans upon the request of the Company and without the consent of any other First Lien Lender (as further described under the heading “Voting” below).
   (B) The First Lien Revolving Facility will mature, and the First Lien Revolving Commitments will terminate, on the date that is five years after the Closing Date (“First Lien Revolving Facility Maturity Date”); provided that the First Lien Facilities Documentation shall provide the right of individual First Lien Revolving Lenders to agree to extend the maturity of their First Lien Revolving Commitments upon the request of the Company and without the consent of any other First Lien Lender (and as further described under the heading “Voting” below).

 

B-14


Guarantees:    All obligations of (i) the Borrowers under the First Lien Facilities (the “Borrower Obligations”) and (ii) at the Company’s option, any Borrower or any Guarantor under interest rate protection, commodity trading or hedging, currency exchange or other non-speculative hedging or swap arrangements (other than any obligation of any Guarantor to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act (a “Swap”), if, and to the extent that, all or a portion of the guarantee by such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof)) or cash management arrangements designated by the Company, including any entered into with any First Lien Lender, any Second Lien Lender (as defined in Exhibit C to the Commitment Letter) or any affiliate of a First Lien Lender or a Second Lien Lender (the “Hedging/Cash Management Arrangements”), will be guaranteed by Holdings (provided that the guarantee by Holdings shall be non-recourse and limited to the equity of the Company), the Company, AcquisitionCo and each existing and subsequently acquired or organized direct or indirect wholly-owned U.S. restricted subsidiary of the Borrowers (other than any such subsidiary (r) that is an Escrow Subsidiary (as defined in the Precedent Facility), (s) that is acquired by the Company or any restricted subsidiary and, at the time of the relevant acquisition, is an obligor in respect of assumed indebtedness permitted by the First Lien Facilities Documentation to the extent (and solely for so long as) the documentation governing the applicable assumed indebtedness prohibits such subsidiary from providing a guarantee, (t) that is a subsidiary of a foreign subsidiary of the Company, (u) that is an unrestricted subsidiary, (v) that is a captive insurance subsidiary, (w) that is a not-for-profit subsidiary, (x) that is individually,

 

B-15


  

and together with any other subsidiaries deemed immaterial subsidiaries, below materiality thresholds to be agreed, (y) that is not permitted by law, regulation or contract to provide such guarantee, or would require governmental (including regulatory) consent, approval, license or authorization to provide such guarantee, unless such consent, approval, license or authorization has been received, or for which the provision of such guarantee would result in material adverse tax consequences to TopCo or one of its subsidiaries (as determined by the Company in good faith) or (z) certain special purpose entities (such subsidiaries described in the foregoing clauses (r) through (z), collectively, the “excluded subsidiaries”)); it being understood that a domestic subsidiary, substantially all of whose assets consist of shares, equity interests, capital stock and/or indebtedness of one or more foreign subsidiaries, intellectual property relating to such foreign subsidiaries and any other assets incidental thereto, will be deemed a foreign subsidiary for purposes of this provision (such guarantors, other than Holdings, the “Subsidiary Guarantors”; and together with Holdings, the “Guarantors”; and together with the Borrowers, the “Loan Parties”; and each a “Loan Party”; and such guarantees, the “Guarantees); provided that any domestic subsidiary of the Company providing a guarantee in respect of the Second Lien Facility shall be a Guarantor under the First Lien Facilities.

 

In addition, certain subsidiaries may be excluded from the guarantee requirements under the First Lien Facilities Documentation in circumstances where the Company and the First Lien Administrative Agent reasonably agree that the cost of providing such a guarantee is excessive in relation to the value afforded thereby.

Unrestricted Subsidiaries:    Subject to the restricted payments covenant in the First Lien Facilities Documentation, the Company may designate any subsidiary as an “unrestricted subsidiary” and subsequently redesignate any such unrestricted subsidiary as a restricted subsidiary. Unrestricted subsidiaries will not be subject to the representations and warranties, covenants, events of default or other provisions of the First Lien Facilities Documentation, and the results of operations and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of calculating any financial metric contained in the First Lien Facilities Documentation except to the extent of distributions received therefrom.

 

B-16


Security:   

Subject to the limitations set forth below in this section, and, on the Closing Date, to the Funding Conditions Provision, the Borrower Obligations and the Guarantees (and, at the Company’s option, Hedging/Cash Management Arrangements) will be secured by a security interest in substantially all the present and after-acquired tangible and intangible assets of each Borrower and each Subsidiary Guarantor, and in the capital stock of the Company, AcquisitionCo and the Borrowers (collectively, but excluding Excluded Assets (as defined below), the “Collateral”), which security interest in the Collateral will be first in priority (as among the First Lien Facilities and the Second Lien Facility), and subject to liens permitted to exist under the First Lien Facilities Documentation and shall include (except as to Excluded Assets) but not be limited to (a) a perfected pledge of all the capital stock of each direct, wholly owned material restricted subsidiary held by any Borrower or any Subsidiary Guarantor (which pledge, in the case of any foreign subsidiary of a U.S. entity, shall be limited to 65% of each series of capital stock of such foreign subsidiary and it being understood that a domestic subsidiary, substantially all of whose assets consist of shares, equity interests, capital stock and/or indebtedness of one or more foreign subsidiaries, intellectual property relating to such foreign subsidiaries and any other assets incidental thereto, will be deemed to be a foreign subsidiary for purposes of this provision) and of the capital stock of AcquisitionCo and the Borrowers and (b) perfected security interests in, and mortgages on, equipment, general intangibles, investment property, intellectual property, intercompany notes and proceeds of the foregoing.

 

For the avoidance of doubt, Collateral owned by any Borrower shall secure such Borrower’s obligations, and Collateral owned by any Guarantor shall secure such Guarantor’s obligations.

 

B-17


   The priority of security interests and relative rights of the First Lien Lenders under the First Lien Facilities and the lenders under the Second Lien Facility shall be subject to intercreditor arrangements to be set forth in an intercreditor agreement substantially in the form of an exhibit to the definitive credit agreement for the First Lien Facilities (the “Intercreditor Agreement”). The terms of the Intercreditor Agreement will be consistent with, substantially similar to and no less favorable to the Sponsor, the Company and its subsidiaries than the form of the intercreditor agreement attached as Exhibit J-1 to that certain First Lien Credit Agreement, dated as of October 8, 2021, among Project Sky Merger Sub Inc. (to be merged with and into Cloudera, Inc.), the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “Precedent Facility”). Without limiting the foregoing, the First Lien Facilities Documentation and the Intercreditor Agreement will allow additional debt that is permitted under the First Lien Facilities Documentation to be incurred and secured, and to share ratably in the collateral securing the First Lien Facilities on (at the Company’s option) a first priority or junior priority basis with respect to the Collateral.
   Notwithstanding anything to the contrary, the Collateral shall exclude the following: (i) any fee owned real property, (ii) real property leasehold interests (including requirements to deliver landlord lien waivers, estoppels and collateral access letters), (iii) motor vehicles and assets subject to certificates of title, aircraft, non-U.S. intellectual property, letter of credit rights with a value of less than an amount to be agreed (except to the extent such letter of credit rights are supporting obligations in respect of Collateral and are automatically perfected by UCC filings) and commercial tort claims with a value of less than an amount to be agreed, (iv) assets specifically requiring perfection through control (e.g., cash, deposit accounts or other bank or securities accounts, etc.) (x) to

 

B-18


   the extent not automatically perfected by UCC filings in the jurisdiction of incorporation or organization or (y) other than in the case of assets described in clause (a) of the first paragraph under the heading “Security” and material intercompany notes, to the extent not perfected by being held and/or controlled by the First Lien Administrative Agent, (v) margin stock and those assets over which the granting of security interests in such assets would be prohibited by contract, applicable law or regulation or the organizational documents of any non-wholly owned subsidiary (including permitted liens, leases and licenses), including contracts over which the granting of security interests therein would result in termination thereof (in each case, after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code, other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code notwithstanding such prohibitions), or to the extent that such security interests would result in material adverse tax consequences to TopCo or one of its subsidiaries (as determined by the Company in good faith), (vi) the Acquisition Agreement and any rights therein or arising thereunder (it being understood that this clause (vi) shall not apply to any proceeds of the Acquisition Agreement), (vii) equity interests of excluded subsidiaries (other than in respect of any direct foreign subsidiary of a U.S. entity to the extent described in clause (a) of the first paragraph under the heading “Security”), (viii) any capital stock, limited partnership interests or other equity interests or other securities of any person to the extent that the pledge of or grant of any lien on such capital stock, limited partnership interests or other equity interests or other securities for the benefit of any holders of securities results in the Company or any of its restricted subsidiaries being required to file separate financial statements for the issuer of such capital stock, limited partnership interests or other equity interests or other securities with the Securities and Exchange Commission (or another governmental authority) pursuant to either Rule 3-10 or 3-16 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), or any other law, rule or regulation as in effect from time to

 

B-19


   time, but only to the extent necessary to not be subject to such requirement, (ix) those assets as to which the First Lien Administrative Agent and the Company reasonably determine that the costs of obtaining such security interests in such assets or perfection thereof are excessive in relation to the benefit to the First Lien Lenders of the security to be afforded thereby and (x) other exceptions to be mutually agreed upon or that are usual and customary for facilities of this type consistent with the standard set forth under the heading “Documentation” below. The foregoing described in clauses (i) through (x) are, collectively, the “Excluded Assets”.
   All of the above-described pledges, security interests and mortgages shall be created and perfected on terms, and pursuant to documentation, consistent with and substantially similar to (and in any event no less favorable to the Sponsors, the Company and its subsidiaries than) Exhibit B to the Precedent Facility (the “First Lien Collateral Documentation”), and none of the Collateral shall be subject to any other pledges, security interests or mortgages, subject to customary or other exceptions for financings of this kind consistent with the standard set forth under the heading “Documentation” below.
   For the avoidance of doubt, (i) no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required in order to create any security interests in assets located or titled outside of the U.S. or to perfect any security interests therein (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction) and (ii) to the extent not automatically perfected by UCC filings in the jurisdiction of incorporation or organization, no Loan Party shall be required to take any actions in order to perfect any security interests granted with respect to any assets specifically requiring perfection through control (including cash, cash equivalents, deposit accounts, securities accounts or other bank accounts, but excluding the assets described in clause (a) of the first paragraph under the heading “Security” and material intercompany notes).

 

B-20


Mandatory Prepayments:    The First Lien Term Loans shall be prepaid with (a) commencing with the first full fiscal year of the Company to occur after the Closing Date, an amount equal to 50% of Excess Cash Flow (to be defined consistent with “Documentation” below) (the “ECF Prepayment Amount”), with a reduction to zero based upon achievement of a Total First Lien Leverage Ratio of 5.00:1.00; provided that (v) the calculation of Total First Lien Leverage Ratio shall give pro forma effect to any partial prepayment with the ECF Prepayment Amount, (w) no prepayment shall be required unless the ECF Prepayment Amount exceeds the greater of (i) $70.0 million and (ii) an amount equal to 25% of pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available (the “ECF Threshold Basket”), and in such case, the ECF Prepayment Amount shall be the amount in excess thereof, (x) the portion of such ECF Prepayment Amount required by the terms of any other debt with pari passu lien priority with the First Lien Facilities (“First Lien Pari Passu Debt”) to be applied or offered to prepay or purchase such First Lien Pari Passu Debt on a pro rata basis with the First Lien Term Loan Facility (and so long as the First Lien Facilities are offered no less than a ratable share of such ECF Prepayment Amount) and (y) in any fiscal year any (1) mandatory prepayment made as a result of any non-ordinary course asset sales or other dispositions of assets by the Company or any of its restricted subsidiaries (including insurance and condemnation proceeds) or voluntary prepayments, repurchases or redemptions of loans under the First Lien Facilities (including First Lien Revolving Loans and loans under any Incremental First Lien Revolving Facility to the extent any commitments with respect thereto are permanently reduced and any prepayment or repurchase of First Lien Term Loans at a discount to par with credit given to the actual cash amount of the prepayment or repurchase), the Second Lien Facility, any Second Lien Incremental Facility, First Lien Pari Passu Debt (including revolving loans to the

 

B-21


   extent any commitments with respect thereto are permanently reduced) or Second Lien Pari Passu Debt, in each case, including the amount of any premium, make-whole or penalty payments, (2) voluntary prepayments, repurchases or redemptions of loans under the First Lien Revolving Facility or any Incremental First Lien Revolving Facility that were made to fund any “flex” OID or additional upfront fees in respect of the First Lien Term Loan Facility, any Incremental First Lien Term Facility, the Second Lien Facility or any Incremental Second Lien Facility, (3) amortization payments of loans under the First Lien Term Loan Facility, loans under any Incremental First Lien Term Facility and any First Lien Pari Passu Debt, (4) investments or other permitted restricted payments or (5) capital expenditures or acquisitions of intellectual property, in each case, made (or, in the case of clauses (4) and (5), committed to be made) during such fiscal year or, at the Company’s option and without duplication, after such fiscal year end and prior to the time such Excess Cash Flow payment is due, shall in each case of clauses (x) and (y) be credited against excess cash flow prepayment obligations for such fiscal year on a dollar-for-dollar basis (other than, in the case of clause (y), to the extent such prepayments are funded with the proceeds of long-term indebtedness); (b) 100% of the net cash proceeds received from the incurrence of indebtedness by the Company or any of its restricted subsidiaries (other than the incurrence of indebtedness permitted under the First Lien Facilities, but including the proceeds of Refinancing First Lien Term Facilities); and (c) 100% (with reductions to 50% and 0% based upon achievement of a Total First Lien Leverage Ratio of 5.25:1.00 and 5.00:1.00, respectively, which shall be calculated (x) on a pro forma basis and (y) at the Company’s option, at the time of such asset sale or other disposition, at the time of entry into a definitive agreement with respect thereto or at the time of application of the net cash proceeds therefrom (and any prospective prepayment may, at the Company’s option, be tested at any time during the applicable reinvestment period)) of the net cash proceeds of all non-ordinary course asset sales or other dispositions of Collateral by the Company or any of its restricted subsidiaries

 

B-22


   (including insurance and condemnation proceeds) in excess of an amount to be agreed and subject to the right of the Company and its restricted subsidiaries to reinvest such proceeds if such proceeds are reinvested (or committed to be reinvested) within 24 months and, if so committed to reinvestment, reinvested within 6 months thereafter (provided that the Company may elect to deem expenditures that otherwise would be permissible reinvestments that occur prior to receipt of the proceeds of an asset sale or other disposition to have been reinvested in accordance with the provisions hereof; provided, further, that such deemed expenditure shall have been made no earlier than the earliest of notice, execution of a definitive agreement for such asset sale or disposition and consummation of such asset sale or disposition) (the “Asset Sale Proceeds Amount”); and other exceptions no less favorable to the Sponsors, the Company and its subsidiaries than the standard set forth under the heading “Documentation” below; provided that the portion of such Asset Sale Proceeds Amount required by any First Lien Pari Passu Debt to be applied or offered to prepay such First Lien Pari Passu Debt on a pro rata basis with the First Lien Term Loans (and so long as the First Lien Term Loans are offered no less than a ratable share of such Asset Sale Proceeds Amount) shall be credited against asset sale proceeds prepayment obligations on a dollar-for-dollar basis; provided, further, that no prepayment shall be required with respect to the proceeds of a disposition (or insurance or condemnation event) of all or substantially all of a product line or line of business (each, a “Business Line”) so long as the Consolidated Total Leverage Ratio, on a pro forma basis (in each case, determined after giving effect to such prepayment), is less than or equal to (A) 6.50:1.00 or (B) if greater, the Consolidated Total Leverage Ratio immediately prior to giving effect to such disposition (such retained proceeds (and any other portion of net cash proceeds not required to be utilized to mandatorily prepay First Lien Term Loans (or required to be reinvested and exempt prepayment in connection with the disposition of all or substantially all of a product line or line of business. In the event that one or more of the step-downs in clause (c) of the preceding sentence

 

B-23


  

are achieved, the retained net cash proceeds from any such asset sale or disposition shall be deemed to be “Retained Asset Sale Proceeds”. Notwithstanding the foregoing, mandatory prepayments made pursuant to clauses (a) and (c) above shall be limited to the extent that the Company determines in good faith that such prepayments would either (i) result in material adverse tax consequences to TopCo or one of its subsidiaries related to the repatriation of funds in connection therewith by foreign subsidiaries or (ii) (1) be prohibited or delayed by or violate or conflict with applicable law, (2) be restricted by applicable organizational documents or any agreement, (3) be subject to other organizational or administrative impediments or (4) conflict with the fiduciary duties of the applicable directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any applicable officer, director or manager, in each case, from being repatriated.

 

Within the First Lien Term Loan Facility, mandatory prepayments shall be applied first, to accrued interest and fees due on the amount of the prepayment under the First Lien Term Loan Facility and second, to the remaining amortization payments under the First Lien Term Loan Facility as directed by the Company (and in case of no direction, applied in direct order of maturity).

 

At the Company’s option it may allow First Lien Lenders to elect not to accept any mandatory prepayment made pursuant to clause (a) or (c) (each, a “Declining Lender”). Any prepayment amount declined by a Declining Lender or a holder of First Lien Pari Passu Debt, as applicable, subject to any prepayment requirements of the Second Lien Facility, may be retained by the Borrowers and will increase the amount available to make restricted payments.

 

If at any time the sum of the outstandings under the First Lien Revolving Facility (including First Lien Revolving Loans, Letters of Credit outstandings and swingline borrowings thereunder) exceeds the total First Lien Revolving Commitments, prepayments of First Lien Revolving Loans and/or swingline borrowings (and/or cash collateralization of Letters of Credit) shall be required in an amount equal to such excess.

 

B-24


   The application of proceeds from mandatory prepayments of the First Lien Revolving Facility shall not reduce the aggregate amount of the total First Lien Revolving Commitments and amounts prepaid may be reborrowed.
Voluntary Prepayments and Reductions in Commitments:    Voluntary reductions of the unutilized portion of the First Lien Revolving Facility and prepayments of borrowings under the First Lien Facilities will be permitted at any time, in minimum principal amounts to be agreed upon, without premium or penalty, subject to reimbursement of the First Lien Lenders’ redeployment costs actually incurred in the case of a prepayment of Term SOFR borrowings other than on the last day of the relevant interest period. All voluntary prepayments of the First Lien Term Loan Facility, any Incremental First Lien Term Facility, any Refinancing First Lien Term Facility and any Extended Term Loans (as defined in the Precedent Facility, “Extended First Lien Term Loans”) will be applied to the remaining amortization payments under the First Lien Term Loan Facility, any Incremental First Lien Term Facility, any Refinancing First Lien Term Facility and any Extended First Lien Term Loans, as applicable, and may be applied to any of the First Lien Term Loan Facility, any Incremental First Lien Term Facility, any Refinancing First Lien Term Facility and any Extended First Lien Term Loans, in any case, as directed by the Company.
   Any First Lien Lender may, at its option, and if agreed by the Company, in connection with any prepayment of loans under the First Lien Term Loan Facility, exchange such First Lien Lender’s portion of such loans to be prepaid for new indebtedness of the Borrowers, in lieu of all or part of such First Lien Lender’s pro rata portion of such prepayment (and any such loans so exchanged shall be deemed repaid for all purposes), so long as (other than in connection with a refinancing in full of the First Lien Facilities) such indebtedness would not have a weighted average life to maturity earlier than the weighted average life to maturity of the First Lien Term Loans being repaid.

 

B-25


Documentation:   

The definitive documentation for the First Lien Facilities (the “First Lien Facilities Documentation”), the definitive terms of which will be negotiated in good faith, (i) will be “covenant-lite,” except to the extent specified in section (B) under the heading “Financial Covenant” below and (ii) will contain incurrence-based covenants and other terms consistent with this Term Sheet and, subject to the foregoing, will otherwise be consistent with, substantially similar to and no less favorable to the Sponsors, the Company and its subsidiaries than the Precedent Facility, including with respect to the EU and UK “bail-in” provisions and customary U.S. Department of Labor lender regulatory representations, and, in each case, will take into account and be modified fully as appropriate to (x) reflect the SOFR provisions in the SOFR Precedent (as defined in Annex I to this Term Sheet) and (y) reflect the terms set forth in the Commitment Letter and, if applicable, the flex provisions of the Fee Letter, and taking into account differences related to the Company and its subsidiaries (including as to operational and strategic requirements of the Company and its subsidiaries in light of their size, industries, businesses, business practices and business plans) (it being understood that basket sizes and incurrence tests will be set taking into account the relative EBITDA and total assets of the Company and its subsidiaries on a consolidated basis after giving pro forma effect to the Transactions) and strictly ministerial administrative changes reasonably requested by the First Lien Administrative Agent and agreed to by the Company, and in any event will contain only those conditions to borrowing, prepayments, representations and warranties, covenants and events of default expressly set forth in this Term Sheet; provided that (1) in no event will the terms of the First Lien Facilities Documentation be less favorable to the Company and its subsidiaries than those in the Existing Credit Agreement (as defined in Exhibit A to the Commitment Letter), (2) the terms of the First Lien Facilities Documentation will take into

 

B-26


   account any additional flexibility from, and be no less favorable to the Sponsors, the Company and its subsidiaries than, that certain First Lien Credit Agreement (the “EP Credit Agreement”), dated as of November 4, 2021, among EP Purchaser, LLC, EP Intermediate, LLC, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent, (3) the terms of the First Lien Facilities Documentation shall include “cured default” provisions that are the same as those set forth in Section 1.02(a) of the EP Credit Agreement and (4) the terms of the First Lien Facilities Documentation shall not include the “Letter of Intent EBITDA” provisions as set forth in clause (s) the definition of “Consolidated EBITDA” and Section 1.07(13) of the EP Credit Agreement. Notwithstanding the foregoing, the only conditions to the availability of the First Lien Facilities on the Closing Date shall be the applicable conditions set forth in the second sentence of the Funding Conditions Provision and in Exhibit D to the Commitment Letter.
Representations and Warranties:    Applicable to the Company and its restricted subsidiaries and limited to the following: organizational status, authority and enforceability of the First Lien Facilities Documentation, no violation of law, charter documents or agreements, litigation, margin regulations, governmental approvals, U.S. Investment Company Act, PATRIOT Act, OFAC, accuracy of disclosure as of the Closing Date, financial statements and no material adverse change (after the Closing Date), no default (after the Closing Date), no default under contractual obligations, no undisclosed liabilities, taxes, ERISA, labor matters, subsidiaries, intellectual property, (subject to the Funding Conditions Provision) creation, validity and perfection of security interests, compliance with laws, environmental matters, properties, use of proceeds and consolidated closing date solvency, subject, in the case of each of the foregoing representations and warranties, to qualifications and limitations no less favorable to the Sponsors, the Company and its subsidiaries than the standard set forth under the heading “Documentation” above.

 

B-27


   The representations and warranties will be required to be made in connection with each extension of credit (including, subject to the Funding Conditions Provision, the extensions of credit on the Closing Date, but excluding extensions of credit under any Incremental First Lien Facility), it being understood that the failure of any representation or warranty (other than the Specified Representations, subject to the Funding Conditions Provision) to be true and correct on the Closing Date will not constitute the failure of a condition precedent to funding or a default under the First Lien Facilities.
Conditions Precedent to Initial Extensions of Credit:    The initial extensions of credit under the First Lien Facilities will be subject solely to (a) the applicable conditions set forth in the second sentence of the Funding Conditions Provision and in Exhibit D to the Commitment Letter and (b) the condition that the Specified Representations and, to the extent required by the Funding Conditions Provision, the Company Representations shall be true and correct in all material respects on and as of the Closing Date (although any Specified Representation or Company Representation which expressly relates to a given date or period shall be required only to be true and correct in all material respects as of the respective date or for the respective period, as the case may be). To the extent that any representations and warranties made on, or as of, the Closing Date (or a date prior thereto) are qualified by or subject to “material adverse effect”, the definition thereof shall be “Company Material Adverse Effect” as defined in the Acquisition Agreement, for purposes of such representations and warranties.
Conditions Precedent to All Subsequent Extensions of Credit:    As set forth in the Precedent Facility.
Affirmative Covenants:    Applicable to the Company and its restricted subsidiaries and limited to the following: delivery of annual and quarterly financial statements, compliance certificates and other information (accompanied, in the case of annual financial statements, by an audit opinion from nationally recognized auditors that is not subject to

 

B-28


   qualification (it being agreed that an explanatory or emphasis of matter paragraph does not constitute a qualification) as to “going concern” or the scope of such audit, other than solely with respect to, resulting solely from or arising on account of (i) an upcoming maturity date under the First Lien Facilities, the Second Lien Facility or any other indebtedness incurred in compliance with the First Lien Facilities Documentation, (ii) any potential or actual inability to satisfy any financial maintenance covenant, (iii) the activities, operations, financial results, assets or liabilities of any unrestricted subsidiary or (iv) changes in accounting principles or practices reflecting changes in GAAP and required or approved by the Company’s (or its direct or indirect parent company’s) independent certified public accounting firm), delivery of notices of defaults and certain material events (including certain ERISA events), inspection rights (including books and records), maintenance of existence and rights and privileges, maintenance of insurance, payment of taxes, compliance with laws (including environmental laws), use of proceeds, commercially reasonable efforts to maintain ratings (but not any specific rating), maintenance of books and records, maintenance of properties, changes in fiscal year, additional guarantors and collateral and further assurances on collateral matters, subject, in the case of each of the foregoing covenants, to exceptions and qualifications no less favorable to the Sponsors, the Company and its subsidiaries than the standard set forth under the heading “Documentation” above.
Negative Covenants:    Applicable to the Company and its restricted subsidiaries and limited to the following incurrence-based high yield covenants: (I) limitations on the incurrence of debt (with exceptions to allow, among other things, the incurrence of indebtedness (i) in an amount that is twice the amount of restricted payments that the Company and its restricted subsidiaries would have been able to make on the date of such incurrence under specified restricted payment baskets, including, without limitation, the consolidated net income builder basket and the Retained Asset Sale Proceeds basket (the “RP Debt Basket”), (ii) in the case of Indebtedness secured on a pari passu basis

 

B-29


   with the First Lien Facilities, either (x) after giving effect to the incurrence of such amount, the Total First Lien Leverage Ratio is equal to or less than 5.50:1.00 or (y) the pro forma Total First Lien Leverage Ratio after giving effect to such incurrence does not exceed the Total First Lien Leverage Ratio in effect prior to such transactions, (iii) in the case of other Indebtedness, either (x) after giving effect to the incurrence of such amount, the Consolidated Total Leverage Ratio (to be defined on a basis consistent with the standard set forth under the heading “Documentation” above, the “Consolidated Total Leverage Ratio”) is equal to or less than 7.50:1.00, (y) the pro forma Consolidated Total Leverage Ratio after giving effect to such incurrence does not exceed the Consolidated Total Leverage Ratio in effect prior to such transactions or (z) after giving effect to the incurrence of such amount, either (1) the Consolidated Coverage Ratio (to be defined on a basis consistent with the standard set forth under the heading “Documentation” above, the “Consolidated Coverage Ratio”) is greater than or equal to 1.75:1.00 or (2) the pro forma Consolidated Coverage Ratio after giving effect to such incurrence is not less than the Consolidated Coverage Ratio in effect prior to such transactions (provided that this exception shall not be subject to any cap on the amount of indebtedness that can be incurred by restricted subsidiaries that are not Subsidiary Guarantors or Escrow Subsidiaries) (for the avoidance of doubt, the ratios in the immediately preceding clause (ii) and this clause (iii) shall be in lieu of the ratio debt exceptions in Subsections 8.1(b)(x) and 8.1(b)(xvii) of the Precedent Facility) and (iv) the incurrence of any indebtedness by any Business Line substantially concurrently with a Permitted Business Line Distribution with respect to such Business Line), (II) limitations on liens (with exceptions to allow, among other things, (i) liens securing debt incurred pursuant to clause (I)(ii), (I)(iii) or (I)(iv) above, (ii) liens securing indebtedness incurred pursuant to the RP Debt Basket, (iii) liens on Collateral, if such liens rank junior to the liens on such Collateral in relation to the liens securing the First Lien Loans and the Guarantees, as applicable, and (iv) liens securing contribution indebtedness), (III) fundamental changes, (IV) restrictions on subsidiary

 

B-30


  

distributions, (V) transactions with affiliates (with exceptions to allow, among other things, transactions approved by a majority of disinterested directors), (VI) further negative pledges with respect to the Collateral, (VII) asset sales (which shall be permitted subject to (i) a 75% cumulative cash consideration requirement, (ii) a fair market value requirement, and (iii) a requirement that the proceeds of asset sales be applied in accordance with “Mandatory Prepayments” (without limiting the reinvestment rights applicable thereto) and with an exception to allow, amongst other things, the sale or other disposition of a Business Line so long as the Consolidated Total Leverage Ratio, on a pro forma basis (in each case, after giving effect to the use of proceeds from such sale or other disposition), is less than (1) 6.50:1.00 or (2) if greater, the Consolidated Total Leverage Ratio immediately prior to giving effect to such sale or other disposition), (VIII) restricted payments (limited to dividends, distributions, stock repurchases or redemptions, investments and certain optional prepayments of contractually subordinated debt) (with exceptions to allow, among other things, (a) payments of contractually subordinated debt pursuant to “AHYDO Saver” provisions in respect of such debt, (b) an unlimited amount subject to pro forma compliance with a maximum Total Secured Leverage Ratio (as defined in Exhibit C to the Commitment Letter) of, (x) in the case of restricted payments in respect of equity interests, 6.50:1.00, (y) in the case of investments, either (1) 7.00:1.00, (2) the Total Secured Leverage Ratio in effect prior to such investment or (3) after giving effect to such investment, either (A) the Consolidated Coverage Ratio is greater than or equal to 1.75:1.00 or (B) the pro forma Consolidated Coverage Ratio after giving effect to such investment is not less than the Consolidated Coverage Ratio in effect prior to such transactions, and (z) in the case of prepayments of contractually subordinated debt, 6.50:1.00, (c) restricted payments made with Retained Asset Sale Proceeds, (d) restricted payments following a qualified IPO in an amount in any fiscal year of the sum of (x) 7.0% of the aggregate proceeds received by the Borrowers, directly or indirectly, in or from such qualified IPO and (y) 7.0% of the market capitalization,

 

B-31


   (e) Parent Expenses (to be defined in a manner consistent with the definition of such term in the Precedent Facility and in a manner that treats (x) the IPO Vehicle and each of its relevant subsidiaries as if it were a “Parent Entity” and (y) any partnership or other entity through which the Investors, directly or indirectly, hold their equity interests in TopCo as if it were a “Parent Entity”), (g) restricted payments in connection with the Transactions (including payments in connection with the Acquisition), (h) debt incurred under the Facilities to finance the Transactions and payments relating thereto, as applicable, on or after the Closing Date) and (i) a restricted payment of a Business Line or a restricted payment of the proceeds from a permitted sale of a Business Line so long as the Consolidated Total Leverage Ratio, on a pro forma basis (in each case, determined after giving effect to such restricted payment and any related transactions), is less than or equal to (1) 6.50:1.00 or (2) if greater, the Consolidated Total Leverage Ratio immediately prior to giving effect to such restricted payment (any such restricted payment, a “Permitted Business Line Distribution”), (IX) amendments of documents related to contractually subordinated debt and (X) line of business, in the case of each of the foregoing covenants subject to exceptions, qualifications and, as appropriate, baskets no less favorable to the Sponsors, the Company and its subsidiaries than the standard set forth under the heading “Documentation” above.
Financial Covenant:    (A) First Lien Term Loan Facility: None.
   (B) First Lien Revolving Facility: A maximum Total First Lien Leverage Ratio of 9.90:1.00 (provided that for purposes of this leverage ratio and all other leverage ratios hereunder, if additional debt is incurred to fund OID or upfront fees (other than any Upfront Fee payable under, and as defined in, the Fee Letter) then such leverage ratios will be modified upward to reflect any such additional debt) will apply at any time when the aggregate principal amount of loans and the amount of unreimbursed drawn letters of credit outstanding under the First Lien Revolving Facility on the last day of a

 

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   fiscal quarter exceeds 40% of the First Lien Revolving Commitments (any such date, a “Financial Covenant Trigger Date”) (provided, that for the first four fiscal quarters following the Closing Date, any borrowings under the First Lien Revolving Facility that were made on the Closing Date to fund “flex” OID shall be disregarded in calculating such utilization). Such covenant is referred to herein as the “Financial Covenant.”
  

For purposes of determining compliance with the Financial Covenant, any cash equity contribution (which equity shall be common equity or qualified equity) made to the Company after the end of the most recently ended fiscal quarter and on or prior to the day that is 21 business days after the day on which financial statements are required to be delivered for any fiscal quarter will, at the request of the Company, either (A) be applied to reduce outstanding amounts under the First Lien Revolving Facility (including First Lien Revolving Loans, Letters of Credit outstanding and swingline borrowings thereunder) in which case such cash equity contribution shall be deemed to have reduced outstanding amounts for purposes of determining whether a Financial Covenant Trigger Date has occurred and, following any such reduction, if the aggregate principal amount of loans and the amount of unreimbursed drawn letters of credit outstanding under the First Lien Revolving Facility on the last day of such fiscal quarter is less than or equal to 40% of the First Lien Revolving Commitments, a Financial Covenant Trigger Date shall be deemed not to have occurred or (B) be included in the calculation of EBITDA for the purpose of determining compliance with the Financial Covenant at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of EBITDA, a “Specified Equity Contribution”); provided that (a) there shall be no more than two Specified Equity Contributions made in each four consecutive fiscal quarter period, (b) the amount of any Specified Equity Contribution shall be no more than (x) the amount required to cause the Company to be in

 

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   pro forma compliance with the Financial Covenant specified above or (y) if applied to reduce outstanding amounts under the First Lien Revolving Facility as contemplated in subclause (A) above, the amount required in order for a Financial Covenant Trigger Date not to have occurred, (c) no more than five Specified Equity Contributions shall be made during the term of the First Lien Revolving Facility (increasing to six if the First Lien Revolving Facility Maturity Date is extended), (d) all Specified Equity Contributions shall be disregarded for purposes of calculating EBITDA in any financial ratio determination under the First Lien Facilities Documentation, other than for determining compliance with the Financial Covenant (and will not be credited as an addition to the applicable restricted payments build-up provisions) and (e) if a Specified Equity Contribution is included in the calculation of EBITDA as contemplated in subclause (B) above there shall be no pro forma or other reduction in indebtedness (including as a result of netting) (except for each fiscal quarter other than the fiscal quarter in respect of which such Specified Equity Contribution is made) with the proceeds of any Specified Equity Contribution for determining compliance with the Financial Covenant for the periods in which such Specified Equity Contribution is included in EBITDA.
Events of Default:   

Applicable to the Company and its restricted subsidiaries and limited to the following: nonpayment of principal, interest or other amounts (provided that the First Lien Facilities Documentation shall include an exception for nonpayments of any of principal, interest or other amounts resulting from the Company’s good faith payment of an invoice received from the First Lien Administrative Agent); violation of covenants (including a 180-day grace period for failure to deliver financial statements and related compliance certificates) (provided that any breach of the Financial Covenant applicable to the First Lien Revolving Facility shall not constitute a default with respect to the First Lien Term Loan Facility unless (A) the First Lien Revolving Loans have been accelerated or the First Lien Revolving Commitments have been terminated by the First Lien Revolving

 

B-34


  

Lenders and such acceleration or termination has not been rescinded or (B) such default results in a cross default to other material indebtedness, such indebtedness is accelerated and such acceleration would otherwise cause a default with respect to the First Lien Term Loan Facility); incorrectness of representations and warranties in any material respect (subject to a 30-day grace period in the case of misrepresentations that are capable of being cured) (provided that in the case of any event of default resulting from a failure of any representation or warranty with respect to the Financial Covenant, including with respect to the calculation thereof contained in any compliance certificate, such default shall not constitute a default with respect to the First Lien Term Loan Facility unless the First Lien Revolving Loans have been accelerated or the First Lien Revolving Commitments have been terminated by the First Lien Revolving Lenders and such acceleration or termination has not been rescinded); cross default (other than in the case of any financial maintenance covenant or related representation or warranty) and cross acceleration to material financial indebtedness; bankruptcy and insolvency of any Borrower or any significant subsidiaries of the Company; material monetary judgments; ERISA events; actual or asserted invalidity of material guarantees or security documents; impairment of security interests in any significant portion of the Collateral; and change of control, in the case of each of the foregoing defaults subject to threshold, notice and grace period provisions consistent with the standard set forth under the heading “Documentation” above.

 

Notwithstanding the foregoing, the First Lien Facilities Documentation shall provide that (x) a notice of default may not be given with respect to any action taken, and reported publicly pursuant to a press release, a filing with the SEC or a posting to applicable IntraLinks, SyndTrak Online, Debtdomain or similar electronic site for the Facilities or otherwise reported to Lenders, more than two years prior to such notice of default and (y) any time period in the First Lien Facilities Documentation to cure any actual or alleged default or event of default may be extended or stayed by a court of competent jurisdiction to the extent such actual or alleged default or event of default is the subject of litigation.

 

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Voting:   

Amendments and waivers of the First Lien Facilities Documentation (including amendments to the pro rata sharing provisions) will require the approval of First Lien Lenders holding more than 50% of the aggregate amount (without duplication) of the loans and commitments under the First Lien Facilities (the “Required Lenders”), except that (i) the consent of all First Lien Lenders directly and adversely affected thereby shall be required with respect to: (A) increases in the commitment of such First Lien Lender, (B) reductions of principal, interest or fees, (C) extensions or postponement of final maturity or any scheduled amortization, (D) releases of all or substantially all the value of the Guarantees or releases of liens on all or substantially all of the Collateral and (E) modifications to any of the voting percentages (provided that any such amendment or waiver which requires the consent of all First Lien Lenders directly and adversely affected thereby shall, to the extent any First Lien Revolving Lender that is a Committed Lender would be directly and adversely affected thereby in its capacity as a First Lien Revolving Lender, require the consent of such First Lien Revolving Lender), (ii) without limiting the preceding clause (i), any proposed amendment or waiver that only affects one or more (but not all) class(es), tranche(s) or facility(ies) under the First Lien Facilities will only require the consent of First Lien Lenders holding more than 50% of the loans and commitments of such affected class(es), tranche(s) or facility(ies) and (iii) customary protections for the First Lien Administrative Agent, the Swingline Lender and the Issuing Lenders will be provided; provided that, for the avoidance of doubt, amendments, waivers and consents in respect of (1) the Financial Covenant and Specified Equity Contribution, (2) conditions to extensions of credit under the First Lien Revolving Facility, (3) representations made or deemed made in connection with any extension of credit under the First Lien Revolving Facility, (4) additional or modified representations, warranties, covenants or other terms or conditions solely

 

 

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   for the benefit of the First Lien Revolving Facility and (5) events of default relating solely to the First Lien Revolving Facility (including events of default relating to the foregoing clauses (1), (2), (3) and (4)) shall in each case only require the consent of First Lien Revolving Lenders holding more than 50% of the loans and commitments under the First Lien Revolving Facility and not the consent of any other First Lien Lender.
   The First Lien Facilities Documentation shall contain provisions permitting the Borrowers to replace or, if no payment or bankruptcy event of default has occurred and is continuing, prepay the First Lien Loans and terminate the commitments of (x) Defaulting Lenders, (y) any non-consenting First Lien Lender in connection with amendments and waivers requiring the consent of all First Lien Lenders directly and adversely affected thereby, so long as First Lien Lenders holding more than 50% of the aggregate amount of the loans and commitments under the First Lien Facilities or more than 50% of the aggregate amount of the loans directly and adversely affected thereby shall have consented thereto or (z) every non-consenting First Lien Lender in connection with amendments and waivers requiring the consent of all First Lien Lenders or of all First Lien Lenders directly and adversely affected thereby, if First Lien Lenders holding more than 50% of the aggregate amount of the loans and commitments under the First Lien Facilities or more than 50% of the aggregate amount of the loans directly and adversely affected thereby have not consented thereto.
   The First Lien Facilities Documentation will include “amend and extend” provisions consistent with the Precedent Facility.
   The First Lien Facilities Documentation will include provisions with respect to “net short lenders” consistent with the Precedent Facility.
Cost and Yield Protection:    Usual for facilities and transactions of this type and consistent with the standard set forth under the heading “Documentation” above and to include increased cost protection as a result of the Dodd Frank Act, Basel III or

 

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   any successor authority; provided that such increased cost provisions will only be available to First Lien Lenders applying such provisions in a manner consistent with their treatment of similarly situated borrowers.

Assignments and

Participations:

   The First Lien Lenders will be permitted to assign (a) First Lien Term Loans with the consent of the Company (not to be unreasonably withheld) and (b) First Lien Revolving Loans and First Lien Revolving Commitments with the consent of the Company, the Swingline Lender and the Issuing Lenders (in each case for an assignment to a commercial bank with a consolidated combined capital and surplus of at least $5.0 billion (a “Commercial Bank”), not to be unreasonably withheld); provided that no consent of the Company shall be required (x) after the occurrence and during the continuance of a payment or bankruptcy event of default (with respect to a Borrower) or (y) for assignments of First Lien Term Loans to any existing First Lien Lender or an affiliate of an existing First Lien Lender or an Approved Fund (to be defined consistent with “Documentation” above, an “Approved Fund”). All assignments will require the consent of the First Lien Administrative Agent (not to be unreasonably withheld), unless such assignment is an assignment of First Lien Term Loans to another First Lien Lender, an affiliate of a First Lien Lender or an Approved Fund. Assignments to any Disqualified Institution (except to the extent the Company has consented to such assignment in writing) and natural persons shall be prohibited. Each assignment will be in an amount of $1.0 million or an integral multiple thereof with respect to the First Lien Term Loan Facility, $5.0 million or an integral multiple thereof with respect to the First Lien Revolving Facility or, in each case, if less, all of such Lender’s remaining loans and commitments of the applicable class, in each case unless the Company and the First Lien Administrative Agent otherwise consent, provided that all such amounts shall be aggregated in respect of each First Lien Lender and its affiliates or Approved Funds, if any. The First Lien Administrative Agent shall receive a processing and recordation fee of $3,500 for each assignment (unless waived by the First Lien Administrative Agent).

 

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  Notwithstanding the foregoing, with respect to assignments of any First Lien Revolving Loans or First Lien Revolving Commitments, the consent of the Sponsors (in each case for an assignment to a Commercial Bank, not to be unreasonably withheld) shall be required (so long as the Sponsors and their respective affiliates collectively hold at least 35.0% of the voting power of the voting stock of the Borrowers, determined as of the date the assignment and assumption agreement with respect to such assignment is delivered to the First Lien Administrative Agent or, if a “trade date” is specified in the assignment and assumption agreement, as of the trade date); provided that no consent of the Sponsors shall be required after the occurrence and during the continuance of a payment or bankruptcy event of default (with respect to a Borrower); provided further that each consent of the Sponsors shall include an acknowledgment that that Sponsors and their respective affiliates collectively hold at least 35.0% of the voting power of the voting stock of the Borrowers. The Sponsors shall be an express third party beneficiary of the provisions in this paragraph.
  The First Lien Lenders will be permitted to sell participations in First Lien Term Loans without restriction, other than as set forth in this paragraph, and in accordance with applicable law. The First Lien Lenders shall be permitted to sell participations in First Lien Revolving Loans or First Lien Revolving Commitments in a manner consistent with the standard set forth under “Documentation” above. Voting rights of participants shall be limited to matters in respect of (a) increases in commitments participated to such participants, (b) reductions of principal, interest or fees, (c) extensions of final maturity or any scheduled amortization and (d) releases of all or substantially all of the value of the Guarantees or all or substantially all of the Collateral, and participants may not direct a First Lien Lender to vote or abstain from voting other than with respect to the foregoing matters. Participations to any Disqualified Institution and natural persons shall be prohibited.

 

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   Notwithstanding the foregoing, in no event shall the First Lien Administrative Agent be obligated to ascertain, monitor or inquire as to whether any person is a Disqualified Institution or have any liability with respect to or arising out of any assignment or participation of First Lien Loans by the First Lien Lenders or disclosure of confidential information by the First Lien Lenders, in each case, to any Disqualified Institution, except to the extent determined by a court of competent jurisdiction in a final and non-appealable decision to have resulted from the gross negligence, bad faith or willful misconduct of the First Lien Administrative Agent (it being understood this exception shall not apply if the Company and, if applicable, the Sponsors shall have knowingly consented in writing to an applicable assignment to such Disqualified Institution).

Successor Administrative

Agent:

   The First Lien Administrative Agent and the collateral agent may each resign or, if it or a controlling affiliate thereof becomes a Defaulting Lender, be removed by the Company or the Required Lenders, in each case upon 10 days’ notice by the applicable parties and in each case subject to the appointment of a successor administrative agent. Such successor shall be approved by the Company, which approval shall not be unreasonably withheld if such successor is a Commercial Bank, and otherwise may be withheld in the Company’s sole discretion; provided that such approval shall not be required during the continuance of a payment or bankruptcy event of default. The Borrowers shall have no obligation to pay any fee to any successor that is greater than or in addition to the fees payable to the First Lien Administrative Agent or collateral agent on the Closing Date.

Expenses and

Indemnification:

   As set forth in the Precedent Facility.
Governing Law and Forum:    New York (except security documentation that the First Lien Lead Arrangers reasonably determine should be governed by local law) and Borough of Manhattan.

 

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Counsel to the First Lien Administrative Agent:    White & Case LLP.
Miscellaneous:    The First Lien Term Sheet (together with the documentation principles set forth in the “Documentation” paragraph therein) reflects all material terms related to the First Lien Facilities. Each party acknowledges that (a) such terms are the result of extensive negotiations among the parties hereto and are an integral and necessary part of the Transactions and (b) the Transactions represent a unique opportunity for the AcquisitionCo, the Borrowers and the Sponsors.

 

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ANNEX I to

EXHIBIT B

 

Interest Rates:    The per annum interest rates under the First Lien Facilities will be as follows:
  

First Lien Revolving Facility

 

At the option of the applicable Borrower, initially, (i) in the case of U.S. dollar denominated loans, Daily Simple SOFR plus 4.50%, Term SOFR plus 4.50% or ABR plus 3.50%, (ii) in the case of Canadian dollar denominated loans, the BA Rate plus 4.50% or the Canadian Prime Rate plus 3.50%, (iii) in the case of Euros denominated loans, Adjusted EURIBOR plus 4.50%, (iv) in the case of Pound Sterling denominated loans, SONIA plus 4.50% and (v) in the case of Swiss Francs denominated loans, SARON plus 4.50%.

   All swingline loans will be ABR loans. From and after the delivery by the Company to the First Lien Administrative Agent of the Company’s financial statements for the first full fiscal quarter of the Company completed after the Closing Date, interest rate spreads under the First Lien Revolving Facility shall be determined by reference to a Total First Lien Leverage Ratio-based pricing grid providing for (i) a step-down of 0.25% (for the margin for each of Daily Simple SOFR, Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 5.00:1.00 and (ii) a further step-down of 0.25% (for the margin for each of Daily Simple SOFR, Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 4.50:1.00. In addition, interest rate spreads under the First Lien Revolving Facility shall be subject to an additional stepdown of 0.25% (for the margin for each of Daily Simple SOFR, Term SOFR, ABR, BA Rate, Canadian Prime Rate, Adjusted EURIBOR, SONIA, TONA and SARON) following a qualified IPO.

 

B-I-1


 

First Lien Term Loan Facility

 

At the option of the applicable Borrower, Term SOFR plus 4.50% or ABR plus 3.50%.

 

From and after the delivery by the Company to the First Lien Administrative Agent of the Company’s financial statements for the first full fiscal quarter of the Company completed after the Closing Date, interest rate spreads under the First Lien Term Loan Facility shall be determined by reference to a Total First Lien Leverage Ratio-based pricing grid providing for (i) a step-down of 0.25% (for the margin for each of Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 5.00:1.00 and (ii) a further step-down of 0.25% (for the margin for each of Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 4.50:1.00 (collectively, the “First Lien Term Loan Pricing Step-downs”). In addition, interest rate spreads under the First Lien Term Loan Facility shall be subject to an additional stepdown of 0.25% (for the margin for each of Term SOFR and ABR) following a qualified IPO (the “First Lien Term Loan IPO Step-down”).

  The applicable Borrower may elect (i) interest periods of 1, 3 or 6 months (or, if available to all relevant Lenders, 12 months or a shorter period) for Term SOFR and Adjusted EURIBOR Rate borrowings or (ii) in the case of Canadian dollar denominated loans, interest periods of 1, 2 or 3 months for BA Rate borrowings.
  Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans based on the Prime Rate, BA Rate loans, Canadian Prime Rate loans, SONIA loans and TONA loans) and interest shall be payable at the end of each interest period and, in any event, at least every 3 months.
  ABR is the highest of (i) the prime commercial lending rate, as published in the Wall Street Journal for such day (which, if less than 0%, shall be deemed to be 0%) (the “Prime Rate”), (ii) the federal funds effective rate from time to time plus 0.50% and (iii) Term SOFR applicable for an interest period of one month plus 1.00%.
  Term SOFR has the meaning given in that certain Cash Flow Credit Agreement, dated as of October 19, 2020 (as amended by the First Amendment, dated as of February 10, 2022), among White Cap Supply Holdings, LLC (as successor by merger to White Cap Buyer, LLC), the

 

B-I-2


 

subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent and collateral agent (the “SOFR Precedent”); provided that neither Term SOFR nor Daily Simple SOFR shall be less than 0.00% per annum.

 

Daily Simple SOFR to be defined consistent with “Daily Simple SOFR Rate” in the SOFR Precedent.

 

Adjusted EURIBOR is the Euro interbank offered rate for Euros, for the relevant interest period, adjusted for statutory reserve requirements; provided, that Adjusted EURIBOR shall not be less than 0.00% per annum.

 

SONIA is the SONIA (sterling overnight index average) simple rate methodology (with lookback); provided, that SONIA shall not be less than 0.00% per annum.

 

Canadian Prime Rate is the higher of (x) the rate of interest that the Administrative Agent (or its Canadian affiliate) announces from time to time as its prime lending rate for loans made in Canadian dollars to Canadian customers and (y) the average annual yield rate for one-month Canadian dollar bankers’ acceptances (expressed as a yearly rate per annum) which is shown on the “CDOR” page referred to below in the definition of BA Rate from time to time, plus 0.75% per annum.

 

BA Rate means, on any day and for any period, an annual rate of interest equal to the average rate applicable to Canadian dollar bankers’ acceptances for the applicable period appearing on the “Reuters Screen CDOR Page” (as defined in the International Swaps and Derivatives Association, Inc. 2000 definitions, as modified and amended from time to time), rounded to the nearest 1/100th of 1% (with .005% being rounded up), at approximately 10:00 a.m., on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; provided, that the BA Rate shall not be less than zero.

 

 

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TONA means, with respect to any business day, a rate per annum equal to the Tokyo Overnight Average Rate for such business day published by the TONA Administrator on the TONA Administrator’s Website; provided, that TONA shall not be less than zero.

 

SARON means, with respect to any business day, a rate per annum equal to the SARON (Swiss Average Rate Overnight) reference rate administered by SIX (or any other person which takes over the administration of that rate) as at the close of trading on the SIX Swiss Exchange on the relevant business day displayed on page SARON.S of the Thomson Reuters screen under the heading CLSFIX; provided, that SARON shall not be less than zero.

 

Notwithstanding anything contained herein to the contrary, the First Lien Facilities Documentation shall include benchmark replacement provisions consistent with the SOFR Precedent.

Letter of Credit Fees:    A per annum fee equal to the spread over, at the option of the applicable Borrower, Daily Simple SOFR or Term SOFR under the First Lien Revolving Facility will accrue for the account of non-Defaulting Lenders on the aggregate face amount of outstanding Letters of Credit, payable in arrears at the end of each quarter and upon the termination of the First Lien Revolving Facility, in each case for the actual number of days elapsed over a 360-day year. Such fees shall be distributed to the non-Defaulting Lenders participating in the First Lien Revolving Facility pro rata in accordance with the amount of each such Lender’s First Lien Revolving Commitment. In addition, the Borrowers shall pay to the relevant Issuing Lender, for its own account, (a) a fronting fee equal to 0.125% of the aggregate face amount of outstanding Letters of Credit or such other amount as may be agreed by the Borrowers and such Issuing Lender, payable in arrears at the end of each quarter and upon the termination of the First Lien Revolving Facility, calculated based upon the actual number of days elapsed over a 360 day year, and (b) normal and customary issuance and administration costs and expenses.

 

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Commitment Fees:    Initially, 0.50% per annum on the undrawn portion of the commitments in respect of the First Lien Revolving Facility, payable to non-Defaulting Lenders quarterly in arrears after the Closing Date and upon the termination of the commitments, calculated based on the number of days elapsed in a 360-day year.
   From and after the delivery by the Company to the First Lien Administrative Agent of the Company’s financial statements for the first full fiscal quarter of the Company completed after the Closing Date, commitment fees under the First Lien Revolving Facility shall be determined by reference to a Total First Lien Leverage Ratio-based pricing grid providing for (i) a step-down to 0.375% (for the margin for each of Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 5.00:1.00 and (ii) a further step-down to 0.25% (for the margin for each of Term SOFR and ABR) based upon achievement of a Total First Lien Leverage Ratio of 4.50:1.00.

 

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CONFIDENTIAL    EXHIBIT C

Project Corgi

Second Lien Facility

Summary of Principal Terms and Conditions

All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this term sheet is attached, including the other Exhibits thereto.

 

Borrowers:    The Borrowers under the First Lien Facilities (the “Borrowers”). The Company may, in its sole discretion, designate one or more of its direct or indirect wholly-owned U.S. subsidiaries as co-borrowers, on a joint and several basis; provided that any such designation will be subject to delivery of all necessary “know your customer” documentation and information in a manner consistent with the Precedent Facility.
Transactions:    As set forth in Exhibit A to the Commitment Letter.
Agents:    UBS AG will act as sole and exclusive administrative agent and collateral agent (in such capacity, the “Second Lien Administrative Agent”) in respect of the Second Lien Facility for a syndicate of financial institutions reasonably acceptable to the Company (together with the Committed Lenders, the “Second Lien Lenders”), and will perform the duties customarily associated with such roles.
Second Lien Lead Arrangers:    UBS Securities, DBSI, BMOCM and Mizuho will act as joint lead arrangers and joint bookrunners for the First Lien Facilities (in such capacity, the “Second Lien Lead Arrangers”), and will perform the duties customarily associated with such roles.
Second Lien Facility:    A second lien secured term loan facility in an aggregate principal amount of up to $425.0 million (plus, at AcquisitionCo’s option pursuant to the terms of the Fee Letter, the amount of any Second Lien Flex Increase) (the “Second Lien Facility”; the loans thereunder, the “Second Lien Loans”).

 

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Incremental Second Lien Facility:    The Second Lien Facility will permit the Borrowers to add additional term loans under the Second Lien Facility or one or more incremental term loan facilities, which, for the avoidance of doubt, may take the form of delayed draw term loans, to be included in the Second Lien Facility (each, an “Incremental Second Lien Facility”; the loans thereunder, the “Incremental Second Lien Loans”) in an aggregate principal amount for all such increases and incremental facilities not to exceed the sum of (a) an unlimited amount if, after giving effect to the incurrence of such amount, either (x) the Total Secured Leverage Ratio (as defined below) is equal to or less than 7.00:1.00 (and assuming all such amounts (including amounts incurred as described in the final paragraph under the heading “Incremental Second Lien Facility”) were secured on a second lien secured basis, whether or not so secured, but excluding amounts incurred in accordance with the following clause (b)) or (y) the pro forma Total Secured Leverage Ratio does not exceed the Total Secured Leverage Ratio in effect prior to such transactions (and assuming all such amounts (including amounts incurred as described in the final paragraph under the heading “Incremental Second Lien Facility”) were secured on a second lien secured basis, whether or not so secured, but excluding amounts incurred in accordance with the following clause (b)) (the amount available under this clause (a), the “Second Lien Ratio Incremental Facility”) and (b) the sum of (i) the greater of (x) $70.0 million and (y) an amount equal to 25% of pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available and (ii) an amount equal to the available capacity under the basket set forth in Subsection 8.1(b)(xiii) of the Precedent Facility (as defined in Exhibit B to the Commitment Letter) (the amount available under this clause (b), the “Second Lien Cash Capped Incremental Facility”); provided that (x) at the Company’s option, capacity under the Second Lien Ratio Incremental Facility shall be deemed to be used before capacity under the Second Lien Cash Capped Incremental Facility and (y) loans may be incurred under the Second Lien Ratio Incremental Facility, the Second Lien Cash Capped Incremental Facility, the First Lien Revolving Facility, any other revolving credit facility and/or any other applicable basket that is not based on a

 

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   Total Secured Leverage Ratio incurrence test, and proceeds from any such incurrence may be utilized in a single transaction or series of related transactions by first calculating the amount available to be incurred under the Second Lien Ratio Incremental Facility by disregarding any concurrent utilization of the Second Lien Cash Capped Incremental Facility, the First Lien Revolving Facility, any other revolving credit facility and/or any other applicable basket that is not based on a Total Secured Leverage Ratio incurrence test (provided that any portion of any Incremental Second Lien Facility incurred under the Second Lien Cash Capped Incremental Facility may be reclassified, as the Company may elect from time to time, as having been incurred under the Second Lien Ratio Incremental Facility if the Company meets the ratio under the Second Lien Ratio Incremental Facility at such time on a pro forma basis); provided further that (i) no existing Second Lien Lender will be required to participate in any such Incremental Second Lien Facility, (ii) no payment or bankruptcy event of default exists, or would exist after giving effect thereto, (iii) the final maturity date and the weighted average life to maturity of any such Incremental Second Lien Facility shall not be earlier than, or shorter than, as the case may be, the maturity date or the weighted average life to maturity, as applicable, of the Second Lien Facility (subject to exceptions for customary bridge financings and escrow or similar arrangements); provided, that (1) up to the greater of (x) $280.0 million and (y) an amount equal to 100% of pro forma EBITDA for the four most recently ended fiscal quarters for which financial statements of the Company are available in the aggregate and (2) any indebtedness incurred in connection with an acquisition or other investment permitted under the Second Lien Facility Documentation (as defined under the heading “Documentation” below) in either case of Incremental Second Lien Loans, Specified Refinancing Term Loans (as defined in the Precedent Facility, “Refinancing Second Lien Facilities”), Second Lien Incremental Equivalent Debt (as defined below) and Permitted Debt Exchange Notes (as defined in the Precedent Facility) may have a maturity date and weighted average life to

 

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maturity that is earlier than, or shorter than, as the case may be, the maturity date or the weighted average life to maturity, as applicable, of the Second Lien Facility (such indebtedness, “Second Lien Earlier Maturity Debt”), (iv) the interest rates applicable to any Incremental Second Lien Facility, and (subject to clause (iii) above) the amortization schedule applicable to any Incremental Second Lien Facility shall be determined by the Company and the lenders thereunder; and (v) any Incremental Second Lien Facility shall be on terms and pursuant to documentation reasonably satisfactory to the Company.

 

The Second Lien Facility Documentation will include “limited condition transactions” provisions substantially similar to (and, in any event, no less favorable to the Sponsor, the Company and its subsidiaries than) those provisions for “limited condition transactions” contained in the First Lien Facilities Documentation (as defined in Exhibit B to the Commitment Letter).

 

As used herein, the “Total Secured Leverage Ratio” means the ratio of total secured net debt for borrowed money that is secured by liens on the Collateral (as defined in Exhibit B to the Commitment Letter) (calculated (x) net of (1) unrestricted cash and cash equivalents (it being understood that unrestricted cash and cash equivalents shall be measured as of the most recent fiscal month of the Company for which consolidated financial statements are available) other than the proceeds of any indebtedness that are not intended to be used for working capital purposes (other than to the extent such proceeds are intended to be promptly applied), if applicable, borrowed at the time of determination and (2) cash and cash equivalents which cash collateralize letters of credit issued on behalf of the Company or any of its restricted subsidiaries, including the cash proceeds of any indebtedness being incurred at the time of determination and (y) excluding (i) any debt secured by a junior lien on the Collateral or that is contractually subordinated in right of payment to the Second Lien Loans, (ii) any outstanding First Lien

 

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  Revolving Loans and other revolving loans used to finance the working capital needs of the Company and its subsidiaries (as determined by the Company in good faith), (iii) any unreimbursed outstanding drawn amounts under funded letters of credit (provided that such amounts shall not be counted as debt until five business days after such amounts were drawn), (iv) obligations under or in respect of any Special Purpose Financing (as defined in the Precedent Facility), (v) indebtedness or other obligations arising from any cash management or related services and (vi) financing leases and any other lease obligations (the foregoing clauses (x) and (y), collectively, the “Debt Adjustments”) to trailing four-quarter EBITDA (to be defined as set forth under the heading “Documentation” below and in any event shall include, without duplication, (x) adjustments (which, for the avoidance of doubt, will not be subject to any caps) for pro forma “run rate” cost savings, operating expense reductions, revenue or operating enhancements and synergies (including revenue synergies, including those related to new business and customer wins, the modification or renegotiation of contracts and other arrangements and pricing adjustments and increases) relating to the Transactions or operational changes or other initiatives that are projected by the Company in good faith to result from actions that have been taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Company) within 36 months after the Closing Date or the consummation of any such operational change or other initiatives, respectively, net of the amount of the actual benefits realized during such period from such actions, (y) additions of the type reflected in any of (i) the Sponsors’ financial model, dated as of May 9, 2022, (ii) the Quality of Earnings report of PricewaterhouseCoopers LLP, dated as of May 6, 2022, (iii) the Confidential Information Memorandum and (iv) any other quality of earnings analysis prepared by independent certified public accountants of nationally recognized standing or any other accounting firm reasonably acceptable to the Second Lien Administrative Agent (it being understood that any “Big Four” accounting firms are acceptable) and delivered to the

 

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Second Lien Administrative Agent in connection with an acquisition or other investment permitted under the Second Lien Facility Documentation, and (z) solely with respect to the Company’s technology business, (i) the amortization of Capitalized Software Expenditures (to be defined in a manner consistent with the EP Credit Agreement) and (ii) an addback for internal software development costs that are expensed during the period but which could have been capitalized in accordance with GAAP, “EBITDA”).

 

The Second Lien Facility will permit the Borrowers to utilize availability under the Incremental Second Lien Facility amount to issue second or junior lien secured notes or loans (subject to (A) the Intercreditor Agreements (as defined under the heading “Security” below) and/or (B) other intercreditor terms to be agreed (such terms referred to in clauses (A) and (B), the “Intercreditor Terms”)) or unsecured notes or loans, with the amount of such secured or unsecured notes or loans incurred and outstanding pursuant to the Second Lien Cash Capped Incremental Facility reducing the aggregate principal amount available for the Incremental Second Lien Facilities pursuant to the Second Lien Cash Capped Incremental Facility (“Second Lien Incremental Equivalent Debt”); provided that, such secured or unsecured notes or loans (i) do not mature prior to the maturity date of, or have a shorter weighted average life to maturity than, loans under the Second Lien Facility (subject to exceptions for Second Lien Earlier Maturity Debt, customary bridge financings and escrow or similar arrangements), (ii) shall not (subject to exceptions for escrow or similar arrangements consistent with those in the Precedent Facility) be secured by any lien on any asset of any Borrower or any Guarantor (as defined under the heading “Guarantees” below) that does not also secure the Second Lien Facility, or be guaranteed by any person other than the Guarantors and (iii) in the case of any such secured notes or loans, shall be subject to an intercreditor agreement consistent with the Intercreditor Terms above.

 

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Second Lien Refinancing Facility:    The Second Lien Facility Documentation will include “refinancing facilities” provisions substantially similar to (and, in any event, no less favorable to the Sponsor, the Company and its subsidiaries than) those provisions for “refinancing facilities” contained in the First Lien Facilities Documentation.
Purpose:    The proceeds of borrowings under the Second Lien Facility will be used by the Borrowers, on or after the Closing Date, together with the proceeds of borrowings of under the First Lien Facilities and the proceeds of the Equity Contribution, solely to finance Transaction Costs.
Availability:    The Second Lien Facility will be available in a single drawing on the Closing Date. Amounts borrowed under the Second Lien Facility that are repaid or prepaid may not be reborrowed.
Interest Rates and Fees:    As set forth in Annex I to this Term Sheet.
Default Rate:    With respect to overdue principal, the applicable interest rate plus 2.00% per annum, with respect to overdue interest, the applicable interest rate for the principal of the related loan plus 2.00% per annum, and with respect to any other overdue amount, the interest rate applicable to ABR loans (as defined in Annex I to this Term Sheet) plus 2.00% per annum.
Final Maturity and
Amortization:
   The Second Lien Facility will mature on the date that is eight years after the Closing Date (the “Second Lien Maturity Date”), with no amortization and all amounts outstanding thereunder payable on the Second Lien Maturity Date; provided that the Second Lien Facility Documentation shall provide the right of individual Second Lien Lenders to agree to extend the maturity of their Second Lien Loans upon the request of the Company and without the consent of any other Second Lien Lender (as further described under the heading “Voting” below).
Guarantees:    All obligations of the Borrowers under the Second Lien Facility (the “Second Lien Borrower Obligations”) will be guaranteed by the same guarantors that guarantee the First Lien Facilities (such guarantors, the “Guarantors”; and together with the Borrowers, the “Loan Parties”; and

 

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   each a “Loan Party”; and such guarantees, the “Guarantees”). Each guarantee in respect of the Second Lien Facility will be automatically released upon the release of the corresponding Guarantee of the First Lien Facilities. It is understood that any subsidiary of the Company that is excluded from the guarantee requirements under the First Lien Facilities Documentation shall not be a Guarantor.
Unrestricted Subsidiaries:    Subject to the restricted payments covenant in the Second Lien Facility Documentation, the Company may designate any subsidiary as an “unrestricted subsidiary” and subsequently redesignate any such unrestricted subsidiary as a restricted subsidiary. Unrestricted subsidiaries will not be subject to the representations and warranties, covenants, events of default or other provisions of the Second Lien Facility Documentation, and the results of operations and indebtedness of unrestricted subsidiaries will not be taken into account for purposes of calculating any financial metric contained in the Second Lien Facility Documentation except to the extent of distributions received therefrom.
Security:    Subject to the limitations set forth below in this section, and, on the Closing Date, to the Funding Conditions Provision, the Second Lien Borrower Obligations and the Guarantees will be secured by a security interest in the Collateral, which security interest in the Collateral will be second in priority (as among the First Lien Facilities and the Second Lien Facility), and subject to liens permitted to exist under the Second Lien Facility Documentation, it being understood that the Collateral shall not include Excluded Assets (as defined in Exhibit B to the Commitment Letter), including those assets as to which the First Lien Administrative Agent (as defined in Exhibit B to the Commitment Letter) and the Company reasonably determine that the costs of obtaining such security interests in such assets or perfection thereof are excessive in relation to the benefit to the First Lien Lenders of the security to be afforded thereby.

 

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For the avoidance of doubt, Collateral owned by any Borrower shall secure such Borrower’s obligations, and Collateral owned by any Guarantor shall secure such Guarantor’s obligations.

 

The priority of security interests and relative rights of the lenders under the First Lien Facilities and the Second Lien Lenders under the Second Lien Facility shall be subject to intercreditor arrangements to be set forth in an intercreditor agreement substantially in the form of an exhibit to the definitive credit agreement for the Second Lien Facility (the “Intercreditor Agreement”). The terms of the Intercreditor Agreement will be consistent with, substantially similar to and no less favorable to the Sponsor, the Company and its subsidiaries than the form of the intercreditor agreement attached as Exhibit J-1 to the Precedent Facility. Without limiting the foregoing, the Second Lien Facility Documentation and the Intercreditor Agreement will allow additional debt that is permitted under the Second Lien Facility Documentation to be incurred and secured, and to share ratably in the collateral securing the Second Lien Facility on (at the Company’s option) a first priority, second priority or junior priority basis with respect to the Collateral.

 

The second lien pledges, security interests and mortgages shall be created and perfected on terms, and pursuant to documentation, consistent with and substantially similar to (and in any event no less favorable to the Sponsors, the Company and its subsidiaries than) the First Lien Collateral Documentation (as defined in Exhibit B to the Commitment Letter).

 

For the avoidance of doubt, (i) no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required in order to create any security interests in assets located or titled outside of the U.S. or to perfect any security interests therein (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction) and (ii) to the extent not automatically perfected by UCC filings in the jurisdiction of incorporation or organization, no Loan Party shall be required to take any actions in order to perfect any security interests granted with respect to any assets

 

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   specifically requiring perfection through control (including cash, cash equivalents, deposit accounts, securities accounts or other bank accounts, but excluding the assets described in clause (a) of the first paragraph under the heading “Security” in Exhibit B to the Commitment Letter and material intercompany notes; provided that the assets described in such clause (a) may be perfected by being held by the First Lien Administrative Agent, the Second Lien Administrative Agent or in accordance with the Intercreditor Agreement).
Mandatory Prepayments:    Subject to the next succeeding paragraph, the Second Lien Loans shall be prepaid with (a) 100% of the net cash proceeds received from the incurrence of indebtedness by the Company or any of its restricted subsidiaries (other than the incurrence of indebtedness permitted under the Second Lien Facility, but including the proceeds of Refinancing Second Lien Facilities); and (b) 100% (with reductions to 50% and 0% based upon achievement of a Total Secured Leverage Ratio of 6.75:1.00 and 6.50:1.00, respectively, which shall be calculated (x) on a pro forma basis and (y) at the Company’s option, at the time of such asset sale or other disposition, at the time of entry into a definitive agreement with respect thereto or at the time of application of the net cash proceeds therefrom (and any prospective prepayment may, at the Company’s option, be tested at any time during the applicable reinvestment period)) of the net cash proceeds of all non-ordinary course asset sales or other dispositions of Collateral by the Company or any of its restricted subsidiaries (including insurance and condemnation proceeds) in excess of an amount to be agreed and subject to the right of the Company and its restricted subsidiaries to reinvest such proceeds if such proceeds are reinvested (or committed to be reinvested) within 24 months and, if so committed to reinvestment, reinvested within 6 months thereafter (provided that the Company may elect to deem expenditures that otherwise would be permissible reinvestments that occur prior to receipt of the proceeds of an asset sale or other disposition to have been reinvested in accordance with the provisions hereof;

 

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   provided, further, that such deemed expenditure shall have been made no earlier than the earliest of notice, execution of a definitive agreement for such asset sale or disposition and consummation of such asset sale or disposition) (the “Asset Sale Proceeds Amount”); and other exceptions no less favorable to the Sponsors, the Company and its subsidiaries than the standard set forth under the heading “Documentation” below; provided that the portion of such Asset Sale Proceeds Amount required by any Second Lien Pari Passu Debt to be applied or offered to prepay such Second Lien Pari Passu Debt on a pro rata basis with the Second Lien Loans (and so long as the Second Lien Loans are offered no less than a ratable share of such Asset Sale Proceeds Amount) shall be credited against asset sale proceeds prepayment obligations on a dollar-for-dollar basis; provided, further, that no prepayment shall be required with respect to the proceeds of a disposition (or insurance or condemnation event) of all or substantially all of a product line or line of business so long as the Consolidated Total Leverage Ratio, on a pro forma basis (in each case, determined after giving effect to such prepayment), is less than or equal to (A) 6.50:1.00 or (B) if greater, the Consolidated Total Leverage Ratio immediately prior to giving effect to such disposition (such retained proceeds (and any other portion of net cash proceeds not required to be utilized to mandatorily prepay First Lien Term Loans (or required to be reinvested and exempt prepayment in connection with the disposition of all or substantially all of a product line or line of business (the “Business Line Sale Exception”). In the event that one or more of the step-downs in clause (b) of the preceding sentence are achieved, the retained net cash proceeds from any such asset sale or disposition shall be deemed to be “Retained Asset Sale Proceeds”. Notwithstanding the foregoing, mandatory prepayments made pursuant to clause (b) above shall be limited to the extent that the Company determines in good faith that such prepayments would either (i) result in material adverse tax consequences to TopCo or one of its subsidiaries related to the repatriation of funds in connection therewith by foreign subsidiaries or (ii) (1) be prohibited or delayed by or violate or conflict with applicable law, (2) be restricted

 

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by applicable organizational documents or any agreement, (3) be subject to other organizational or administrative impediments or (4) conflict with the fiduciary duties of the applicable directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any applicable officer, director or manager, in each case, from being repatriated.

 

No mandatory prepayments of Second Lien Loans shall be required until amounts outstanding under the First Lien Term Loan Facility, any First Lien Pari Passu Debt and any other first lien secured notes, loans or other indebtedness (any such indebtedness, “First Lien Debt”) have been paid in full (and the amount of any such prepayment shall be reduced by any portion thereof that was first applied to repay, prepay, repurchase or retire First Lien Debt).

  Within the Second Lien Facility, mandatory prepayments shall be applied first, to accrued interest and fees due on the amount of the prepayment under the Second Lien Facility and second, to the remaining outstanding principal amount under the Second Lien Facility.
  At the Company’s option it may allow Second Lien Lenders to elect not to accept any mandatory prepayment made pursuant to clause (b) (each, a “Declining Lender”). Any prepayment amount declined by a Declining Lender or a holder of Second Lien Pari Passu Debt, as applicable, may be retained by the Borrowers and will increase the amount available to make restricted payments.
Voluntary Prepayments:   Voluntary prepayments of borrowings under the Second Lien Facility will be permitted at any time, in minimum principal amounts to be agreed upon, without premium (except as set forth below) or penalty, subject to reimbursement of the Second Lien Lenders’ redeployment costs actually incurred in the case of a prepayment of Term SOFR borrowings other than on the last day of the relevant interest period.

 

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Any Second Lien Lender may, at its option, and if agreed by the Company, in connection with any prepayment of loans under the Second Lien Facility, exchange such Second Lien Lender’s portion of such loans to be prepaid for new indebtedness of the Borrowers, in lieu of all or part of such Second Lien Lender’s pro rata portion of such prepayment (and any such loans so exchanged shall be deemed repaid for all purposes), so long as (other than in connection with a refinancing in full of the Second Lien Facility) such indebtedness would not have a weighted average life to maturity earlier than the weighted average life to maturity of the Second Lien Loans being repaid.

 

All voluntary prepayments, all repricing transactions (to be defined in a manner consistent with “Repricing Transaction” (as defined in the Fee Letter)) in respect of the Second Lien Facility and all prepayments made with proceeds of Refinancing Second Lien Facilities or indebtedness not permitted under the Second Lien Facility and all payments of assignments in respect of replacements of non-consenting Lenders will be subject to the following prepayment premiums: (i) 2.00% of the principal amount prepaid if such prepayment occurs on or prior to the one-year anniversary of the Closing Date, (ii) 1.00% of the principal amount prepaid if such prepayment occurs after the one-year anniversary of the Closing Date, but on or prior to the two-year anniversary of the Closing Date and (iii) none if such prepayment occurs after the two-year anniversary of the Closing Date. There will be no such prepayment premium payable in respect of the Second Lien Facility if such prepayment or payment is made in connection with a qualified IPO, a change of control, a Transformative Acquisition (as defined in the Precedent Facility) or Transformative Disposition (as defined in the Precedent Facility) (such exceptions, the “Second Lien Call Protection Exceptions”).

 

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Documentation:    The definitive documentation for the Second Lien Facility (the “Second Lien Facility Documentation”) will be separate from but substantially similar to (and no less favorable to the Sponsors, the Company and its subsidiaries than) the First Lien Facilities Documentation (including with respect to the EU and UK “bail-in” provisions and customary U.S. Department of Labor lender regulatory representations), and, in each case, will take into account and be modified fully as appropriate to (x) reflect the SOFR provisions in the SOFR Precedent (as defined in Exhibit B to the Commitment Letter) and (y) reflect the terms set forth in the Commitment Letter, the inapplicability of the provisions relating to the revolving credit mechanics of the First Lien Revolving Facility and, if applicable, the flex provisions of the Fee Letter. Notwithstanding the foregoing, the only conditions to the availability of the Second Lien Facility on the Closing Date shall be the applicable conditions set forth in the second sentence of the Funding Conditions Provision and in Exhibit D to the Commitment Letter.

Representations and

Warranties:

   The representations and warranties shall be substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those representations and warranties contained in the First Lien Facilities Documentation.
   The representations and warranties will be required to be made in connection with each extension of credit (including, subject to the Funding Conditions Provision, the extensions of credit on the Closing Date, but excluding extensions of credit under any Incremental Second Lien Facility), it being understood that the failure of any representation or warranty (other than the Specified Representations, subject to the Funding Conditions Provision) to be true and correct on the Closing Date will not constitute the failure of a condition precedent to funding or a default under the Second Lien Facility.

Conditions Precedent to

Initial Extension of Credit:

   The initial extensions of credit under the Second Lien Facility will be subject solely to (a) the applicable conditions set forth in the second sentence of the Funding Conditions Provision and in Exhibit D to the Commitment Letter and (b) the condition that the Specified Representations and, to the extent required by the Funding Conditions Provision, the Company

 

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   Representations shall be true and correct in all material respects on and as of the Closing Date (although any Specified Representation or Company Representation which expressly relates to a given date or period shall be required only to be true and correct in all material respects as of the respective date or for the respective period, as the case may be). To the extent that any representations and warranties made on, or as of, the Closing Date (or a date prior thereto) are qualified by or subject to “material adverse effect”, the definition thereof shall be “Company Material Adverse Effect” as defined in the Acquisition Agreement, for purposes of such representations and warranties.

Affirmative Covenants:

   The affirmative covenants shall be substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those affirmative covenants contained in the First Lien Facilities Documentation.

Negative Covenants:

   The negative covenants shall be substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those negative covenants contained in the First Lien Facilities Documentation (except that the lien covenant will allow, among other things, (i) liens securing debt if, either (x) after giving effect to the incurrence of such amount, (A) in the case of liens having first priority, the Total First Lien Leverage Ratio (as defined in Exhibit B to the Commitment Letter) is equal to or less than 5.50:1.00 (it being understood that, for purposes of this exception, any liens that are senior in priority to the liens on the Collateral securing the Second Lien Loans shall be deemed to be first priority liens) or (B) in the case of liens that are not senior to the liens securing the Second Lien Facility, the Total Secured Leverage Ratio is equal to or less than 7.00:1.00 or (y) the pro forma Total First Lien Leverage Ratio or the pro forma Total Secured Leverage Ratio, as applicable, after giving effect to such incurrence does not exceed the Total First Lien Leverage Ratio or the Total Secured Leverage Ratio, as applicable, in effect prior to such transactions and (ii) liens on Collateral, if such liens rank junior to the liens on such

 

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   Collateral in relation to the liens securing the Second Lien Loans and the Guarantees, as applicable), except that the “baskets” for the negative covenants under the Second Lien Facility Documentation will be sized (1) other than in the case of ratio-based baskets, at least 25% above the levels of such “baskets” under the First Lien Facilities Documentation and (2) in the case of ratio-based baskets, with an additional cushion of 0.25x against the applicable ratio of such ratio-based baskets under the First Lien Facility Documentation.

Financial Covenant:

   None.
Events of Default:    Events of Default shall be substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) the events of default contained in the First Lien Facilities Documentation; provided that the Second Lien Facility Documentation shall (i) include longer grace periods and thresholds that are at least 25% higher than those in the First Lien Facilities Documentation and (ii) provide for cross acceleration, instead of cross default.
Voting:    Amendments and waivers of the Second Lien Facility Documentation (including amendments to the pro rata sharing provisions) will require the approval of Second Lien Lenders holding more than 50% of the aggregate amount (without duplication) of the loans and commitments under the Second Lien Facility (the “Required Lenders”), except that (i) the consent of all Second Lien Lenders directly and adversely affected thereby shall be required with respect to: (A) increases in the commitment of such Second Lien Lender, (B) reductions of principal, interest or fees, (C) extensions or postponement of final maturity or any scheduled amortization, (D) releases of all or substantially all the value of the Guarantees or releases of liens on all or substantially all of the Collateral and (E) modifications to any of the voting percentages, (ii) without limiting the preceding clause (i), any proposed amendment or waiver that only affects one or more (but not all) class(es), tranche(s) or facility(ies) under the Second Lien Facility will only require the consent of

 

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  Second Lien Lenders holding more than 50% of the loans and commitments of such affected class(es), tranche(s) or facility(ies) and (iii) customary protections for the Second Lien Administrative Agent will be provided.
  The Second Lien Facility Documentation shall contain provisions permitting the Borrowers to replace or, if no payment or bankruptcy event of default has occurred and is continuing, prepay the Second Lien Loans and terminate the commitments of (x) Defaulting Lenders, (y) any non-consenting Second Lien Lender in connection with amendments and waivers requiring the consent of all Second Lien Lenders directly and adversely affected thereby, so long as Second Lien Lenders holding more than 50% of the aggregate amount of the loans and commitments under the Second Lien Facility or more than 50% of the aggregate amount of the loans directly and adversely affected thereby shall have consented thereto or (z) every non-consenting Second Lien Lender in connection with amendments and waivers requiring the consent of all Second Lien Lenders or of all Second Lien Lenders directly and adversely affected thereby, if Second Lien Lenders holding more than 50% of the aggregate amount of the loans and commitments under the Second Lien Facility or more than 50% of the aggregate amount of the loans directly and adversely affected thereby have not consented thereto.
  The Second Lien Facility Documentation will include “amend and extend” provisions substantially similar to (and, in any event, no less favorable to the Sponsor, the Company and its subsidiaries than) those “amend and extend” provisions contained in the First Lien Facilities Documentation.
  The Second Lien Facility Documentation will include provisions with respect to “net short lenders” substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those provisions for “net short lenders” contained in the First Lien Facilities Documentation.

 

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Cost and Yield Protection:

   The Second Lien Facility Documentation will include cost and yield protection provisions substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those provisions for cost and yield protection contained in the First Lien Facilities Documentation.

Assignments and Participations:

  

The Second Lien Facility Documentation will contain provisions for assignments of and participations in the Second Lien Loans and commitments substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those provisions for assignments of and participations in the loans and commitments contained in the First Lien Facilities Documentation.

 

The threshold set forth in Subsection 11.6(h)(i)(2) of the Precedent Facility for the amount of Second Lien Loans (including Incremental Second Lien Loans) that may be purchased by Affiliated Lenders (as defined in the Precedent Facility) that are not Affiliated Debt Funds (as defined in the Precedent Facility) shall be increased to 30%.

Successor Administrative Agent:

   The Second Lien Facility Documentation will contain provisions for the resignation or removal of the Second Lien Administrative Agent and the collateral agent substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those provisions for the resignation or removal of the First Lien Administrative Agent in the First Lien Facilities Documentation.

Expenses and Indemnification:

   The Second Lien Facility Documentation will contain provisions for expenses and indemnification substantially similar to (and, in any event, no less favorable to the Sponsors, the Company and its subsidiaries than) those provisions for expenses and indemnification contained in the First Lien Facilities Documentation.

Governing Law and Forum:

   New York (except security documentation that the First Lien Lead Arrangers reasonably determine should be governed by local law and Borough of Manhattan).

 

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Counsel to the Second Lien Administrative Agent:    White & Case LLP.
Miscellaneous:    The Second Lien Term Sheet (together with the documentation principles set forth in the “Documentation” paragraph therein) reflects all material terms related to the Second Lien Facility. Each party acknowledges that (a) such terms are the result of extensive negotiations among the parties hereto and are an integral and necessary part of the Transactions and (b) the Transactions represent a unique opportunity for the AcquisitionCo, the Borrowers and the Sponsors.

 

C-19


ANNEX I to

EXHIBIT C

 

Interest Rates:

   The per annum interest rates under the Second Lien Facility will be as follows:
  

At the option of the applicable Borrower, Term SOFR plus 8.00% or ABR plus 7.00%.

 

Interest rate spreads under the Second Lien Facility shall be subject to an additional stepdown of 0.25% (for the margin for each of Term SOFR and ABR) following a qualified IPO (the “Second Lien Term Loan IPO Step-down”).

   The applicable Borrower may elect interest periods of 1, 3 or 6 months (or, if available to all relevant Lenders, 12 months or a shorter period) for Term SOFR borrowings.
   Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans based on the Prime Rate) and interest shall be payable at the end of each interest period and, in any event, at least every 3 months.
   ABR is the highest of (i) the prime commercial lending rate, as published in the Wall Street Journal for such day (which, if less than 0%, shall be deemed to be 0%) (the “Prime Rate”), (ii) the federal funds effective rate from time to time plus 0.50% and (iii) Term SOFR applicable for an interest period of one month plus 1.00%.
  

Term SOFR has the meaning given in the SOFR Precedent; provided that Term SOFR shall not be less than 0.00% per annum.

 

Notwithstanding anything contained herein to the contrary, the First Lien Facilities Documentation shall include benchmark replacement provisions consistent with the SOFR Precedent.

 

C-I-1


CONFIDENTIAL    EXHIBIT D

Project Corgi

Summary of Additional Conditions

All capitalized terms used but not defined herein shall have the meaning given to them in the Commitment Letter to which this Summary of Additional Conditions is attached, including the other Exhibits thereto.

Except as otherwise set forth below, the initial borrowing under each of the Facilities shall be subject to the satisfaction (or (i) in the case of each of paragraphs (1), (2), (3), (6), (8) and (9), waiver by the Lead Arrangers holding at least a majority of the commitments under the First Lien Facilities with respect to the First Lien Facilities and/or the Lead Arrangers holding at least a majority of the commitments under the Second Lien Facility with respect to the Second Lien Facility or (ii) in the case of each of paragraphs (4), (5) and (7), waiver by the Lead Arrangers) of the following additional conditions:

1. The Acquisition shall have been or, substantially concurrently with the initial borrowing under the Facilities shall be, consummated in all material respects in accordance with the terms of the Acquisition Agreement, without giving effect to any modifications, amendments, express waivers or express consents thereunder by AcquisitionCo that are materially adverse to the Lenders (in their capacities as such) without the consent of the Lead Arrangers holding at least a majority of the commitments under the First Lien Facilities with respect to the First Lien Facilities and/or the Lead Arrangers holding at least a majority of the commitments under the Second Lien Facility with respect to the Second Lien Facility (such consent not to be unreasonably withheld, conditioned or delayed and provided that the Lead Arrangers shall be deemed to have consented to such modification, amendment, waiver or consent unless they shall object thereto within two business days after receipt of written notice of such modification, amendment, waiver or consent), it being understood and agreed that (i) any change in the purchase price shall not be deemed to be materially adverse to the Lenders but (x) any resulting reduction in cash uses shall be allocated (a) first, to a reduction of the Equity Contribution to the level set forth in paragraph (a) in the Transaction Description, and (b) second, (I) 65.0% to a reduction in the Second Lien Facility (followed by a reduction of the First Lien Term Loan Facility) and (II) 35.0% to a reduction in the Equity Contribution and (y) any increase in purchase price (excluding, for the avoidance of doubt, any purchase price adjustments in accordance with the terms of the Acquisition Agreement, with respect to which there shall be no limitation on source of funding) shall be funded (at AcquisitionCo’s option) with the proceeds of an equity contribution and/or the proceeds of First Lien Revolving Loans and (ii) any modification, amendment, express waiver or express consent to the definition of “Company Material Adverse Effect” in the Acquisition Agreement shall be deemed to be materially adverse to the Lenders (in their capacities as such); provided that the Lead Arrangers shall be deemed to have consented to such modification, amendment, express waiver or express consent unless they shall object thereto within two business days after receipt of written notice of such modification, amendment, express waiver or express consent.

 

D-1


2. (i) The Equity Contribution shall have been or, substantially concurrently with the initial borrowing under the Facilities shall be, consummated, which to the extent constituting equity interests other than common equity interests shall be on terms and conditions and pursuant to documentation reasonably satisfactory to the Lead Arrangers holding at least a majority of the commitments under the Facilities to the extent material to the interests of the Lenders (in their capacities as such) (which shall be deemed to be satisfied with the equity of management and existing equity holders of the Target retained, rolled over or otherwise invested in TopCo or any other parent company of AcquisitionCo and its subsidiaries in connection with the Transactions) and (ii) the Refinancing shall be consummated substantially concurrently with the initial borrowing under the Facilities.

3. Since the date of the Acquisition Agreement, there shall not have occurred a Company Material Adverse Effect (as defined in the Acquisition Agreement).

4. All fees related to the Transactions payable to the Lead Arrangers, the Administrative Agents or the Lenders under the Commitment Letter and the Fee Letter shall have been paid to the extent due.

5. The Lead Arrangers shall have received (a) audited consolidated balance sheets and related consolidated statements of operations comprehensive income (loss), shareholders equity and cash flows of the Target for the three most recently completed fiscal years ended at least 90 days prior to the Closing Date and (b) unaudited consolidated balance sheets and related consolidated and comprehensive income (loss), shareholders equity and cash flows of the Target for each fiscal quarter ended on or after March 31, 2022 and at least 45 days prior to the Closing Date. The Lead Arrangers hereby acknowledge receipt of the financial statements referred to in the foregoing clause (a) for the fiscal years ended December 31, 2021, December 31, 2020 and December 31, 2019 and the fiscal quarter ended March 31, 2022.

6. The Lead Arrangers shall have received a certificate of the chief financial officer or treasurer (or other comparable officer) of the Company substantially in the form of Annex I to Exhibit D attached hereto certifying the solvency, after giving effect to the Transactions, of the Company and its subsidiaries on a consolidated basis.

7. The Lead Arrangers shall have received, at least three Business Days (as defined in the Acquisition Agreement) prior to the Closing Date, all documentation and other information about the Borrowers and the Guarantors that is (i) (x) required by applicable regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act and the CDD Rule (which CDD Rule requirements shall be satisfied by delivering the LSTA

 

D-2


form beneficial ownership certification) (such rules and regulations, the “KYC Rules”) and (y) set forth on the list of KYC Requirements delivered to you on or prior to the date hereof (or, in the case of any Additional Committing Lender, on or prior to the date such Additional Committing Lender becomes party to the Commitment Letter) and (ii) all other documentation and other information about the Borrowers and the Guarantors that is (x) requested in writing at least ten Business Days (as defined in the Acquisition Agreement) prior to the Closing Date by the applicable Administrative Agent or the Lead Arrangers and (y) (i) required by applicable regulatory authorities under the KYC Rules as a result of a change to the KYC Rules occurring after the date hereof, (ii) required as a result of the occurrence of any change in the applicable Lead Arranger’s circumstances, which change results in additional information being required under the KYC Rules, (iii) after the Lead Arranger’s review of any information delivered pursuant to this paragraph 8, reasonably determined to be required under the KYC Rules or (iv) readily available and customarily delivered by portfolio company affiliates of the Sponsors in the United States in connection with bank financings.

8. Subject in all respects to the Funding Conditions Provision, (a) the Guarantees with respect to the applicable Facilities shall have been executed by the Guarantors and be in full force and effect or substantially simultaneously with the initial borrowing under the Facilities, shall be executed and become in full force and effect and (b) all documents and instruments required to perfect the applicable Administrative Agent’s security interest in the Collateral with respect to the Facilities shall have been executed and delivered by the Borrowers and the Guarantors or substantially simultaneously with the initial borrowings under the Facilities, shall be executed and delivered by the Borrowers and the Guarantors and, if applicable, be in proper form for filing, and none of the Collateral shall be subject to any other pledges, security interest or mortgages, except for the liens permitted under the Facilities Documentation or to be released on or prior to the Closing Date.

9. You shall have provided to the Lead Arrangers the financial information identified in paragraph 5 of this Summary of Additional Conditions not less than 10 consecutive business days prior to the Closing Date (or such shorter period reasonably acceptable to the Lead Arrangers) (provided that (i) if such 10 consecutive business day period shall not have ended on or prior to August 19, 2022, then such 10 consecutive business day period shall not commence prior to September 6, 2022 and (ii) if such 10 consecutive business day period shall not have ended on or prior to December 22, 2022, then such 10 consecutive business day period shall not commence prior to January 3, 2023).

The information required by condition 9 of this Summary of Additional Conditions above shall be referred to as the “Facilities Required Information”. If at any time you shall in good faith believe that you have provided the Facilities Required Information, you may deliver to the Lead Arrangers and their counsel a written notice

 

D-3


(which may be delivered by email) to that effect (stating when you believe you completed such delivery), in which case the requirements in the foregoing condition 9 of this Summary of Additional Conditions will be deemed to have been satisfied as of the date of the applicable notice, unless the Lead Arrangers in good faith reasonably believe that you have not completed the delivery of the Facilities Required Information and, within two business days after the delivery of such notice by you, deliver a written notice to you to that effect (stating with specificity which Facilities Required Information you have not delivered).

 

D-4


ANNEX I to EXHIBIT D

Form of Solvency Certificate

Date: _____, 20[•]

To the Administrative Agent and each of the Lenders party to the Credit Agreement referred to below:

I, the undersigned, the [Chief Financial Officer or Treasurer] of _____, a _____ _____ (the “Company”), in that capacity only and not in my individual capacity (and without personal liability), do hereby certify as of the date hereof, and based upon (i) facts and circumstances as they exist as of the date hereof (and disclaiming any responsibility for changes in such fact and circumstances after the date hereof) and (ii) such materials and information as I have deemed relevant to the determination of the matters set forth in this certificate, that:

1. This certificate is furnished to the Administrative Agent and the Lenders pursuant to Section __ of the Credit Agreement, dated as of _________ ____, 20[ ], among _________ (the “Credit Agreement”). Unless otherwise defined herein, capitalized terms used in this certificate shall have the meanings set forth in the Credit Agreement.

2. For purposes of this certificate, the terms below shall have the following definitions:

(a) “Fair Value”

The amount at which the assets (both tangible and intangible), in their entirety, of the Company and its Subsidiaries taken as a whole would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

(b) “Present Fair Salable Value”

The amount that could be obtained by an independent willing seller from an independent willing buyer if the assets of the Company and its Subsidiaries taken as a whole are sold with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.

 

D-I-1


(c) “Stated Liabilities”

The recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Company and its Subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of the Transactions, determined in accordance with GAAP consistently applied.

(d) “Identified Contingent Liabilities”

The maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Company and its Subsidiaries taken as a whole after giving effect to the Transactions (including all fees and expenses related thereto but exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as and to the extent identified and explained in terms of their nature and estimated magnitude by responsible officers of the Company.

(e) “Will be able to pay their Stated Liabilities and Identified Contingent Liabilities as they mature”

For the period from the date hereof through the Maturity Date, the Company and its Subsidiaries taken as a whole will have sufficient assets and cash flow to pay their respective Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable.

(f) “Do not have Unreasonably Small Capital”

For the period from the date hereof through the Maturity Date, the Company and its Subsidiaries taken as a whole after consummation of the Transactions is a going concern and has sufficient capital to ensure that it will continue to be a going concern for such period.

3. For purposes of this certificate, I, or officers of the Company under my direction and supervision, have performed the following procedures as of and for the periods set forth below.

(a) I have reviewed the financial statements (including the pro forma financial statements) referred to in Section __ of the Credit Agreement.

(b) I have knowledge of and have reviewed to my satisfaction the Credit Agreement.

(c) As the [Chief Financial Officer or Treasurer] of the Company, I am familiar with the financial condition of the Company and its Subsidiaries.

 

D-I-2


4. Based on and subject to the foregoing, I hereby certify on behalf of the Company that after giving effect to the consummation of the Transactions, it is my opinion that (i) the Fair Value and Present Fair Salable Value of the assets of the Company and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities; (ii) the Company and its Subsidiaries taken as a whole do not have Unreasonably Small Capital; and (iii) the Company and its Subsidiaries taken as a whole will be able to pay their Stated Liabilities and Identified Contingent Liabilities as they mature.

* * *

 

D-I-3


IN WITNESS WHEREOF, the Company has caused this certificate to be executed on its behalf by its [Chief Financial Officer or Treasurer] as of the date first written above.

 

[COMPANY]
By:    
Name:  
Title:   [Chief Financial Officer or Treasurer]

 

D-I-4

EX-99.(b)(2)

Exhibit (b)(2)

EXECUTION VERSION

CORGI BIDCO, INC.

c/o Clayton, Dubilier & Rice

375 Park Avenue, 18th Floor

New York, New York 10152

and

c/o TPG Capital, L.P.

345 California Street

San Francisco, California 94104

June 15, 2022

DEUTSCHE BANK AG NEW YORK BRANCH

DEUTSCHE BANK SECURITIES INC.

1 Columbus Circle

New York, New York 10019

UBS AG, STAMFORD BRANCH

600 Washington Boulevard

Stamford, Connecticut 06901

UBS SECURITIES LLC

1285 Avenue of the Americas

New York, New York 10019

BANK OF MONTREAL

BMO CAPITAL MARKETS CORP.

151 West 42nd Street

New York, New York 10036

MIZUHO BANK, LTD.

1271 Avenue of the Americas

New York, New York 10020

TD SECURITIES (USA) LLC

THE TORONTO-DOMINION BANK, NEW YORK BRANCH

1 Vanderbilt Avenue

New York, New York 10017

SANTANDER BANK, N.A.

45 East 53rd Street

New York, New York 10022

ING CAPITAL LLC

1133 Avenue of the Americas

New York, New York 10036

Re: Letter Agreement Pursuant to

Commitment Letter and Fee Letter each dated May 24, 2022


Ladies and Gentlemen:

Reference is hereby made to the following agreements:

(a) the Commitment Letter dated as of May 24, 2022, by and among Corgi BidCo, Inc. (“AcquisitionCo”), Deutsche Bank Securities Inc. (“DBSI”), Deutsche Bank AG New York Branch (“DBNY” and, together with DBSI, “DB”), UBS AG, Stamford Branch (“UBS AG”), UBS Securities LLC (“UBS Securities” and, together with UBS AG, “UBS”), Bank of Montreal (“BMO”), BMO Capital Markets Corp. (“BMOCM” and, together with BMO, “BofM”) and Mizuho Bank Ltd. (“Mizuho” and, together with DB, UBS and BofM, the “Original Committed Bank Lenders”) (the “Commitment Letter”); and

(b) the Fee Letter dated as of May 24, 2022, by and among the Original Committed Bank Lenders and AcquisitionCo (the “Fee Letter”).

Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Commitment Letter or the Fee Letter, as applicable.

1. Additional Agents. As contemplated by the first sentence of the fifth paragraph of the Commitment Letter, the parties hereto agree (a) to allocate 7.50%, 5.00% and 2.50% of the commitments in each of the First Lien Facilities (including without limitation, any First Lien Term Loan Flex Increase) and the Second Lien Facility (including without limitation, any Second Lien Flex Increase) to The Toronto-Dominion Bank, New York Branch (“TD Bank”), Santander Bank, N.A. (“Santander”) and ING Capital LLC (“ING”) respectively, (b) that each of the corresponding commitments in each of the Facilities of the Original Committed Bank Lenders is hereby reduced on a ratable basis as set forth on Annex A to this letter agreement and (c) to appoint TD Bank, Santander and ING as Additional Committing Lenders thereunder (each an “Additional Committing Lender” and, collectively, the “Additional Committing Lenders”). Each of the Additional Committing Lenders acknowledges that it has, independently and without any reliance upon any of the Original Committed Bank Lenders or any of their respective affiliates, or any of their respective officers, directors, employees, agents, advisors or representatives, and based on the financial statements of the Company and its affiliates and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this letter agreement and the transactions contemplated hereby.

2. Agreement of Each Additional Committing Lender to Be Bound; Titles; Etc. By execution hereof, the parties hereto agree that, subject to the terms and conditions set forth in the Commitment Letter, (a) each of TD Bank, Santander and ING hereby commits to provide 7.50%, 5.00% and 2.50%, respectively, of each of the First Lien Facilities (including without limitation, any First Lien Term Loan Flex Increase) and the Second Lien Facility (including without limitation, any Second Lien Flex Increase) and (b) each Additional Committing Lender agrees to be and shall be bound by the terms and conditions, subject to all commitments and obligations and entitled to all of the rights and benefits of a “Committed Lender” and “Lender” under the Commitment Letter and the Fee Letter as if such Additional Committing Lender was originally a party thereto; provided that, for the avoidance of doubt, the commitments of the Original Committed Bank Lenders and the Additional Committing Lenders to provide the First Lien Facilities (including without limitation, any First Lien Term Loan Flex Increase) and the Second Lien Facility (including without limitation, any Second Lien Flex Increase) as set forth on Annex A to this letter agreement are several, but not joint. Each of TD Securities (USA) LLC (“TD Securities”), Santander and ING shall act as a joint lead arranger and joint bookrunner for the First Lien Facilities and the Second Lien Facility and all references in the Commitment Letter and Fee Letter to “Lead First Lien Facilities Arrangers”, “Lead Second Lien Facility Arrangers” and “Lead Arrangers” shall be deemed to include TD Securities , Santander and ING in such capacities. By execution hereof the

 

2


parties hereto agree that with respect to the second paragraph under the heading “General” in the Fee Letter that deals with any Alternate Transaction and payment of an Alternative Transaction Fee, each reference to “the date hereof” means the date of this letter agreement after giving effect to the terms hereof, including the reduction of the commitments in each of the Facilities of the Original Committed Bank Lenders in accordance with Section 1(b), above.

Each of the parties hereto further agrees to extend the date for (i) appointing Additional Committing Lenders as contemplated by the first sentence of the fifth paragraph of the Commitment Letter to June 28, 2022 and (ii) exercising the Alternate Second Lien Facility Option as contemplated by the sixth paragraph of the Commitment Letter to June 28, 2022.

3. Effect; Amendments; Governing Law; Etc. Except as specifically amended by this letter agreement, the Commitment Letter and the Fee Letter shall remain in full force and effect. This letter agreement shall be construed in connection with and form part of the Commitment Letter and the Fee Letter, as applicable, and any reference to any of the Commitment Letter or the Fee Letter shall be deemed to be a reference to the Commitment Letter and the Fee Letter, each as amended by this letter agreement. This letter agreement may not be amended or modified, or any provision hereof waived, except by an instrument in writing signed by the parties hereto. This letter agreement, the Commitment Letter and the Fee Letter set forth the entire agreement between the parties hereto and supersede all prior understandings, whether written or oral, between the parties hereto with respect to the matters herein and therein. AcquisitionCo agrees that this letter agreement and its contents are subject to the confidentiality provisions of the Commitment Letter applicable to AcquisitionCo. AcquisitionCo agrees that this letter agreement and its contents are subject to the indemnification provisions of the Commitment Letter. This letter agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and permitted assigns. This letter agreement and the rights and duties of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York without giving effect to its principles or rules of conflict of laws, to the extent such principles or rules are not mandatorily applicable by statute and would require or permit the application of the laws of another jurisdiction. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THE COMMITMENT LETTER, THE FEE LETTER OR THE PERFORMANCE OF SERVICES THEREUNDER. The submission to jurisdiction provision of the Commitment Letter is incorporated herein by reference, mutatis mutandis, and such provision shall apply to this letter agreement, and will bind each of the parties hereto, in the same manner and to the same extent as such provision applies to the Commitment Letter, the Fee Letter and the original parties thereto.

This letter agreement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this letter agreement by facsimile transmission or other electronic transmission (e.g., a “pdf”, “tiff” or “DocuSign”) shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this letter agreement or any document to be signed in connection with this letter agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.

[Remainder of this page intentionally left blank]

 

3


Very truly yours,
CORGI BIDCO, INC.
By:   /s/ Rima Simson
  Name: Rima Simson
  Title: Vice President, Treasurer and Secretary

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


ACKNOWLEDGED AND AGREED as of the date first written above:
DEUTSCHE BANK AG NEW YORK BRANCH
By:   /s/ William C. Frauen
  Name: William C. Frauen
  Title: Managing Director

 

By:   /s/ Celine Catherin
  Name: Celine Catherin
  Title: Managing Director

 

DEUTSCHE BANK SECURITIES INC.
By:   /s/ William C. Frauen
  Name: William C. Frauen
  Title: Managing Director

 

By:   /s/ Celine Catherin
  Name: Celine Catherin
  Title: Managing Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


UBS AG, STAMFORD BRANCH
By:   /s/ David Juge
  Name: David Juge
  Title: Managing Director

 

By:   /s/ Bruce Mackenzie
  Name: Bruce Mackenzie
  Title: Managing Director

 

UBS SECURITIES LLC
By:   /s/ David Juge
  Name: David Juge
  Title: Managing Director

 

By:   /s/ Bruce Mackenzie
  Name: Bruce Mackenzie
  Title: Managing Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


BANK OF MONTREAL
By:   /s/ Eric Oppenheimer
  Name: Eric Oppenheimer
  Title: Managing Director

 

BMO CAPITAL MARKETS CORP.
By:   /s/ Colin Bathgate
  Name: Colin Bathgate
  Title: Managing Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


MIZUHO BANK, LTD.
By:   /s/ Raymond Ventura
  Name: Raymond Ventura
  Title: Managing Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


TD SECURITIES (USA) LLC
By:   /s/ K. Alper Ilgar
  Name: K. Alper Ilgar
  Title: Managing Director

 

THE TORONTO-DOMINION BANK,NEW YORK BRANCH
By:   /s/ Mike Tkach
  Name: Mike Tkach
  Title: Authorized Signatory

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


SANTANDER BANK, N.A.
By:   /s/ William Maag
  Name: William Maag
  Title: Managing Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


ING CAPITAL LLC
By:   /s/ Roy De Jongh
  Name: Roy De Jongh
  Title: Director
By:   /s/ Clifford Beltzer
  Name: Clifford Beltzer
  Title: Director

[Signature Page to Joinder to Corgi Commitment and Fee Letters]


Annex A

 

Committed Lender

   Current Committed
Percentage for the First Lien
Facilities and the Second Lien
Facility
    Revised Committed
Percentage for the First Lien
Facilities and the Second Lien
Facility
 

DBNY

     25.00     21.25

UBS AG

     25.00     21.25

BMO

     25.00     21.25

Mizuho

     25.00     21.25

TD Bank

     N/A       7.50

Santander

     N/A       5.00

ING

     N/A       2.50
EX-99.(b)(3)

Exhibit (b)(3)

Confidential

Private and Strictly Confidential

May 24, 2022

Corgi BidCo, Inc.

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Ladies and Gentlemen:

This letter agreement (this “Letter”) sets forth the commitments of Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership (the “Investor”), subject to the terms and conditions set forth herein, to purchase, directly or indirectly, certain equity interests of Corgi BidCo, Inc., a newly formed Delaware corporation (“Parent”). It is contemplated that, pursuant to that certain Agreement and Plan of Merger (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement”), dated as of the date hereof, by and among Parent, Corgi Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of Parent (“Merger Sub”), and Covetrus, Inc., a Delaware corporation (the “Company”), at the Closing of the transactions contemplated thereby (the “Transaction”), Merger Sub will be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the “Merger”), with the Company being the surviving corporation of such Merger and the direct, wholly-owned subsidiary of Parent. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Transaction Agreement.

1. Commitments. The Investor hereby irrevocably and unconditionally commits (its “Commitment”), subject to the terms and conditions set forth herein, that, at or prior to the Closing, it shall punctually purchase, or shall cause the punctual purchase of, directly or indirectly through one or more intermediate entities, equity securities of Parent, with immediately available funds, at the same price per equity security and of the same class as the equity securities purchased by TPG Partners VIII, L.P., a Delaware limited partnership, and TPG Healthcare Partners, L.P., a Delaware limited partnership (together, the “Other Investors”) pursuant to those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”), with an aggregate purchase price not to exceed $802,160,400.00 (the “Cap”). Notwithstanding anything to the contrary in this Letter, this Letter may not be enforced against the Investor without giving effect to the Cap. The Commitment, subject to the Cap, together with the proceeds of the Other Investors Equity Financing (as defined herein) and the Debt Financing will be solely used to (a) fund all Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay indebtedness, fees and expenses expressly required to be paid by Parent pursuant to the Transaction Agreement (the “Transaction Expenses”). For purposes of this Letter, (i) the “Other Investors Equity Financing” means the direct or indirect purchase of equity securities of Parent by the Other Investors pursuant to, and in accordance with, the terms of the Other Investor Equity Commitment Letters, and (ii) the “Other Investors’ Commitments” means the Commitment (as defined in the Other Investors Equity Commitment Letters) of each of the Other Investors.


2. Conditions. The Investor’s Commitment shall be subject to (a) the execution and delivery of the Transaction Agreement by all parties thereto, (b) the satisfaction or waiver by Parent and Merger Sub of each of the conditions to Parent’s and Merger Sub’s obligations to effect the Closing set forth in Article 7 of the Transaction Agreement (in each case, other than any conditions that by their nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or waiver of such conditions), (c) the substantially contemporaneous, or prior, funding of the Debt Financing (or, if applicable any Alternative Financing) in accordance with the terms of the applicable Commitment Letter at the Closing if each of the Commitment and the Other Investors’ Commitments is funded and (d) the substantially simultaneous consummation of the Closing in accordance with the terms of the Transaction Agreement. If the amount required to be paid by Parent pursuant to the Transaction Agreement is less than the aggregate sum of the Investor’s Commitment as funded and the Other Investors’ Commitments as funded, solely to the extent Parent does not require the full amount of the Commitment and the Other Investors’ Commitments to fund (a) the Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay the Transaction Expenses, the Investor’s Commitment hereunder and the Other Investors’ Commitments will each be accordingly reduced with such reduction allocated to the Investor’s Commitment and the Other Investors’ Commitments on a pro rata basis; provided that (x) it will thereafter be possible for Parent to satisfy payments (and without breaching the terms of the Debt Commitment Letter or causing the failure of any of the conditions set forth therein) with the Investor and the Other Investors contributing less than the full amount of the Commitment and the Other Investors’ Commitments, respectively and (y) such amounts referred to in the foregoing clauses (a) and (b) are actually funded at Closing and not returned.

3. Limited Guarantee. Concurrently with the execution and delivery of this Letter, the Investor and the Other Investors are each executing and delivering to the Company a limited guarantee dated as of the date hereof and related to the performance of certain of Parent’s payment obligations under the Transaction Agreement (the “Limited Guarantees”). Other than with respect to the Company’s rights pursuant to clause (b) of Section 5 hereof and the Company’s rights pursuant to clause (b) of Section 5 of the Other Investors Equity Commitment Letters, the Company’s right to assert any Retained Claim (as defined in the Limited Guarantees) against any Non-Recourse Party (as defined in the Limited Guarantee) against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantees and the Company’s remedies against the Investor and the Other Investors under their applicable Limited Guarantee shall be, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company and its security holders and Affiliates against the Investor, the Other Investors or any other Non-Recourse Party in respect of any liabilities or obligations arising under, or in connection with, this Letter, the Other Investors Equity Commitment Letters, the Limited Guarantees, the Transaction Agreement or the transactions contemplated thereby or the negotiation hereof or thereof, including breaches hereof or thereof, whether or not such breach is caused by the Investor’s breach of its obligations under this Letter.

 

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4. Parties in Interest; Third Party Beneficiaries. The parties hereto hereby agree that their respective agreements and obligations set forth herein are solely for the benefit of the other party hereto and its respective successors and permitted assigns, in accordance with and subject to the terms of this Letter, and this Letter is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, the obligations set forth herein; provided, that (a) the Company is an express third-party beneficiary of, and shall have the enforcement rights provided in, clause (b) of Section 5 of this Letter, and (b) any Non-Recourse Party may rely on and enforce the provisions of Section 6 hereof.

5. Enforceability. This Letter may only be enforced by (a) Parent at the direction of the Investor or (b) the Company pursuant to the Company’s right to seek specific performance of Parent’s obligation to enforce the Investor’s obligation to fund its Commitment in accordance with the terms hereof, pursuant to, and subject to, and solely in accordance with, the terms and conditions of Section 9.13 of the Transaction Agreement and the rights set forth herein; provided that, this Letter may only be enforced by Parent in accordance with clause (a) above or the Company in accordance with clause (b) above if Parent or the Company, as applicable, is also seeking the enforcement of the obligations of the Other Investors under, and in accordance with, the Other Investors Equity Commitment Letters. Neither Parent’s creditors nor any other Person (other than the Company to the extent provided herein) shall have any right to enforce this Letter or to cause Parent to enforce this Letter. For the avoidance of doubt, and notwithstanding anything to the contrary herein, nothing in this Letter shall affect the right of Investor, Other Investors or Parent to enforce any terms of that certain Interim Investors Agreement, executed as of the date hereof, by and among the Investor, the Other Investors and Parent (the “Interim Investors Agreement”).

6. No Modification; Entire Agreement. This Letter may not be amended or otherwise modified without the prior written consent of Parent, the Investor and the Company. Together with the Transaction Agreement, the Limited Guarantee, the Confidentiality Agreement, the Interim Investors Agreement, and this Letter constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between the Investor or any of its Affiliates, on the one hand, and Parent or any of its Affiliates, on the other, with respect to the transactions contemplated hereby. Except as expressly permitted in Section 11 hereof, no transfer of any rights or obligations hereunder shall be permitted without the consent of Parent, the Investor and the Company. Any transfer in violation of the preceding sentence shall be null and void.

7. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial.

(a) This Letter and all Actions (whether based on contract, tort or otherwise) arising out of or relating to this Letter, any of the transactions contemplated by this Letter, or any of the acts or omissions of Parent, the Investor or the Company in the negotiation, administration, performance or enforcement hereof or thereof shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof or of any other jurisdiction which would require the application of the laws of any other jurisdiction.

 

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(b) Each party hereto submits to the exclusive jurisdiction of the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware in respect of any action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Letter or the transactions contemplated hereby and waives, and agrees not to assert, any defense in any action for the interpretation or enforcement of this Letter and any related agreement, certificate or other document delivered in connection herewith, that they are not subject thereto or that such action may not be brought or is not maintainable in such courts or that this Letter may not be enforced in or by such courts or that their property is exempt or immune from execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper. Service of process with respect thereto may be made upon any party to this agreement by mailing a copy thereof by registered or certified mail, postage prepaid, to such party at its address as provided in Section 6 of the Investor’s Limited Guarantee.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO THIS LETTER AND ALL ACTIONS OR CLAIMS (WHETHER BASED ON ANY DISPUTE IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS LETTER OR ANY OF THE ACTS OR OMISSIONS OF PARENT, THE INVESTOR OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF, AS THE CASE MAY BE. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LETTER BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(C).

8. Counterparts. This Letter shall not be effective until it has been executed and delivered by all parties hereto. This Letter may be executed in any number of counterparts (including by facsimile or by .pdf delivered via email), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

9. Confidentiality. This Letter shall be treated as confidential and is being provided to Parent solely in connection with the Transaction. This Letter may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction) by

 

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Parent except with the prior written consent of the Investor in each instance; provided, that (a) this Letter may be provided to the Company (so long as the Company agrees to keep, and agrees to cause its directors, officers, employees, partners, advisors and other representatives to keep, this Letter confidential) and (b) no such written consent is required for any disclosure of the existence of this Letter (i) to the extent required by applicable Law (provided, that Parent or the Company, as applicable, will provide the Investor an opportunity to review such required disclosure in advance of such public disclosure being made), (ii) to Parent’s or the Company’s Representatives who need to know of the existence or terms of this Letter (so long as such Representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Letter confidential) or (iii) in connection with any litigation or Action related to Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction.

10. Termination. The obligation of the Investor under or in connection with this Letter will terminate automatically and immediately upon the earliest to occur of (a) the Closing and the funding of the Commitment (at which time all such obligations shall be discharged), (b) the termination of the Transaction Agreement pursuant to its terms (unless the Company shall have previously commenced an action pursuant to clause (b) of Section 5 hereof, in which case this Letter shall terminate upon the final, non-appealable resolution of such action and satisfaction by the Investor of any obligations finally determined or agreed to be owed by the Investor in respect of the payment obligations of Parent consistent with the terms hereof), (c) the Company or any of its controlled Affiliates, or any Person claiming by, through or for the benefit of any of the foregoing, accepting all or any portion of the Company Termination Fee pursuant to the Transaction Agreement or accepting any payment from the Guarantor (as defined in the Limited Guarantee) under the Limited Guarantee in respect of such obligations, (d) the Company or any of its controlled Affiliates asserting in writing a claim against the Investor or any Non-Recourse Party under or in connection with either the Limited Guarantee or the Transaction Agreement other than the Company asserting any Retained Claim against any Non-Recourse Party against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantee and (e) the termination of the Other Investors Equity Commitment Letters.

11. No Assignment. The Commitment evidenced by this Letter shall not be assignable, in whole or in part, by Parent without the Investor’s and the Company’s prior written consent, and the granting of such consent in a given instance shall be solely in the discretion of the Investor and the Company, as applicable, and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment. Investor may assign all or a portion of its obligations to fund the Commitment to its Affiliates or affiliated funds or to entities governed by one of its Affiliates or affiliated funds subject to the prior written consent of the Company; provided, that any permitted assignment shall not relieve Investor of its obligations under this Letter. Any purported assignment of this Letter or the Commitment in contravention of this Section 11 shall be void and of no force and effect. The Investor and Parent shall give written notice to the Company of any assignment pursuant to this paragraph that is effected prior to Closing as promptly as practicable thereafter (and in no event more than two (2) Business Days thereafter).

 

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12. Representations and Warranties. The Investor hereby represents and warrants to Parent that: (a) it has all limited partnership power and authority to execute, deliver and perform this Letter; (b) the execution, delivery and performance of this Letter by it has been duly and validly authorized and approved by all necessary limited partnership or other organizational action by it and no other proceedings or actions on the part of it are necessary therefor; (c) this Letter has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms of this Letter; (d) its Commitment is less than the maximum amount that it is permitted to invest in any one portfolio investment pursuant to the terms of its constituent documents or otherwise; (e) it has, and will maintain for so long as this Letter is in effect, uncalled capital commitments or access to available funds in excess of the sum of its Commitment hereunder plus the aggregate amount of all other commitments and obligations it currently has outstanding; (f) all consents, approvals, authorizations, permits of, filings with and notification to, any governmental authority necessary for the due execution, delivery and performance of this Letter by the Investor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Letter; and (g) the execution, delivery and performance by the Investor of this Letter do not (i) violate the organizational documents of the Investor, (ii) violate any applicable law or judgment or (iii) result in any violation of, or default (with or without notice or lapse of time or both) under, or give rise to a termination, cancellation or acceleration of any obligation or to the loss of any benefit under, any material contract to which it is a party.

[Remainder of the page intentionally left blank – signature page follows]

 

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Sincerely,  
CLAYTON, DUBILIER & RICE FUND XI, L.P.
By: CD&R Associates XI, L.P., its general partner
By: CD&R Investment Associates XI, Ltd., its general partner
By:   /s/ Rima Simson
Name: Rima Simson
Title: Vice President, Treasurer and Secretary

Agreed to and accepted:

 

CORGI BIDCO, INC.
By:   /s/ Sarah Kim
Name: Sarah Kim
Title: President
EX-99.(b)(4)

Exhibit (b)(4)

Confidential

Private and Strictly Confidential

May 24, 2022

Corgi BidCo, Inc.

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Ladies and Gentlemen:

This letter agreement (this “Letter”) sets forth the commitments of TPG Partners VIII, L.P., a Delaware limited partnership (the “Investor”), subject to the terms and conditions set forth herein, to purchase, directly or indirectly, certain equity interests of Corgi BidCo, Inc., a newly formed Delaware corporation (“Parent”). It is contemplated that, pursuant to that certain Agreement and Plan of Merger (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement”), dated as of the date hereof, by and among Parent, Corgi Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of Parent (“Merger Sub”), and Covetrus, Inc., a Delaware corporation (the “Company”), at the Closing of the transactions contemplated thereby (the “Transaction”), Merger Sub will be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the “Merger”), with the Company being the surviving corporation of such Merger and the direct, wholly-owned subsidiary of Parent. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Transaction Agreement.

1. Commitments. The Investor hereby irrevocably and unconditionally commits (its “Commitment”), subject to the terms and conditions set forth herein, that, at or prior to the Closing, it shall punctually purchase, or shall cause the punctual purchase of, directly or indirectly through one or more intermediate entities, equity securities of Parent, with immediately available funds, at the same price per equity security and of the same class as the equity securities purchased by Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership, and TPG Healthcare Partners, L.P., a Delaware limited partnership (together, the “Other Investors”) pursuant to those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”), with an aggregate purchase price not to exceed $526,839,600.00 (the “Cap”). Notwithstanding anything to the contrary in this Letter, this Letter may not be enforced against the Investor without giving effect to the Cap. The Commitment, subject to the Cap, together with the proceeds of the Other Investors Equity Financing (as defined herein) and the Debt Financing will be solely used to (a) fund all Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay indebtedness, fees and expenses expressly required to be paid by Parent pursuant to the Transaction Agreement (the “Transaction Expenses”). For purposes of this Letter, (i) the “Other Investors Equity Financing” means the direct or indirect purchase of equity securities of Parent by the Other Investors pursuant to, and in accordance with, the terms of the Other Investors Equity Commitment Letters, and (ii) the “Other Investors’ Commitments” means the Commitment (as defined in the Other Investors Equity Commitment Letters) of each of the Other Investors.


2. Conditions. The Investor’s Commitment shall be subject to (a) the execution and delivery of the Transaction Agreement by all parties thereto, (b) the satisfaction or waiver by Parent and Merger Sub of each of the conditions to Parent’s and Merger Sub’s obligations to effect the Closing set forth in Article 7 of the Transaction Agreement (in each case, other than any conditions that by their nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or waiver of such conditions), (c) the substantially contemporaneous, or prior, funding of the Debt Financing (or, if applicable any Alternative Financing) in accordance with the terms of the applicable Commitment Letter at the Closing if each of the Commitment and the Other Investors’ Commitments is funded and (d) the substantially simultaneous consummation of the Closing in accordance with the terms of the Transaction Agreement. If the amount required to be paid by Parent pursuant to the Transaction Agreement is less than the aggregate sum of the Investor’s Commitment as funded and the Other Investors’ Commitments as funded, solely to the extent Parent does not require the full amount of the Commitment and the Other Investors’ Commitments to fund (a) the Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay the Transaction Expenses, the Investor’s Commitment hereunder and the Other Investors’ Commitments will each be accordingly reduced with such reduction allocated to the Investor’s Commitment and the Other Investors’ Commitments on a pro rata basis; provided that (x) it will thereafter be possible for Parent to satisfy payments (and without breaching the terms of the Debt Commitment Letter or causing the failure of any of the conditions set forth therein) with the Investor and the Other Investors contributing less than the full amount of the Commitment and the Other Investors’ Commitments, respectively and (y) such amounts referred to in the foregoing clauses (a) and (b) are actually funded at Closing and not returned.

3. Limited Guarantee. Concurrently with the execution and delivery of this Letter, the Investor and the Other Investors are each executing and delivering to the Company a limited guarantee dated as of the date hereof and related to the performance of certain of Parent’s payment obligations under the Transaction Agreement (the “Limited Guarantees”). Other than with respect to the Company’s rights pursuant to clause (b) of Section 5 hereof and the Company’s rights pursuant to clause (b) of Section 5 of the Other Investors Equity Commitment Letters, the Company’s right to assert any Retained Claim (as defined in the Limited Guarantees) against any Non-Recourse Party (as defined in the Limited Guarantee) against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantees and the Company’s remedies against the Investor and the Other Investors under their applicable Limited Guarantee shall be, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company and its security holders and Affiliates against the Investor, the Other Investors or any other Non-Recourse Party in respect of any liabilities or obligations arising under, or in connection with, this Letter, the Other Investors Equity Commitment Letters, the Limited Guarantees, the Transaction Agreement or the transactions contemplated thereby or the negotiation hereof or thereof, including breaches hereof or thereof, whether or not such breach is caused by the Investor’s breach of its obligations under this Letter.

 

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4. Parties in Interest; Third Party Beneficiaries. The parties hereto hereby agree that their respective agreements and obligations set forth herein are solely for the benefit of the other party hereto and its respective successors and permitted assigns, in accordance with and subject to the terms of this Letter, and this Letter is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, the obligations set forth herein; provided, that (a) the Company is an express third-party beneficiary of, and shall have the enforcement rights provided in, clause (b) of Section 5 of this Letter, and (b) any Non-Recourse Party may rely on and enforce the provisions of Section 6 hereof.

5. Enforceability. This Letter may only be enforced by (a) Parent at the direction of the Investor or (b) the Company pursuant to the Company’s right to seek specific performance of Parent’s obligation to enforce the Investor’s obligation to fund its Commitment in accordance with the terms hereof, pursuant to, and subject to, and solely in accordance with, the terms and conditions of Section 9.13 of the Transaction Agreement and the rights set forth herein; provided that, this Letter may only be enforced by Parent in accordance with clause (a) above or the Company in accordance with clause (b) above if Parent or the Company, as applicable, is also seeking the enforcement of the obligations of the Other Investors under, and in accordance with, the Other Investors Equity Commitment Letters. Neither Parent’s creditors nor any other Person (other than the Company to the extent provided herein) shall have any right to enforce this Letter or to cause Parent to enforce this Letter. For the avoidance of doubt, and notwithstanding anything to the contrary herein, nothing in this Letter shall affect the right of Investor, Other Investors or Parent to enforce any terms of that certain Interim Investors Agreement, executed as of the date hereof, by and among the Investor, the Other Investors and Parent (the “Interim Investors Agreement”).

6. No Modification; Entire Agreement. This Letter may not be amended or otherwise modified without the prior written consent of Parent, the Investor and the Company. Together with the Transaction Agreement, the Limited Guarantee, the Confidentiality Agreement, the Interim Investors Agreement, and this Letter constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between the Investor or any of its Affiliates, on the one hand, and Parent or any of its Affiliates, on the other, with respect to the transactions contemplated hereby. Except as expressly permitted in Section 11 hereof, no transfer of any rights or obligations hereunder shall be permitted without the consent of Parent, the Investor and the Company. Any transfer in violation of the preceding sentence shall be null and void.

7. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial.

(a) This Letter and all Actions (whether based on contract, tort or otherwise) arising out of or relating to this Letter, any of the transactions contemplated by this Letter, or any of the acts or omissions of Parent, the Investor or the Company in the negotiation, administration, performance or enforcement hereof or thereof shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof or of any other jurisdiction which would require the application of the laws of any other jurisdiction.

 

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(b) Each party hereto submits to the exclusive jurisdiction of the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware in respect of any action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Letter or the transactions contemplated hereby and waives, and agrees not to assert, any defense in any action for the interpretation or enforcement of this Letter and any related agreement, certificate or other document delivered in connection herewith, that they are not subject thereto or that such action may not be brought or is not maintainable in such courts or that this Letter may not be enforced in or by such courts or that their property is exempt or immune from execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper. Service of process with respect thereto may be made upon any party to this agreement by mailing a copy thereof by registered or certified mail, postage prepaid, to such party at its address as provided in Section 6 of the Investor’s Limited Guarantee.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO THIS LETTER AND ALL ACTIONS OR CLAIMS (WHETHER BASED ON ANY DISPUTE IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS LETTER OR ANY OF THE ACTS OR OMISSIONS OF PARENT, THE INVESTOR OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF, AS THE CASE MAY BE. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LETTER BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(C).

8. Counterparts. This Letter shall not be effective until it has been executed and delivered by all parties hereto. This Letter may be executed in any number of counterparts (including by facsimile or by .pdf delivered via email), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

9. Confidentiality. This Letter shall be treated as confidential and is being provided to Parent solely in connection with the Transaction. This Letter may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction) by

 

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Parent except with the prior written consent of the Investor in each instance; provided, that (a) this Letter may be provided to the Company (so long as the Company agrees to keep, and agrees to cause its directors, officers, employees, partners, advisors and other representatives to keep, this Letter confidential) and (b) no such written consent is required for any disclosure of the existence of this Letter (i) to the extent required by applicable Law (provided, that Parent or the Company, as applicable, will provide the Investor an opportunity to review such required disclosure in advance of such public disclosure being made), (ii) to Parent’s or the Company’s Representatives who need to know of the existence or terms of this Letter (so long as such Representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Letter confidential) or (iii) in connection with any litigation or Action related to Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction.

10. Termination. The obligation of the Investor under or in connection with this Letter will terminate automatically and immediately upon the earliest to occur of (a) the Closing and the funding of the Commitment (at which time all such obligations shall be discharged), (b) the termination of the Transaction Agreement pursuant to its terms (unless the Company shall have previously commenced an action pursuant to clause (b) of Section 5 hereof, in which case this Letter shall terminate upon the final, non-appealable resolution of such action and satisfaction by the Investor of any obligations finally determined or agreed to be owed by the Investor in respect of the payment obligations of Parent consistent with the terms hereof), (c) the Company or any of its controlled Affiliates, or any Person claiming by, through or for the benefit of any of the foregoing, accepting all or any portion of the Company Termination Fee pursuant to the Transaction Agreement or accepting any payment from the Guarantor (as defined in the Limited Guarantee) under the Limited Guarantee in respect of such obligations, (d) the Company or any of its controlled Affiliates asserting in writing a claim against the Investor or any Non-Recourse Party under or in connection with either the Limited Guarantee or the Transaction Agreement other than the Company asserting any Retained Claim against any Non-Recourse Party against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantee and (e) the termination of the Other Investors Equity Commitment Letters.

11. No Assignment. The Commitment evidenced by this Letter shall not be assignable, in whole or in part, by Parent without the Investor’s and the Company’s prior written consent, and the granting of such consent in a given instance shall be solely in the discretion of the Investor and the Company, as applicable, and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment. Investor may assign all or a portion of its obligations to fund the Commitment to its Affiliates or affiliated funds or to entities governed by one of its Affiliates or affiliated funds subject to the prior written consent of the Company; provided, that any permitted assignment shall not relieve Investor of its obligations under this Letter. Any purported assignment of this Letter or the Commitment in contravention of this Section 11 shall be void and of no force and effect. The Investor and Parent shall give written notice to the Company of any assignment pursuant to this paragraph that is effected prior to Closing as promptly as practicable thereafter (and in no event more than two (2) Business Days thereafter).

 

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12. Representations and Warranties. The Investor hereby represents and warrants to Parent that: (a) it has all limited partnership power and authority to execute, deliver and perform this Letter; (b) the execution, delivery and performance of this Letter by it has been duly and validly authorized and approved by all necessary limited partnership or other organizational action by it and no other proceedings or actions on the part of it are necessary therefor; (c) this Letter has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms of this Letter; (d) its Commitment is less than the maximum amount that it is permitted to invest in any one portfolio investment pursuant to the terms of its constituent documents or otherwise; (e) it has, and will maintain for so long as this Letter is in effect, uncalled capital commitments or access to available funds in excess of the sum of its Commitment hereunder plus the aggregate amount of all other commitments and obligations it currently has outstanding; (f) all consents, approvals, authorizations, permits of, filings with and notification to, any governmental authority necessary for the due execution, delivery and performance of this Letter by the Investor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Letter; and (g) the execution, delivery and performance by the Investor of this Letter do not (i) violate the organizational documents of the Investor, (ii) violate any applicable law or judgment or (iii) result in any violation of, or default (with or without notice or lapse of time or both) under, or give rise to a termination, cancellation or acceleration of any obligation or to the loss of any benefit under, any material contract to which it is a party.

[Remainder of the page intentionally left blank – signature page follows]

 

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Sincerely,
TPG PARTNERS VIII, L.P.

By: TPG GenPar VIII, L.P.

its general partner

By: TPG GenPar VIII Advisors, LLC

its general partner

By:   /s/ Ken Murphy
Name:   Ken Murphy
Title:   Chief Operating Officer

 

Agreed to and accepted:
CORGI BIDCO, INC.
By:   /s/ Sarah Kim
Name:   Sarah Kim
Title:   President
EX-99.(b)(5)

Exhibit (b)(5)

Confidential

Private and Strictly Confidential

May 24, 2022

Corgi BidCo, Inc.

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Ladies and Gentlemen:

This letter agreement (this “Letter”) sets forth the commitments of TPG Healthcare Partners, L.P., a Delaware limited partnership (the “Investor”), subject to the terms and conditions set forth herein, to purchase, directly or indirectly, certain equity interests of Corgi BidCo, Inc., a newly formed Delaware corporation (“Parent”). It is contemplated that, pursuant to that certain Agreement and Plan of Merger (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement”), dated as of the date hereof, by and among Parent, Corgi Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of Parent (“Merger Sub”), and Covetrus, Inc., a Delaware corporation (the “Company”), at the Closing of the transactions contemplated thereby (the “Transaction”), Merger Sub will be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the “Merger”), with the Company being the surviving corporation of such Merger and the direct, wholly-owned subsidiary of Parent. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Transaction Agreement.

1. Commitments. The Investor hereby irrevocably and unconditionally commits (its “Commitment”), subject to the terms and conditions set forth herein, that, at or prior to the Closing, it shall punctually purchase, or shall cause the punctual purchase of, directly or indirectly through one or more intermediate entities, equity securities of Parent, with immediately available funds, at the same price per equity security and of the same class as the equity securities purchased by Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership, and TPG Partners VIII, L.P., a Delaware limited partnership (together, the “Other Investors”) pursuant to those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”), with an aggregate purchase price not to exceed $275,000,000.00 (the “Cap”). Notwithstanding anything to the contrary in this Letter, this Letter may not be enforced against the Investor without giving effect to the Cap. The Commitment, subject to the Cap, together with the proceeds of the Other Investors Equity Financing (as defined herein) and the Debt Financing will be solely used to (a) fund all Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay indebtedness, fees and expenses expressly required to be paid by Parent pursuant to the Transaction Agreement (the “Transaction Expenses”). For purposes of this Letter, (i) the “Other Investors Equity Financing” means the direct or indirect purchase of equity securities of Parent by the Other Investors pursuant to, and in accordance with, the terms of the Other Investors Equity Commitment Letters, and (ii) the “Other Investors’ Commitments” means the Commitment (as defined in the Other Investors Equity Commitment Letters) of each of the Other Investors.


2. Conditions. The Investor’s Commitment shall be subject to (a) the execution and delivery of the Transaction Agreement by all parties thereto, (b) the satisfaction or waiver by Parent and Merger Sub of each of the conditions to Parent’s and Merger Sub’s obligations to effect the Closing set forth in Article 7 of the Transaction Agreement (in each case, other than any conditions that by their nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or waiver of such conditions), (c) the substantially contemporaneous, or prior, funding of the Debt Financing (or, if applicable any Alternative Financing) in accordance with the terms of the applicable Commitment Letter at the Closing if each of the Commitment and the Other Investors’ Commitments is funded and (d) the substantially simultaneous consummation of the Closing in accordance with the terms of the Transaction Agreement. If the amount required to be paid by Parent pursuant to the Transaction Agreement is less than the aggregate sum of the Investor’s Commitment as funded and the Other Investors’ Commitments as funded, solely to the extent Parent does not require the full amount of the Commitment and the Other Investors’ Commitments to fund (a) the Merger Consideration required to be paid by Parent at the Closing pursuant to Article 3 of the Transaction Agreement and (b) pay the Transaction Expenses, the Investor’s Commitment hereunder and the Other Investors’ Commitments will each be accordingly reduced with such reduction allocated to the Investor’s Commitment and the Other Investors’ Commitments on a pro rata basis; provided that (x) it will thereafter be possible for Parent to satisfy payments (and without breaching the terms of the Debt Commitment Letter or causing the failure of any of the conditions set forth therein) with the Investor and the Other Investors contributing less than the full amount of the Commitment and the Other Investors’ Commitments, respectively and (y) such amounts referred to in the foregoing clauses (a) and (b) are actually funded at Closing and not returned.

3. Limited Guarantee. Concurrently with the execution and delivery of this Letter, the Investor and the Other Investors are each executing and delivering to the Company a limited guarantee dated as of the date hereof and related to the performance of certain of Parent’s payment obligations under the Transaction Agreement (the “Limited Guarantees”). Other than with respect to the Company’s rights pursuant to clause (b) of Section 5 hereof and the Company’s rights pursuant to clause (b) of Section 5 of the Other Investors Equity Commitment Letters, the Company’s right to assert any Retained Claim (as defined in the Limited Guarantees) against any Non-Recourse Party (as defined in the Limited Guarantee) against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantees and the Company’s remedies against the Investor and the Other Investors under their applicable Limited Guarantee shall be, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company and its security holders and Affiliates against the Investor, the Other Investors or any other Non-Recourse Party in respect of any liabilities or obligations arising under, or in connection with, this Letter, the Other Investors Equity Commitment Letters, the Limited Guarantees, the Transaction Agreement or the transactions contemplated thereby or the negotiation hereof or thereof, including breaches hereof or thereof, whether or not such breach is caused by the Investor’s breach of its obligations under this Letter.

 

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4. Parties in Interest; Third Party Beneficiaries. The parties hereto hereby agree that their respective agreements and obligations set forth herein are solely for the benefit of the other party hereto and its respective successors and permitted assigns, in accordance with and subject to the terms of this Letter, and this Letter is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, the obligations set forth herein; provided, that (a) the Company is an express third-party beneficiary of, and shall have the enforcement rights provided in, clause (b) of Section 5 of this Letter, and (b) any Non-Recourse Party may rely on and enforce the provisions of Section 6 hereof.

5. Enforceability. This Letter may only be enforced by (a) Parent at the direction of the Investor or (b) the Company pursuant to the Company’s right to seek specific performance of Parent’s obligation to enforce the Investor’s obligation to fund its Commitment in accordance with the terms hereof, pursuant to, and subject to, and solely in accordance with, the terms and conditions of Section 9.13 of the Transaction Agreement and the rights set forth herein; provided that, this Letter may only be enforced by Parent in accordance with clause (a) above or the Company in accordance with clause (b) above if Parent or the Company, as applicable, is also seeking the enforcement of the obligations of the Other Investors under, and in accordance with, the Other Investors Equity Commitment Letters. Neither Parent’s creditors nor any other Person (other than the Company to the extent provided herein) shall have any right to enforce this Letter or to cause Parent to enforce this Letter. For the avoidance of doubt, and notwithstanding anything to the contrary herein, nothing in this Letter shall affect the right of Investor, Other Investors or Parent to enforce any terms of that certain Interim Investors Agreement, executed as of the date hereof, by and among the Investor, the Other Investors and Parent (the “Interim Investors Agreement”).

6. No Modification; Entire Agreement. This Letter may not be amended or otherwise modified without the prior written consent of Parent, the Investor and the Company. Together with the Transaction Agreement, the Limited Guarantee, the Confidentiality Agreement, the Interim Investors Agreement, and this Letter constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between the Investor or any of its Affiliates, on the one hand, and Parent or any of its Affiliates, on the other, with respect to the transactions contemplated hereby. Except as expressly permitted in Section 11 hereof, no transfer of any rights or obligations hereunder shall be permitted without the consent of Parent, the Investor and the Company. Any transfer in violation of the preceding sentence shall be null and void.

7. Governing Law; Jurisdiction; Venue; Waiver of Jury Trial.

(a) This Letter and all Actions (whether based on contract, tort or otherwise) arising out of or relating to this Letter, any of the transactions contemplated by this Letter, or any of the acts or omissions of Parent, the Investor or the Company in the negotiation, administration, performance or enforcement hereof or thereof shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof or of any other jurisdiction which would require the application of the laws of any other jurisdiction.

 

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(b) Each party hereto submits to the exclusive jurisdiction of the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware in respect of any action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Letter or the transactions contemplated hereby and waives, and agrees not to assert, any defense in any action for the interpretation or enforcement of this Letter and any related agreement, certificate or other document delivered in connection herewith, that they are not subject thereto or that such action may not be brought or is not maintainable in such courts or that this Letter may not be enforced in or by such courts or that their property is exempt or immune from execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper. Service of process with respect thereto may be made upon any party to this agreement by mailing a copy thereof by registered or certified mail, postage prepaid, to such party at its address as provided in Section 6 of the Investor’s Limited Guarantee.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO THIS LETTER AND ALL ACTIONS OR CLAIMS (WHETHER BASED ON ANY DISPUTE IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS LETTER OR ANY OF THE ACTS OR OMISSIONS OF PARENT, THE INVESTOR OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF, AS THE CASE MAY BE. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LETTER BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(C).

8. Counterparts. This Letter shall not be effective until it has been executed and delivered by all parties hereto. This Letter may be executed in any number of counterparts (including by facsimile or by .pdf delivered via email), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

9. Confidentiality. This Letter shall be treated as confidential and is being provided to Parent solely in connection with the Transaction. This Letter may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction) by

 

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Parent except with the prior written consent of the Investor in each instance; provided, that (a) this Letter may be provided to the Company (so long as the Company agrees to keep, and agrees to cause its directors, officers, employees, partners, advisors and other representatives to keep, this Letter confidential) and (b) no such written consent is required for any disclosure of the existence of this Letter (i) to the extent required by applicable Law (provided, that Parent or the Company, as applicable, will provide the Investor an opportunity to review such required disclosure in advance of such public disclosure being made), (ii) to Parent’s or the Company’s Representatives who need to know of the existence or terms of this Letter (so long as such Representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Letter confidential) or (iii) in connection with any litigation or Action related to Transaction Agreement, the Limited Guarantees, the Other Investors Equity Commitment Letters, the Debt Commitment Letter or any other ancillary agreements entered into in connection with the Transaction.

10. Termination. The obligation of the Investor under or in connection with this Letter will terminate automatically and immediately upon the earliest to occur of (a) the Closing and the funding of the Commitment (at which time all such obligations shall be discharged), (b) the termination of the Transaction Agreement pursuant to its terms (unless the Company shall have previously commenced an action pursuant to clause (b) of Section 5 hereof, in which case this Letter shall terminate upon the final, non-appealable resolution of such action and satisfaction by the Investor of any obligations finally determined or agreed to be owed by the Investor in respect of the payment obligations of Parent consistent with the terms hereof), (c) the Company or any of its controlled Affiliates, or any Person claiming by, through or for the benefit of any of the foregoing, accepting all or any portion of the Company Termination Fee pursuant to the Transaction Agreement or accepting any payment from the Guarantor (as defined in the Limited Guarantee) under the Limited Guarantee in respect of such obligations, (d) the Company or any of its controlled Affiliates asserting in writing a claim against the Investor or any Non-Recourse Party under or in connection with either the Limited Guarantee or the Transaction Agreement other than the Company asserting any Retained Claim against any Non-Recourse Party against which such Retained Claim may be asserted pursuant to Section 8 of the Limited Guarantee and (e) the termination of the Other Investors Equity Commitment Letters.

11. No Assignment. The Commitment evidenced by this Letter shall not be assignable, in whole or in part, by Parent without the Investor’s and the Company’s prior written consent, and the granting of such consent in a given instance shall be solely in the discretion of the Investor and the Company, as applicable, and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment. Investor may assign all or a portion of its obligations to fund the Commitment to its Affiliates or affiliated funds or to entities governed by one of its Affiliates or affiliated funds subject to the prior written consent of the Company; provided, that any permitted assignment shall not relieve Investor of its obligations under this Letter. Any purported assignment of this Letter or the Commitment in contravention of this Section 11 shall be void and of no force and effect. The Investor and Parent shall give written notice to the Company of any assignment pursuant to this paragraph that is effected prior to Closing as promptly as practicable thereafter (and in no event more than two (2) Business Days thereafter).

 

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12. Representations and Warranties. The Investor hereby represents and warrants to Parent that: (a) it has all limited partnership power and authority to execute, deliver and perform this Letter; (b) the execution, delivery and performance of this Letter by it has been duly and validly authorized and approved by all necessary limited partnership or other organizational action by it and no other proceedings or actions on the part of it are necessary therefor; (c) this Letter has been duly and validly executed and delivered by it and constitutes a valid and legally binding obligation of it, enforceable against it in accordance with the terms of this Letter; (d) its Commitment is less than the maximum amount that it is permitted to invest in any one portfolio investment pursuant to the terms of its constituent documents or otherwise; (e) it has, and will maintain for so long as this Letter is in effect, uncalled capital commitments or access to available funds in excess of the sum of its Commitment hereunder plus the aggregate amount of all other commitments and obligations it currently has outstanding; (f) all consents, approvals, authorizations, permits of, filings with and notification to, any governmental authority necessary for the due execution, delivery and performance of this Letter by the Investor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Letter; and (g) the execution, delivery and performance by the Investor of this Letter do not (i) violate the organizational documents of the Investor, (ii) violate any applicable law or judgment or (iii) result in any violation of, or default (with or without notice or lapse of time or both) under, or give rise to a termination, cancellation or acceleration of any obligation or to the loss of any benefit under, any material contract to which it is a party.

[Remainder of the page intentionally left blank – signature page follows]

 

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Sincerely,

 

TPG HEALTHCARE PARTNERS, L.P.

 

By: TPG Healthcare Partners GenPar, L.P. its general partner

By: TPG Healthcare Partners GenPar Advisors, LLC its general partner

By:   /s/ Ken Murphy
Name:   Ken Murphy
Title:   Chief Operating Officer

 

Agreed to and accepted:

 

CORGI BIDCO, INC.
By:   /s/ Sarah Kim
Name:   Sarah Kim
Title:   President
EX-99.(c)(2)

Exhibit c(2)

 

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Project Padlock
Board Discussion Materials Goldman Sachs & Co. LLC
May 23, 2022
INVESTMENT BANKING DIVISION


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Disclaimer
INVESTMENT BANKING DIVISION
These materials have been prepared and are provided by Goldman Sachs on a confidential basis solely for the information and assistance of the Board of Directors (the “Board”), the Transaction Committee of the Board, and senior management of Corgi (the “Company”) in connection with their consideration of the matters referred to herein. These materials and Goldman Sachs’ presentation relating to these materials (the “Confidential Information”) may not be disclosed to any third party or circulated or referred to publicly or used for or relied upon for any other purpose without the prior written consent of Goldman Sachs. The Confidential Information was not prepared with a view to public disclosure or to conform to any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and Goldman Sachs does not take any responsibility for the use of the Confidential Information by persons other than those set forth above. Notwithstanding anything in this Confidential Information to the contrary, the Company may disclose to any person the US federal income and state income tax treatment and tax structure of any transaction described herein and all materials of any kind (including tax opinions and other tax analyses) that are provided to the Company relating to such tax treatment and tax structure, without Goldman Sachs imposing any limitation of any kind. The Confidential Information has been prepared by the Investment Banking Division of Goldman Sachs and is not a product of its research department.
Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, any other party to any transaction and any of their respective affiliates or any currency or commodity that may be involved in any transaction. Goldman Sachs’ investment banking division maintains regular, ordinary course client service dialogues with clients and potential clients to review events, opportunities, and conditions in particular sectors and industries and, in that connection, Goldman Sachs may make reference to the Company, but Goldman Sachs will not disclose any confidential information received from the Company.
The Confidential Information has been prepared based on historical financial information, forecasts and other information obtained by Goldman Sachs from publicly available sources, the management of the Company or other sources (approved for our use by the Company in the case of information from management and non-public information). In preparing the Confidential Information, Goldman Sachs has relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by us, and Goldman Sachs does not assume any liability for any such information. Goldman Sachs does not provide accounting, tax, legal or regulatory advice.
Goldman Sachs has not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance sheet assets and liabilities) of the Company or any other party to any transaction or any of their respective affiliates and has no obligation to evaluate the solvency of the Company or any other party to any transaction under any state or federal laws relating to bankruptcy, insolvency or similar matters. The analyses contained in the Confidential Information do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold or purchased. Goldman Sachs’ role in any due diligence review is limited solely to performing such a review as it shall deem necessary to support its own advice and analysis and shall not be on behalf of the Company. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses, and Goldman Sachs does not assume responsibility if future results are materially different from those forecast.
The Confidential Information does not address the underlying business decision of the Company to engage in any transaction, or the relative merits of any transaction or strategic alternative referred to herein as compared to any other transaction or alternative that may be available to the Company. The Confidential Information is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of such Confidential Information and Goldman Sachs assumes no responsibility for updating or revising the Confidential Information based on circumstances, developments or events occurring after such date. The Confidential Information does not constitute any opinion, nor does the Confidential Information constitute a recommendation to the Board, any security holder of the Company or any other person as to how to vote or act with respect to any transaction or any other matter. The Confidential Information, including this disclaimer, is subject to, and governed by, any written agreement between the Company, the Board and/or any committee thereof, on the one hand, and Goldman Sachs, on the other hand. The Confidential Information does not address, nor does Goldman Sachs express any view as to, the potential effects of volatility in the credit, financial and stock markets on the Company, any other party to any transaction or any transaction.
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Topics for Discussion
INVESTMENT BANKING DIVISION
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


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Topics for Discussion
INVESTMENT BANKING DIVISION
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


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Overview of Proposed Transaction
($ in millions, except per share data)
INVESTMENT BANKING DIVISION
Review of Transaction
Merger Consideration (cash, $ per share) $                21.00
Implied Premium to:
Current Price as of 19-May-22 ($18.02) 16.5% 30-Day VWAP as of 19-May-22 ($15.58) 34.8% 60-Day VWAP as of 19-May-22 ($16.23) 29.4% 90-Day VWAP as of 19-May-22 ($16.71) 25.7%
1
Price as of 13-May-22 ($15.27) 37.5% 30-Day VWAP as of 13-May-22 ($15.13) 38.8% 60-Day VWAP as of 13-May-22 ($16.12) 30.3% 90-Day VWAP as of 13-May-22 ($16.71) 25.6%
Total Diluted Shares Outstanding (in Millions)                145.02 Implied Equity Consideration $                3,045
Plus: Debt $                1,047 Plus: Minority Interest $                22 Less: Cash & Cash Equivalents $                (117) Less: Equity Method Investments $                (48)
Implied Enterprise Value $                3,949
EV / Adjusted EBITDA Metric
LTM (31-Mar-22) $                250 15.8x
2022E—Management $                285 13.8x 2023E—Management $                349 11.3x
2022E—IBES $                274 14.4x 2023E—IBES $                311 12.7x
Source: CapitalIQ, Corgi filings, financial projections for Corgi as of 20-May-2022 prepared by Corgi management as approved for Goldman Sachs’ use by Corgi (“Management Projections”). Note: Market data as of 19-May-2022, prior to Corgi’s 13-D/A filing on 20-May-2022. Balance sheet data as of 31-Mar-2022, diluted share count per Corgi management, as of 20-May-2022. LTM
EBITDA as per Corgi filings. (1) Last trading date prior to proposal being provided.
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Topics for Discussion
INVESTMENT BANKING DIVISION
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


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Overview of Corgi Stock Price Performance
Stock Price Performance Since Initial Public Trading
INVESTMENT BANKING DIVISION
Stock Price Performance Since Initial Public Trading (Feb-2019)
54.00 Performance (%) YTD 30,000 Corgi (9.8)%
1
48.00 Distribution 7.0 10-Nov-2020: Announces 3Q21
2 results, including initial U.K. and
Companion Animal Health (26.1) Germany headwinds (2.3%) 25,000 Tech-Enabled Services3 (8.9)
42.00
05-May-2022: Announces Q1
36.00 13-Aug-2019: Announces 2Q19 FY22 results +10.5% 20,000 results, reducing FY earnings guidance for the second time since (USD) its public debut (40.1%)
30.00
90D VWAP: $16.71 (000)
15,000
Price 12-Nov-2019: Announces 3Q19 30D VWAP: $15.58 g results, outpacing consensus in 24.00
EBITDA estimates by ~14% Volume Clos +22.0%
18.00 15-May-2020: Announces 1Q20 results, 10,000 showing a modest beat to consensus estimates and improvement among Rx
5/19: $18.02 management platform KPIs such as 5/13: $15.27 4
12.00 “same-store” growth +8.7%
30-Apr-2020: Announces $250M 5,000 convertible preferred equity investment 6.00 by CD&R +2.6%
0 0 Feb-2019 Aug-2019 Mar-2020 Sep-2020 Apr-2021 Oct-2021 May-2022
Volume Corgi 30D VWAP 90D VWAP
Source: Bloomberg Market Data as of 19-May-2022. ¹ Distribution includes ABC, CAH, MCK, Owens & Minor, Henry Schein, Patterson; ² Companion Animal Health includes Dechra Pharma, Elanco, Phibro, Vetoquinol, Virbac, Zoetis, Idexx, Heska; ³ Tech-enabled Services includes Evolent, Health Equity, R1, IQVIA, Convey Health and Signify Health. 4 Last trading date prior to proposal being provided.
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INVESTMENT BANKING DIVISION
Overview of Corgi Multiple Over Time
NTM EV / EBITDA
40x Δ S inc e
Average In 0 1- Ja n- Average In
Average 2020 2021 2022 2 0 2 2 FY1-FY3 EBITDA Growth 2020 2021 2022
Corgi 15.2 x 17.0 x 11.5 x (1.4)x Corgi 12.1% 13.3% 10.9% Distribution¹ 8.0 8.5 10.0 1.2 Companion Animal Health² 18.1 22.7 18.8 (7.3) Tech-enabled Services³ 18.2 24.0 18.7 (2.6) 30x S&P 500 14.7 15.9 14.4 (2.8)
Multip le EBITDA d ighte 20x
17.0 x We 16.4 x me - Ti 13.0 x 5/19: 12.1 x
4
NTM 5/13: 10.6 x
10x
10.4 x
0x
Feb-2019 Aug-2019 Mar-2020 Sep-2020 Apr-2021 Oct-2021 May-2022
Corgi Distribution¹ Companion Animal Health² Tech-enabled Services³ S&P 500
Source: Bloomberg, CIQ and IBES, as of 19-May-2022.
¹Distribution includes ABC, CAH, MCK, Owens & Minor, Henry Schein, Patterson; ABC, CAH, and MCK pro forma for opioid settlements as of 02-Apr-2022. ²Companion Animal Health includes Dechra Pharma, Elanco, Phibro, Vetoquinol, Virbac, Zoetis, Idexx, and Heska. ³Tech-enabled Services includes Evolent, Health Equity, R1, IQVIA, Convey Health and Signify Health. 4 Last trading date prior to proposal being provided.
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INVESTMENT BANKING DIVISION
Operational Peer Benchmarking
Management Projections and IBES Street Consensus
2021E – 2023E Revenue Growth 2021E – 2023E EBITDA Growth
Peer Median(1): 7.4% Peer Median(1): 10.0% 22.0 % 19.5 % 19.8 %
12.9 %
9.3 % 7.9 % 7.7 % 6.3 % 5.6 % 4.6 %
Corgi (IBES) Corgi (Mgmt) Distribution Tech-Enabled Companion Animal Corgi (IBES) Corgi (Mgmt) Distribution Tech-Enabled Companion Animal Services Health Services Health
2022E Gross Margin 2022E Adj. EBITDA Margin
Peer Median(1): 32.7% Peer Median(1): 15.5% 22.8 % 23.1 % 58.4 %
39.1 %
19.2 % 19.7 % 5.8 % 12.5 % 5.7 %
3.5 %
Corgi (IBES) Corgi (Mgmt) Distribution Tech-Enabled Companion Animal Corgi (IBES) Corgi (Mgmt) Distribution Tech-Enabled Companion Animal Services Health Services Health
Source: Corgi based on Management Projections, peers based on IBES estimates as of 19-May-2022
Note: Distribution includes ABC, CAH, MCK, Owens & Minor, Henry Schein, Patterson. Companion Animal Health includes Dechra Pharma, Elanco, Phibro, Vetoquinol, Virbac, Zoetis, Idexx, and Heska. Tech-Enabled Services includes Convey Health Solutions, Evolent, Health Equity, R1, IQVIA, and Signify Health. Values adjusted when needed to reflect calendar year end financials. (1) Reflects median of names across all peer groups.
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INVESTMENT BANKING DIVISION
Distribution Valuation Benchmarking
Street Consensus ($ in millions)
EV / 2022E EBITDA
5/19: 12.7x
12.0 x
11.3 x 5/13: 11.3x (4)
11.2 x
10.3 x
9.5 x
8.6 x
(1)
(1) (1)(3)
Corgi
EV $ 13,656 $ 55,755 $ 40,147 $ 3,454 $ 23,112 $ 5,276 $ 3,490 Rev Growth(2) 4.7 % 3.0 % 7.2 % 3.8 % 5.9 % 4.5 % 5.6 % 22E Gross Margin 29.8 % 5.0 % 3.5 % 20.7 % 3.7 % 20.1 % 19.2 % EBITDA Growth(2) 5.1 % 1.5 % 9.6 % 7.6 % 1.7 % 20.3 % 12.9 % 22E EBITDA Margin 8.7 % 1.9 % 1.4 % 5.0 % 1.5 % 5.0 % 5.7 %
Source: IBES estimates as of 19-May-2022. Note: Values adjusted when needed to reflect calendar year end financials. (1) Pro forma for payments to be made in conjunction with the opioid settlements. (2) Reflects CY 2021A – CY 2023E growth. (3) Growth metrics are pro forma for Cordis divestiture closed August 2021. (4) Last trading date prior to proposal being provided.
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INVESTMENT BANKING DIVISION
Wall Street Ratings and Methodology
12-Month Price Target
Median: $22.00 Current Price: $18.02
$26
$22 $22 $19 $16
Analyst A Analyst B Analyst C Analyst D Analyst E
Date 08-May-2022 05-May-2022 05-May-2022 06-May-2022 19-May-2022
Recommendation Buy Buy Buy Hold Sell
SOTP (9.3x 2023E EV/EBITDA for supply chain
DCF (8.0% WACC, 2.0% DCF (9.9% WACC, 0.5% ~14.0x NTM P/E, Methodology 12.5x 2023E Adj. EBITDA services, 1.7x 2023 TGR) TGR) ~10.0x NTM EV/EBITDA
EV/Sales for prescription management)
Source: Wall Street research, market data as of 19-May-2022.
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INVESTMENT BANKING DIVISION
Topics for Discussion
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


LOGO

INVESTMENT BANKING DIVISION
Summary of Corgi Management Projections
($ in millions)
GTS ‘20A – ‘22E CAGR 18.3% GTS ’22E – ‘25E CAGR 15.5% Distribution ‘20A – ‘22E CAGR 4.3% Distribution ’22E – ‘25E CAGR 6.5% Total ‘20A – ‘22E CAGR 6.5% Total ’22E – ‘25E CAGR 8.2% $ 6,918 $ 7,208 $ 6,233 $ 6,600 $ 5,775 $ 5,330 $ 1,748 $ 1,939 $ 4,575 $ 4,916 $ 1,383 $ 1,562
Revenue $ 4,336 $ 1,214
$ 897 $ 1,058 $ 641 $ 754 $ 4,561 $ 4,850 $ 5,038 $ 5,170 $ 5,269 $ 3,695 $ 3,821 $ 4,019 $ 4,271
2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E
Rev % Growth – Mgmt 5.5% 7.5% 8.4% 8.4% 7.9% 5.9% 4.8% 4.2%
Rev $ – Consensus $4,575 $4,827 $5,105 $5,416 -———-
Rev % Growth – Consensus 5.5% 5.5% 5.8% 6.1% -———-
GTS ‘20A – ‘22E CAGR 26.8% GTS ’22E – ‘25E CAGR 23.4% Distribution ‘20A – ‘22E CAGR 7.5% Distribution ’22E – ‘25E CAGR 14.4% Total ‘20A – ‘22E CAGR 12.3% Total ’22E – ‘25E CAGR 17.2% $ 570 $ 537 $ 500 $ 397 $ 459
Adjusted $ 205 $ 229
$ 349 $ 181
EBITDA $ 285 $ 158
$ 244 $ 132 $ 226 $ 112 $ 84
$ 52 $ 70 $ 301 $ 319 $ 332 $ 341 $ 237 $ 265 $ 174 $ 173 $ 201
2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E
% Margin – Mgmt. 5.2% 5.3% 5.8% 6.6% 6.9% 7.4% 7.6% 7.8% 7.9% EBITDA % Growth – Mgmt. 7.7% 17.1% 22.5% 13.6% 15.7% 8.9% 7.3% 6.2%
EBITDA $ – Consensus $244 $274 $311 $328 -———-
EBITDA % Growth – Consensus 7.7% 12.6% 13.3% 5.6% -———-
Source: Management Projections. 12 Note: Corporate expense allocated to each segment based on projected pre-Corporate Segment EBITDA breakdown.


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INVESTMENT BANKING DIVISION
Comparison of Management Forecast Vs. Street
($ in millions)
Revenue Adjusted EBITDA
2022E—2025E CAGR 2022E—2025E CAGR
Management Projections 8.2% Management Projections 17.2% Analyst Median 6.5% Analyst Median 12.0%
$6,233 $459 $5,833 $5,775 $397 $385 $5,416 $5,330 $349 $4,916 $328 $285 $5,105 $311 $4,827 $274
2022E 2023E 2024E 2025E 2022E 2023E 2024E 2025E
Growth (%) Margin (%)
Mgmt. Projections 7.5% 8.4% 8.4% 7.9% Mgmt. Projections 5.8% 6.6% 6.9% 7.4% Analyst Median 5.5% 5.8% 6.1% 7.7% Analyst Median 5.7% 6.1% 6.1% 6.6% # of Analysts 6 6 5 3 # of Analysts 6 6 5 3
Management Projections Analyst Median
Source: Management Projections, Wall Street research
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INVESTMENT BANKING DIVISION
Topics for Discussion
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


LOGO

INVESTMENT BANKING DIVISION
Summary of Illustrative Financial Analyses
($ Represents Implied Corgi Share Price, Unless Otherwise Noted)
Current Price: $18.02 Offer Price: $21.00 Key Commentary
Discounted Cash • Management projections through 2028
$ 14.76 $ 27.02 • Assumes WACC 9.0% – 11.5%
Flow Analysis
• Assumes perp. growth of 2.5 – 3.5%
• Assumes EV / NTM EBITDA multiple range Present Value of Future between 10.0 – 13.0x applied to management
$ 17.32 $ 27.73
Stock Price Analysis projected financials
• Assumes cost of equity of 11.7%
Analyses Precedent • Assumes EV / LTM EBITDA multiple range Transaction Comps $ 12.74 $ 27.02 between 11.0 – 19.3x applied to LTM Adjusted EBITDA of $250M
Financial • Based on 25th to 75th percentile of precedent
Precedent Premiums
$ 22.33 $ 25.52 non-biopharma premiums paid since 2010
Analysis—Latest Close (5/19)
(23.9% – 41.6%), applied to current share price as of 5/19 ($18.02)
Precedent Premiums • Based on 25th to 75th percentile of precedent (1) $ 18.92 $ 21.62 non-biopharma premiums paid since 2010
Analysis—(5/13)
(23.9% – 41.6%), applied to share price as of 5/13 ($15.27)(1)
Wall Street Analyst • Analyst price target range of $16—$26 per share
$ 16.00 $ 26.00
Price Targets based on five price targets
Reference • Median price target of $22 per share
52-Week
$ 13.39 $ 29.02
Trading Range • 52-week intra-day trading range between For $13.39 and $29.02
Source: Capital IQ, Corgi management, Management Projections, SEC Filings. Note: Market data as of 19-May-2022. (1) Last trading date prior to proposal being provided.
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INVESTMENT BANKING DIVISION
Illustrative Discounted Cash Flow Analysis
($ in millions, except per share data)
Illustrative Unlevered Free Cash Flow
Q2-Q4 ‘22E 2023E 2024E 2025E 2026E 2027E 2028E Terminal Total Sales $ 3,768 $ 5,330 $ 5,775 $ 6,233 $ 6,600 $ 6,918 $ 7,208 $ 7,208
Rev % Growth 8.4 % 8.4 % 7.9 % 5.9 % 4.8 % 4.2 %
Total Adj. EBITDA $ 222 $ 349 $ 397 $ 459 $ 500 $ 537 $ 570 $ 570
% Margin 5.9 % 6.6 % 6.9 % 7.4 % 7.6 % 7.8 % 7.9 % 7.9 %
D&A $(137) $(192) $(209) $(227) $(250) $(262) $(273) $(112)
% of Sales (3.6)% (3.6)% (3.6)% (3.6)% (3.8)% (3.8)% (3.8)%
EBIT $ 85 $ 157 $ 188 $ 233 $ 250 $ 274 $ 297 $ 458
% Margin 2.3 % 2.9 % 3.3 % 3.7 % 3.8 % 4.0 % 4.1 % 6.4 %
(-) Tax $(21) $(39) $(47) $(58) $(62) $(69) $(74) $(114)
Tax Rate 25.0 % 25.0 % 25.0 % 25.0 % 25.0 % 25.0 % 25.0 % 25.0 %
NOPAT $ 64 $ 118 $ 141 $ 175 $ 187 $ 206 $ 223 $ 343
(+) D&A $ 137 $ 192 $ 209 $ 227 $ 250 $ 262 $ 273 112 (-) Δ in NWC 27 (49) (56) (57) (58) (42) (38) (19) (-) Capex (59) (86) (97) (97) (102) (107) (112) (112)
Unlevered Free Cash Flow $ 170 $ 175 $ 197 $ 247 $ 278 $ 319 $ 345 $ 324
Implied Equity Value Implied Share Price Implied Terminal EV / EBITDA
PGR PGR PGR
# ###### 2.5 % 3.0 % 3.5 % $ 19.97 2.5 % 3.0 % 3.5 % $ 8.03 2.5 % 3.0 % 3.5 %
9.00 % $ 3,345 $ 3,609 $ 3,922 9.00 % $ 23.06 $ 24.88 $ 27.02 9.00 % 9.0 x 9.8 x 10.7 x
RateRateRate ount 10.25 % $ 2,644 $ 2,816 $ 3,015 ount 10.25 % $ 18.24 $ 19.42 $ 20.79 ount 10.25 % 7.5 x 8.1 x 8.7 x
Disc Disc Disc
11.50 % $ 2,138 $ 2,258 $ 2,392 11.50 % $ 14.76 $ 15.58 $ 16.51 11.50 % 6.5 x 6.9 x 7.4 x
Source: Management Projections. Note: Balance sheet as of 31-Mar-2022.
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INVESTMENT BANKING DIVISION
Illustrative Present Value of Future Stock Price Analysis
Current Future Value of Stock Price Present Value of Future Stock Price
Corgi NTM
EBITDA $30 Multiple: $40 $ 37.60 $ 27.73
5/19: 12.1x
5/13(1): 10.6x $ 32.86 $ 25.56 $ 31.03 $25 $ 23.95 $ 24.24 NTM EV / $30 $ 22.19 $ 26.93 $ 28.13
EBITDA Multiple $ 26.03 $ 20.63 $ 20.74
$20 $ 18.82 $ 22.42 $ 22.84 13.0x $ 17.32
$20 $ 18.82 5/19: $ 18.02
(1)
11.5x $15 5/13: $ 15.27 5/19: $ 18.02 (1) 5/13: $ 15.27
10.0x
$10 $10
Current FYE 2022 FYE 2023 FYE 2024 Current FYE 2022 FYE 2023 FYE 2024
Present Value of Future Stock Price Sensitivity Tables
80% NTM EBITDA
YE 2023: $318M FYE 2023 PVFSP Sensitivity FYE 2024 PVFSP Sensitivity
YE 2024: $367M
90% NTM EBITDA
YE 2023: $357M NTM EBITDA Multiple NTM EBITDA Multiple
YE 2024: $413M
100% NTM EBITDA
YE 2023: $397M 11.7 % 10.0 x 11.5 x 13.0 x 10.0 x 11.5 x 13.0 x
YE 2024: $459M
% Plan Case n 80.0 % $ 14.32 $ 17.02 $ 19.72 n 80.0 % $ 16.09 $ 18.88 $ 21.68
’21A – ’25E nce Pla nce Pla
EBITDA CAGR
90.0 % $ 16.57 $ 19.60 $ 22.64 90.0 % $ 18.42 $ 21.56 $ 24.70
80% : 10.8% rforma rforma 90% : 14.1% Against Against Pe Pe
100% : 17.2% 100.0 % $ 18.82 $ 22.19 $ 25.56 100.0 % $ 20.74 $ 24.24 $ 27.73
Consensus : 12.1%
Source: Capital IQ and Management Projections. Market data as of 19-May-2022.
Note: Future value of stock price discounted to 31-Mar-2022 using Corgi’s illustrative cost of equity of 11.7%. (1) Last trading date prior to proposal being provided.
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INVESTMENT BANKING DIVISION
Selected Precedent Transaction Multiples
Selected Precedent Transactions in Distribution, Animal Health and HCIT
EV / LTM EBITDA
Distribution Animal Health HCIT
Median = 11.9x Median = 16.2x Median = 14.8x
19.3x
18.3x 18.0x 16.2x
14.9x 14.8x 13.0x 12.0x 11.9x 11.0x
9.3x
Year 2021 2013 2014 2015 2017 2015 2013 2015 2018 2021 2021
Acquiror
Target
Deal Value $6.5bn $2.0bn $8.4bn $2.6bn $9.0bn $1.1bn $1.3bn $8.7bn $4.9bn $13.8bn $28.6bn
Source: Public filings, Eikon, Capital IQ, and Wall Street research.
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INVESTMENT BANKING DIVISION
Premiums Paid Analysis
Public | $1-5bn Deal Value | 1-Day Premiums | Change of Control Deals for U.S. Targets
Non-Biopharma Healthcare (Median)
34.4%
30.0% 26.2%
‘10-‘15 ‘16-‘22 YTD ‘10-‘22 YTD
Mean 37.6% 34.3% 36.2% 25th Percentile 23.9% 24.0% 23.9% 75th Percentile 41.2% 39.8% 41.6% # of Deals 21 15 36
Source: Dealogic as of 19-May-2022. Note: Premiums paid analysis represents premiums to undisturbed share prices.
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LOGO

INVESTMENT BANKING DIVISION
Topics for Discussion
1 Transaction Overview
2 Public Market Perspectives on Corgi 3 Overview of Corgi Management Projections 4 Illustrative Valuation Analysis A Appendix A: Supplemental Materials


LOGO

INVESTMENT BANKING DIVISION
Valuation Peer Benchmarking
Street Consensus
EV / 2022E EBITDA
33.2 x 31.8 x 30.6 x
Median: 18.6x
21.8 x 21.8 x 21.8 x 19.8 x Median: 17.3x
Median: 10.7x 15.3 x 14.9 x
1 1 14.9 x 13.7 x
12.7 x 12.0 x 12.2 x 11.3 x 11.2 x 10.3 x 1
9.5 x 8.6 x 9.2 x
7.8 x
EV / 2023E EBITDA
25.3 x
22.5 x 23.1 x 19.9 x
18.1 x 18.3 x 18.3 x Median: 15.9x Median: 15.5x
1 Median: 10.1x 12.8 x 13.4 x
1 12.2 x 12.2 x 11.2 x 11.4 x 11.4 x 10.7 x 11.4 x
9.6 x 9.1 x1
7.4 x 8.3 x
6.7 x
Distribution Companion Animal Health Tech-Enabled Services
Source: Corgi and peers based on IBES estimates as of 19-May-2022
Note: Distribution includes ABC, CAH, MCK, Owens & Minor, Henry Schein, Patterson. Companion Animal Health includes Dechra Pharma, Elanco, Phibro, Vetoquinol, Virbac, Zoetis, Idexx, and Heska. Tech-Enabled Services includes Convey Health Solutions, Evolent, Health Equity, R1, IQVIA, and Signify Health. 1 Pro forma for payments to be made in conjunction with the opioid settlements.
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INVESTMENT BANKING DIVISION
Illustrative Weighted Average Cost of Capital Analysis
Assumptions WACC Sensitivity Analysis
Target Capital Structure
Total Debt / Capitalization
Debt 25.0 % Equity 75.0 %
Assumptions $ 0.10 20.0 % 25.0 % 30.0 %
Risk Free Rate 3.25 % Equity Beta 1.39
Beta 1.19 9.4 % 9.2 % 8.9 %
Equity Risk Premium 6.1 % ty
Cost of Equity 11.7 % ui
Marginal Tax Rate 21.0 % Eq 1.39 10.4 % 10.1 % 9.8 % Pre-Tax Cost of Debt 6.5 % After Tax Cost of Debt 5.1 %
Levered 1.59 11.4 % 11.0 % 10.6 %
Discount Rate 10.1 %
Historical Beta Over Time
Pre-COVID3 Post-COVID3
2.90 Average Since IPO 2Y 1Y 6M 3M 1M Corgi 1.59 1.06 1.83 1.86 1.85 1.79 1.72 1.57 2.50 Distribution¹ 0.95 1.19 0.84 0.83 0.84 0.84 0.86 0.96 Companion Animal Health² 0.82 0.71 0.87 0.87 0.87 0.84 0.78 0.74
Beta 2.10 l a 1.70
1.58 Historic 1.30 0.97
0.90
0.81
0.50
Feb-2019 Jul-2019 Dec-2019 Apr-2020 Sep-2020 Feb-2021 Jul-2021 Dec-2021 May-2022
Source: Corgi filings, historical Axioma betas, Management Projections, market capitalization on basic shares outstanding, Bloomberg as of 19-May-2022.
1 Distribution peers include Patterson, AmerisourceBergen, Cardinal, McKesson, Owens & Minor, and Henry Schein. 2 Companion Animal Health peers include Dechra, Elanco Animal Health, Phibro Animal Health, Vetoquinol, Virbac, Zoetis, IDEXX, and Heska. 3 Assumes post-COVID period begins 19-Feb-2020.
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INVESTMENT BANKING DIVISION
Overview of Equity Capitalization
As of May 20th, 2022
Common Shares Outstanding                139,518,436
Strike Price
$ 0.37                4,531
$ 0.39                1,210
$ 0.49                1,992
$ 2.78                8,679
$ 3.16                 49,415
$ 5.34                 58,845
$ 5.67                102,096
$ 7.83                180,159
$ 8.21                 59,074
$ 8.60                173,097 $ 14.38                 90,681 $ 18.54                 80,210 $ 20.84                 60,508 $ 24.60                 23,040 $ 32.98                8,945 $ 37.47                259,260
Total Options                1,161,742
RSUs / PSUs                4,929,395
1                105,250 ESPP
Diluted Share Outstanding Build
Common Shares Outstanding                139,518,436
2                465,122 Options Restricted Stock Units                4,929,395 ESPP                105,250
Total Diluted Shares Outstanding                145,018,203
Source: Corgi Management.
1. ESPP dilution based on $1.5mm in current cycle of ESPP program and $14.37 exercise price (85% of closing price as of 1-Dec-2021).
2. Option dilution based on $21.00 offer price.
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INVESTMENT BANKING DIVISION
Overview of LTM Multiples Over Time
LTM EV / EBITDA
16x Average 5Y 3Y 2Y 1Y Amerisourcebergen 8.9 x 8.9 x 9.2 x 9.8 x Cardinal Health 7.6 7.2 7.1 7.0 14x McKesson 8.9 8.5 8.8 9.9
13.2 x
12x
11.1 x
10x
Multiple 9.2 x EBITDA 8x LTM 6x
4x
2x
0x
May-2017 Mar-2018 Jan-2019 Nov-2019 Sep-2020 Jul-2021 May-2022
Amerisourcebergen Cardinal Health McKesson
Source: Bloomberg,CIQ and IBES, as of 19-May-2022.
Note: EV pro forma for payments to be made in conjunction with the opioid settlements.
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INVESTMENT BANKING DIVISION
Overview of Trading Price and Volume
Stock Price Performance
Monday Tuesday Wednesday Thursday Friday Monday Tuesday Wednesday Thursday
Monday 9 May 10 May 11 May 12 May 13 May 16 May 17 May 18 May 19 Friday May 13—Thursday May 191 Company Corgi (7.4)% 0.9 % (1.4)% 4.1 % 3.0 % 8.1 % 9.3 % (4.2)% 4.3 % 18.0 % Chewy (3.9)% 2.3 % (12.1)% 9.8 % 7.6 % (5.0)% 4.1 % (12.2)% 2.8 % (10.7)% Dechra Pharma (3.0)% 0.9 % 1.4 % (2.5)% 3.9 % 0.4 % 1.0 % (1.6)% 4.2 % 4.0 % Elanco (8.2)% 0.3 % (4.9)% 4.2 % 2.7 % 4.7 % 3.8 % (3.5)% (0.5)% 4.4 % Phibro (2.4)% 1.5 % (2.9)% 1.5 % (0.8)% 2.1 % 0.9 % (0.2)% (4.0)% (1.2)% Vetoquinol (2.5)% 0.7 % 1.0 % (2.2)% 4.5 % 0.3 % 3.0 % 0.0 % 1.3 % 4.6 % Virbac (4.0)% 1.8 % 2.6 % (3.9)% 3.4 % 1.8 % 2.1 % (2.0)% 2.0 % 3.8 % Zoetis (4.4)% 0.5 % (1.7)% 2.0 % 1.4 % 0.1 % 0.6 % (4.5)% (0.1)% (4.1)% Idexx (5.9)% (1.4)% (1.8)% 4.2 % 4.1 % (0.5)% 1.7 % (2.5)% 2.1 % 0.7 % Heska (10.8)% (0.6)% (4.1)% (1.0)% 3.9 % 5.8 % 4.5 % (1.6)% 4.9 % 14.1 % S&P (3.2)% 0.2 % (1.6)% (0.1)% 2.4 % (0.4)% 2.0 % (4.0)% (0.6)% (3.1)% Nasdaq (4.3)% 1.0 % (3.2)% 0.1 % 3.8 % (1.2)% 2.8 % (4.7)% (0.3)% (3.5)%
Corgi (7.4)% 0.9 % (1.4)% 4.1 % 3.0 % 8.1 % 9.3 % (4.2)% 4.3 % 18.0 % Animal Health Median (4.0)% 0.7 % (1.8)% 1.5 % 3.9 % 0.4 % 2.1 % (2.0)% 2.0 % 3.8 % Animal Health Average (5.0)% 0.7 % (2.5)% 1.3 % 3.4 % 1.1 % 2.4 % (3.1)% 1.4 % 1.7 % S&P 500 (3.2)% 0.2 % (1.6)% (0.1)% 2.4 % (0.4)% 2.0 % (4.0)% (0.6)% (3.1)% Nasdaq (4.3)% 1.0 % (3.2)% 0.1 % 3.8 % (1.2)% 2.8 % (4.7)% (0.3)% (3.5)%
Corgi Volume (000s) 789.4 753.7 702.8 650.6 717.8 1,509.3 1,606.8 2,254.8 1,647.2 1,547.2 Multiple of 1M ADTV 0.80 x 0.76 x 0.70 x 0.67 x 0.74 x 1.50 x 1.57 x 2.09 x 1.50 x 1.49 x Multiple of 3M ADTV 1.02 x 0.97 x 0.90 x 0.83 x 0.91 x 1.87 x 1.96 x 2.66 x 1.90 x 1.87 x Multiple of 6M ADTV 0.87 x 0.83 x 0.78 x 0.72 x 0.80 x 1.67 x 1.77 x 2.46 x 1.80 x 1.70 x
Verbal communication of proposal
Source: S&P Capital IQ, market data as of 19-May-2022
1 Friday May 13 – Thursday May 19 multiples of ADTVs reflect the average volume and average ADTV from Friday May 13 to Thursday May 19.
25

EX-99.(d)(2)

Exhibit (d)(2)

Execution Version

LIMITED GUARANTEE

LIMITED GUARANTEE, dated as of May 24, 2022 (this “Limited Guarantee”), by Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership (the “Guarantor”), in favor of Covetrus, Inc., a Delaware corporation (the “Guaranteed Party”).

1. GUARANTEE. To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement;” capitalized terms used but not defined herein shall have the meanings given to such terms in the Transaction Agreement) among Corgi Bidco, Inc., a Delaware corporation (“Parent”), Corgi Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of Parent (“Merger Sub”), and the Guaranteed Party, pursuant to which Merger Sub will merge with and into the Guaranteed Party and the separate corporate existence of Merger Sub shall thereupon cease with the Guaranteed Party being the surviving corporation of such merger and the direct wholly-owned subsidiary of Parent (the “Transaction”), the Guarantor, intending to be legally bound, hereby absolutely, irrevocably and unconditionally guarantees to the Guaranteed Party the due and punctual performance and discharge of 50% (the “Guarantor Percentage”) of the payment obligations of Parent to the Guaranteed Party under (a) Section 8.5(d) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Parent Fee Obligations”) and (b) Sections 6.10(a)(i), 6.10(a)(ii) and 8.5(f) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Expense Obligations” and, together with the Parent Fee Obligations, the “Guaranteed Obligations”); provided, that in no event shall the Guarantor’s aggregate liability for the Guaranteed Obligations exceed $101,475,000.00 (such limitation on the liability the Guarantor may have for the Guaranteed Obligations being herein referred to as the “Cap”), and this Limited Guarantee may not be enforced against the Guarantor without giving effect to the Cap (and to the provisions of Sections 7 and 8 hereof); provided further that the foregoing shall not limit the Guaranteed Party’s rights under the Equity Commitment Letter (defined below), subject to the limitations set forth therein. This Limited Guarantee may be enforced for the payment of money only. All payments hereunder shall be made in lawful money of the United States, in immediately available funds. The Guarantor acknowledges that the Guaranteed Party entered into the transactions contemplated by the Transaction Agreement in reliance upon the execution of this Limited Guarantee. The Guaranteed Party hereby agrees that in no event shall the Guarantor be required to pay any amount to the Guaranteed Party under, in respect of, or in connection with this Limited Guarantee or by the Transaction Agreement other than as expressly set forth herein or therein.

If Parent fails to discharge any Guaranteed Obligations when due, then the Guarantor shall forthwith pay to the Guaranteed Party the Guarantor Percentage of the Guaranteed Obligations (up to the Cap), and the Guaranteed Party may at any time and from time to time, at the Guaranteed Party’s option, and so long as Parent has failed to discharge the Guaranteed Obligations, take any and all actions available hereunder or under applicable Law to collect the Guarantor’s liabilities hereunder in respect of the Guarantor Percentage of such Guaranteed Obligations, subject to the Cap.


In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantor Percentage of the Guaranteed Obligations (in an aggregate amount not to exceed the Cap), regardless of whether any such action is brought against Parent or whether Parent is joined in any such action or actions.

Notwithstanding anything to the contrary contained in this Limited Guarantee or those certain Limited Guarantees, dated as of the date hereof, by TPG Partners VIII, L.P., a Delaware limited partnership, and TPG Healthcare Partners, L.P., a Delaware limited partnership (together, the “Other Investors”) in favor of the Guaranteed Party (the “Other Investors Limited Guarantees”), to the extent Parent is relieved of all or any portion of the Guaranteed Obligations in accordance with the Transaction Agreement, the Guarantor and Other Investors shall be similarly relieved of their corresponding payment obligations under this Limited Guarantee and the Other Investors Limited Guarantees on a proportional basis; provided that no such relief shall reduce the payment obligation under this Limited Guarantee and the Other Investors Limited Guarantees to below the Guarantee Obligations.

2. NATURE OF GUARANTEE. The Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification, amendment or waiver of or any consent to departure from the Transaction Agreement or the equity commitment letter by and between Guarantor and Parent, dated as of the date hereof (the “Equity Commitment Letter”), those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”) and those certain limited guarantees, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Limited Guarantees”) that may be agreed to by Parent. Without limiting the foregoing, the Guaranteed Party shall not be obligated to file any claim relating to the Guaranteed Obligations in the event that Parent becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantor’s obligations hereunder. In the event that any payment hereunder is rescinded or must otherwise be, and is, returned to the Guarantor for any reason whatsoever, the Guarantor shall remain liable hereunder as if such payment had not been made. This Limited Guarantee is a primary obligation of the Guarantor and is an unconditional guarantee of payment and not of collection.

3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the Guaranteed Party may, in its sole discretion, at any time and from time to time, without notice to or further consent of the Guarantor, extend the time of payment of any of the Guaranteed Obligations, and may also make any agreement with Parent, Merger Sub or any other Person (including the Guarantor) liable with respect to the Guaranteed Obligation for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party and Parent, without in any way impairing or affecting the Guarantor’s obligations under this Limited Guarantee or affecting the validity or enforceability of this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, and shall not be conditioned upon or otherwise affected by (whether or not the Guarantor has any knowledge or notice thereof and without further consent of the Guarantor): (a) the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to

 

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enforce any right or remedy against Parent, Merger Sub or the Guarantor; (b) any change in the time, place, manner or terms of payment or performance of any of the Guaranteed Obligations, or any waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Transaction Agreement, the Equity Commitment Letter or the Other Investors Equity Commitment Letters, in each case, that are made in accordance with the terms thereof; (c) any renewal, rescission, waiver, compromise or other amendment or modification of any terms or provisions of the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations, in each case, that are made in accordance with the terms thereof; (d) any change in the legal existence, structure or ownership of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any release or discharge of any obligation of Parent contained in the Transaction Agreement resulting therefrom; (e) any insolvency, bankruptcy, liquidation, dissolution, reorganization, sale or other similar proceeding affecting Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any disposition of all or substantially all of the assets, marshalling of the assets and liabilities, receivership, assignment for the benefit of creditors, arrangement, composition with creditors or readjustment or other similar proceeding affecting Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation; (f) the addition, substitution or release of any Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement; (g) the adequacy of any other means the Guaranteed Party may have of obtaining payment related to the Guaranteed Obligations; (h) the existence of any claim, set-off or other right that the Guarantor may have at any time against Parent, Merger Sub or the Guaranteed Party, whether in connection with the Guaranteed Obligations or otherwise; or (i) any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a matter of law or equity, all of which may be done without notice to Guarantor (except for notices required hereunder or under the Transaction Agreement). To the fullest extent permitted by Law, the Guarantor hereby irrevocably and expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor hereby irrevocably waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of any Guaranteed Obligations incurred and all other notices of any kind (other than notices required to be issued to Parent pursuant to the Transaction Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect or any right to require the marshalling of assets of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, and all suretyship defenses generally. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Transaction Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.

 

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The Guarantor hereby unconditionally and irrevocably waives any rights that it may now have or hereafter acquire against Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation that arise from the existence, payment, performance, or enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against Parent, Merger Sub or such other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common Law, including, without limitation, the right to take or receive from Parent, Merger Sub or such other Persons, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, and the Guarantor shall not exercise any such rights unless and until all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap) shall have been indefeasibly paid in full in immediately available funds. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in immediately available funds of all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap), such amount shall be received and held in trust for the benefit of the Guaranteed Party, shall be segregated from other property and funds of the Guarantor and shall forthwith be promptly paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to all amounts payable by the Guarantor under this Limited Guarantee, whether matured or unmatured, or to be held as collateral for the amounts payable under this Limited Guarantee thereafter arising.

Notwithstanding anything to the contrary contained in this Limited Guarantee or otherwise, other than as set forth in clause (e) of the second sentence of this Section 3, the Guaranteed Party hereby agrees that the defense to the payment of the Guarantor’s obligations under this Limited Guarantee (which in any event shall be subject to the Cap) that the Guaranteed Obligations are not due and owing under and pursuant to the express terms of the Transaction Agreement shall be available to the Guarantor, to the extent available to Parent under the Transaction Agreement with respect to the Guaranteed Obligations.

No failure on the part of the Guaranteed Party, to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver hereof, nor shall any single or partial exercise by the Guaranteed Party, of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power (subject to the Cap). Without limiting the express limitations set forth hereunder in this Limited Guarantee, each and every right, remedy and power hereby granted to the Guaranteed Party, or allowed to it by Law, in equity or by other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party, at any time or from time to time. Subject to the Cap and the other terms and conditions hereof, the Guaranteed Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Guaranteed Party’s rights against, Parent or any other person liable for the Guaranteed Obligations or any portion of the Guaranteed Obligations, prior to proceeding against Guarantor.

 

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4. REPRESENTATIONS AND WARRANTIES.

The Guarantor hereby represents and warrants that:

(a) it is a duly organized and validly existing limited partnership in good standing under the laws of the jurisdiction of its organization (in each case, to the extent applicable) and has all requisite limited partnership or other power and authority to execute, deliver and perform this Limited Guarantee and the execution, delivery and performance of this Limited Guarantee have been duly and validly authorized by all necessary action and do not and will not conflict with or result in any default, breach, violation or infringement (with or without notice or lapse of time or both) of or contravene any provision of the Guarantor’s partnership agreement or any Law, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;

(b) all consents, approvals, authorizations, permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Limited Guarantee;

(c) this Limited Guarantee has been duly and validly executed by the Guarantor and, assuming due execution and delivery of the Transaction Agreement by all parties thereto, this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (but without limiting the effect of clause (e) of the second sentence of Section 3): (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations (including the Guaranteed Obligations) under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill the Guaranteed Obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 7 hereof.

5. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign or delegate its rights, interests or obligations hereunder to any other Person (except by operation of Law) without the prior written consent of the Guaranteed Party (in the case of an assignment or delegation by the Guarantor) or the Guarantor (in the case of an assignment or delegation by the Guaranteed Party); provided, however, that the Guarantor may assign or delegate all or part of its rights, interests and obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) any other Person to which it has allocated all or a portion of its investment commitment to Parent or (ii) an entity managed or advised by an Affiliate of the Guarantor, so long as, in the case of each of clauses (i) and (ii), (a) such assignee is financially capable of fulfilling the assumed obligations and assigned rights hereunder and (b) such assignment does not, in and of itself, prevent, impair or delay the consummation of the Merger or the transactions contemplated by the Transaction Agreement; provided, further, that (1) no such assignment or delegation shall relieve the Guarantor of (or otherwise effect) its liability or obligations hereunder as a primary obligor and (2) the consent of the Guaranteed Party shall be required for such assignment if the assignee is tax resident in a jurisdiction other than the United, States, any State thereof (or the District of Columbia) or the Cayman Islands and such assignment causes a payment hereunder to be subject to additional withholding taxes.

 

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6. NOTICES. Any notice, request, instruction or other document to be given hereunder by any party hereto to the other shall be in writing and delivered personally or sent by overnight courier, delivery fees prepaid, or by e-mail, or by facsimile:

if to the Guarantor:

Clayton, Dubilier & Rice Fund XI, L.P.

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

   Attention:    Sarah Kim; Ravi Sachdev; Jack Robinson
   Email:    skim@cdr-inc.com; rsachdev@cdr-inc.com;
      jrobinson@cdr-inc.com

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

   Attention:    Paul S. Bird; Andrew L. Bab; Spencer K. Gilbert
   Email:    psbird@debevoise.com; albab@debevoise.com;
      skgilbert@debevoise.com

if to the Guaranteed Party, as provided in the Transaction Agreement, or, in each case, to such other Persons or addresses as may be designated in writing by the party hereto to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party (a) upon actual receipt, if delivered personally, (b) on the next Business Day after deposit with an overnight courier, if sent by an overnight courier, delivery fees prepaid, (c) upon transmission if sent by e-mail on a Business Day during normal business hours (and otherwise on the next Business Day), or (d) upon confirmation of successful transmission if sent by facsimile on a Business Day during normal business hours (and otherwise on the next Business Day) (provided, that, if given by e-mail or facsimile, such notice, request, instruction or other document shall be followed up within one (1) Business Day by dispatch pursuant to one of the other methods described in clause (a) or clause (b) above).

7. CONTINUING GUARANTEE. Unless terminated pursuant to this Section 7, this Limited Guarantee may not be revoked or terminated and shall remain in full force and effect and shall be binding until the Guaranteed Obligations have been indefeasibly paid in full, and shall inure to the benefit of, and be enforceable by, the Guaranteed Party and its permitted successors, transferees and assigns. Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, this Limited Guarantee shall terminate and the Guarantor shall have no further obligations under or in connection with this Limited Guarantee as of the earliest of: (a) the consummation of the Closing, if the Closing occurs and the amounts

 

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required to in order to fund the Merger Consideration and the other required payments under the Transaction Agreement have been funded; (b) the payment in full of the Guarantor Percentage of the Guaranteed Obligations; (c) termination of the Transaction Agreement in accordance with its terms by mutual consent of the parties thereto or in circumstances where the Parent is not obligated to pay the Parent Termination Fee or any of the Guaranteed Obligations; and (d) the six (6) month anniversary after the Termination Date (unless, in the case of clauses (c) and (d) above, the Guaranteed Party shall have commenced litigation against the Guarantor under and pursuant to this Limited Guarantee prior to such termination, in which case this Limited Guarantee shall terminate upon the final, non-appealable resolution of such action, either by judicial determination or pursuant to an agreement between the Guaranteed Party and the Guarantor and satisfaction by the Guarantor of any obligations finally determined or agreed to be owed by the Guarantor, consistent with the terms hereof). Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s liability to the Cap or the provisions of this Section 7 or Section 8 hereof are illegal, invalid or unenforceable in whole or in part, asserts that the Guarantor is liable in respect of Guaranteed Obligations, in the aggregate, in excess of or to a greater extent than the Cap, or asserts any theory of liability against any Non-Recourse Party (as defined in Section 8 hereof) with respect to this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement or the transactions contemplated hereby or thereby, in each case, other than Retained Claims (as defined in Section 8 hereof), then: (i) the obligations of the Guarantor under or in connection with this Limited Guarantee shall terminate ab initio and be null and void; (ii) if the Guarantor has previously made any payments under or in connection with this Limited Guarantee, it shall be entitled to recover and retain such payments; and (iii) neither the Guarantor nor any other Non-Recourse Parties shall have any liability whatsoever (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) to the Guaranteed Party or any other Person in any way under or in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement or the transactions contemplated hereby or thereby, other than in respect of a Retained Claim described in clause (v) of the definition thereof.

8. NO RECOURSE. The Guaranteed Party acknowledges the separate corporate existence of Parent. The Guaranteed Party acknowledges and agrees that the sole asset of Parent is cash in a de minimis amount (less than $1,000) and that no additional funds are expected to be contributed to Parent except as may be required under the Equity Commitment Letter, the Other Equity Commitment Letter and the Transaction Agreement. Notwithstanding anything that may be expressed or implied in this Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Confidentiality Agreement or in any agreement or instrument delivered or contemplated thereby (collectively, the “Transaction Documents”) or statement made or action taken in connection with, or that otherwise in any manner relates to, the transactions contemplated by any of the Transaction Documents or the negotiation, execution, performance or

 

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breach of any Transaction Document (this Limited Guarantee, the other Transaction Documents and such agreements, instruments, statements and actions collectively, “Transaction-Related Matters”), and notwithstanding any equitable, common law or statutory right or claim that may be available to the Guaranteed Party or any of its Affiliates, and notwithstanding the fact that the Guarantor is a limited partnership, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, acknowledges and agrees, on behalf of itself and its Affiliates, that:

(a) None of the Non-Recourse Parties has or shall have any obligations (whether of an equitable, contractual, tort, statutory or other nature) under, in connection with or in any manner related to any Transaction-Related Matter, other than (i) Parent’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of Section 3.2(a) of the Transaction Agreement, and, without duplication, the Guarantor’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of this Limited Guarantee (subject to the Cap) and to otherwise comply with the terms of this Limited Guarantee and the Other Investors’ obligations to make a cash payment to the Guaranteed Party under and pursuant to the terms of the Other Investors Limited Guarantees (subject to the “Cap” set forth in the Other Investors Limited Guarantees) and to otherwise comply with the terms of the Other Investors Limited Guarantees, (ii) Parent’s obligation to cause the equity financing to be funded in accordance with the terms of the Equity Commitment Letter and the Other Investors Equity Commitment Letters when and if the Guaranteed Party seeks specific performance of such obligation pursuant to, in accordance with, and subject to the limitations set forth in, Section 9.13(b) of the Transaction Agreement, (iii) the Guarantor’s obligation to specifically perform its obligation to make an equity contribution to Parent pursuant to the Equity Commitment Letter in accordance with the terms of such letter and the Other Investors’ obligations to specifically perform its obligation to make an equity contribution to Parent pursuant to the Other Investors Equity Commitment Letters when and if the conditions thereto have been satisfied and Parent seeks specific performance of such obligation pursuant to, and subject to the limitations set forth in, Section 5 of each of the Equity Commitment Letter and the Other Investors Equity Commitment Letters and Section 9.13 of the Transaction Agreement, (iv) Parent’s obligation to make payment of the Merger Consideration under the Transaction Agreement and its and Merger Sub’s obligations to otherwise comply with the terms of the Transaction Agreement and any other transaction documents subject to the terms and conditions therein and (v) certain Non-Recourse Parties’ obligations under, and pursuant to the terms of, the Confidentiality Agreement (the claims described in clauses (i) through (v) against any of the Persons specified in clauses (i) through (v) or any of their respective permitted successors or assigns, collectively, the “Retained Claims”);

(b) no recourse (whether under an equitable, contractual, tort, statutory or other claim or theory) under, in connection with or in any manner related to, any Transaction-Related Matter shall be sought or had against (and, without limiting the generality of the foregoing, no liability shall attach to) any Non-Recourse Party, whether through Parent or any other Person interested in the transactions contemplated by any Transaction Document or otherwise, whether by or through theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing

 

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the veil, unfairness, undercapitalization, or any other attempt to avoid or disregard the entity form of any Non-Recourse Party, by or through a claim by or on behalf of the Guaranteed Party or any of its Affiliates, Parent or any other Person against any Non-Recourse Party, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except, in each case, for Retained Claims; and

(c) neither the Guaranteed Party nor any of its Affiliates has relied on any statement, representation or warranty or assurance made by, or any action taken by, any Person in connection with or in any manner related to a Transaction-Related Matter, other than those made by (i) the Guarantor in this Limited Guarantee and the Equity Commitment Letter, (ii) Parent in the Transaction Documents and (iii) the Other Investors in the Other Investors Equity Commitment Letters and the Other Investors Limited Guarantees.

The Retained Claims shall be the sole and exclusive remedy (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) of the Guaranteed Party, all of its controlled Affiliates and any Person purporting to claim by or through any of them or for the benefit of any of them against any or all of the Non-Recourse Parties, in respect of any claims, liabilities or obligations arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. To the fullest extent permitted by Law, the Guaranteed Party, on behalf of itself and its controlled Affiliates, hereby releases, remises and forever discharges all claims (other than Retained Claims) that the Guaranteed Party, any of its security holders or any of its Affiliates has had, now has or might in the future have against any Non-Recourse Party arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. The Guaranteed Party hereby covenants and agrees that, other than with respect to the Retained Claims, it shall not, and it shall cause its controlled Affiliates not to, institute any proceeding or bring any claim in any way under, in connection with or in any manner related to any Transaction-Related Matter (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) against any Non-Recourse Party. Other than the Non-Recourse Parties, no Person other than the Guarantor and the Guaranteed Party shall have any rights or remedies under, in connection with or in any manner related to this Limited Guarantee or the transactions contemplated hereby.

As used herein, the term “Non-Recourse Parties” means the Guarantor and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of the Guarantor (including but not limited to Parent and Merger Sub) and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of any of the foregoing, and any and all former, current or future direct or indirect heirs, executors, administrators, trustees, representatives, successors or assigns of any of the foregoing, and the providers or potential providers of any equity or debt financing in connection with the Transaction (in each case, other than Parent); provided that, notwithstanding the foregoing, such defined term shall exclude Parent and Merger Sub and any Person to which Parent or Merger Sub has validly assigned its respective rights or obligations under the Transaction Agreement.

 

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9. GOVERNING LAW; JURISDICTION. This Limited Guarantee, the rights of the parties under or in connection herewith or the transactions contemplated hereby, and all actions or proceedings arising out of or related to any of the foregoing, shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to principles of conflicts of law. Each party hereto agrees that it shall bring, maintain and defend any such action or proceeding exclusively in the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware (as just described, the “Chosen Courts”), and solely in connection with such actions or proceedings: (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto; and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if effected pursuant to the Laws of the State of Delaware or in accordance with Section 6 hereof (other than by facsimile or e-mail transmission).

10. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY ACTION OR PROCEEDING CONTEMPLATED BY SECTION 9 HEREOF IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) IT MAKES THIS WAIVER VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS LIMITED GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.

11. COUNTERPARTS. This Limited Guarantee shall not be effective until it has been executed and delivered by all parties hereto. This Limited Guarantee may be executed by facsimile or electronic transmission in pdf format, and in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

12. THIRD PARTY BENEFICIARIES. This Limited Guarantee shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, and nothing express or implied in this Limited Guarantee is intended to, or shall, confer upon any other Person any benefits, rights or remedies under or by reason of, or any rights to enforce or cause the Guaranteed Party to enforce, the obligations set forth herein; except that as a material aspect of this Limited Guarantee the parties intend that all Non-Recourse Parties other than the Guarantor shall be, and such Non-Recourse Parties are, intended third party beneficiaries of this Limited Guarantee who may rely on and enforce the provisions of this Limited Guarantee that bar the liability, or otherwise protect the interests, of such Non-Recourse Parties.

 

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13. CONFIDENTIALITY. This Limited Guarantee shall be treated as confidential and is being provided to the Guaranteed Party and its Representatives solely in connection with the transactions contemplated by the Transaction Documents. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Equity Commitment Letter, the Other Equity Commitment Letter, the Other Investors Limited Guarantees and any other documents entered into in connection with the consummation of the Merger and the other transactions contemplated by the Transaction Documents or required to be disclosed in connection therewith), except with the written consent of the Guarantor; provided that no such written consent is required for any disclosure of the existence or content of this Limited Guarantee by the Guaranteed Party: (i) to its Affiliates and its representatives who need to know of the existence or terms of this Limited Guarantee (so long as such Affiliates and representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Limited Guarantee confidential); or (ii) to the extent required by applicable Law, the applicable rules of any national securities exchange or in connection with any securities regulatory agency filings related to the Transaction (provided, that the Guaranteed Party will provide the Guarantor an opportunity to review such required disclosure in advance of such disclosure being made); or pursuant to any litigation relating to the Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or the transactions contemplated hereby or thereby.

14. MISCELLANEOUS.

(a) This Limited Guarantee, the Transaction Agreement, the Confidentiality Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees and any other agreements executed in connection with the Transaction Agreement constitute the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among the Guarantor or any of its Affiliates, on the one hand, and the Guaranteed Party or any of its Affiliates, on the other hand. No amendment, supplementation, modification or waiver of this Limited Guarantee or any provision hereof shall be enforceable unless approved by the Guaranteed Party and the Guarantor in writing. The Guaranteed Party and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guarantor or any other Non-Recourse Party in connection with the subject matter hereof except as expressly set forth herein by the Guarantor. The Guarantor and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guaranteed Party in connection with the subject matter hereof except as expressly set forth herein by the Guaranteed Party.

 

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(b) Any term or provision of this Limited Guarantee that is invalid or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective solely to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided, however, that this Limited Guarantee may not be enforced without giving effect to the limitation of the amount payable by the Guarantor hereunder to the Cap provided in Section 1 hereof and to the provisions of Sections 7 and 8 hereof. Each party hereto covenants and agrees that it shall not assert, and shall cause its respective Affiliates and representatives not to assert, that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable.

(c) The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Limited Guarantee.

(d) All parties acknowledge that each party and its counsel have reviewed this Limited Guarantee and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Limited Guarantee.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer or representative thereunto duly authorized.

 

CLAYTON, DUBILIER & RICE FUND XI, L.P.
By: CD&R Associates XI, L.P., its general partner
By: CD&R Investment Associates XI, Ltd., its general partner
By:   /s/ Rima Simson
Name:   Rima Simson
Title:   Vice President, Treasurer and Secretary

 

 

[LIMITED GUARANTEE SIGNATURE PAGE]


IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

COVETRUS, INC.
By:   /s/ Benjamin Wolin

Name:

  Benjamin Wolin
Title:   President and Chief Executive Officer

 

[LIMITED GUARANTEE SIGNATURE PAGE]

EX-99.(d)(3)

Exhibit (d)(3)

LIMITED GUARANTEE

LIMITED GUARANTEE, dated as of May 24, 2022 (this “Limited Guarantee”), by TPG Partners VIII, L.P., a Delaware limited partnership (the “Guarantor”), in favor of Covetrus, Inc., a Delaware corporation (the “Guaranteed Party”).

1. GUARANTEE. To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement;” capitalized terms used but not defined herein shall have the meanings given to such terms in the Transaction Agreement) among Corgi Bidco, Inc., a Delaware corporation (“Parent”), Corgi Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of Parent (“Merger Sub”), and the Guaranteed Party, pursuant to which Merger Sub will merge with and into the Guaranteed Party and the separate corporate existence of Merger Sub shall thereupon cease with the Guaranteed Party being the surviving corporation of such merger and the direct wholly-owned subsidiary of Parent (the “Transaction”), the Guarantor, intending to be legally bound, hereby absolutely, irrevocably and unconditionally guarantees to the Guaranteed Party the due and punctual performance and discharge of 32.9% (the “Guarantor Percentage”) of the payment obligations of Parent to the Guaranteed Party under (a) Section 8.5(d) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Parent Fee Obligations”) and (b) Sections 6.10(a)(i), 6.10(a)(ii) and 8.5(f) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Expense Obligations” and, together with the Parent Fee Obligations, the “Guaranteed Obligations”); provided, that in no event shall the Guarantor’s aggregate liability for the Guaranteed Obligations exceed $66,672,996.00 (such limitation on the liability the Guarantor may have for the Guaranteed Obligations being herein referred to as the “Cap”), and this Limited Guarantee may not be enforced against the Guarantor without giving effect to the Cap (and to the provisions of Sections 7 and 8 hereof); provided further that the foregoing shall not limit the Guaranteed Party’s rights under the Equity Commitment Letter (defined below), subject to the limitations set forth therein. This Limited Guarantee may be enforced for the payment of money only. All payments hereunder shall be made in lawful money of the United States, in immediately available funds. The Guarantor acknowledges that the Guaranteed Party entered into the transactions contemplated by the Transaction Agreement in reliance upon the execution of this Limited Guarantee. The Guaranteed Party hereby agrees that in no event shall the Guarantor be required to pay any amount to the Guaranteed Party under, in respect of, or in connection with this Limited Guarantee or by the Transaction Agreement other than as expressly set forth herein or therein.

If Parent fails to discharge any Guaranteed Obligations when due, then the Guarantor shall forthwith pay to the Guaranteed Party the Guarantor Percentage of the Guaranteed Obligations (up to the Cap), and the Guaranteed Party may at any time and from time to time, at the Guaranteed Party’s option, and so long as Parent has failed to discharge the Guaranteed Obligations, take any and all actions available hereunder or under applicable Law to collect the Guarantor’s liabilities hereunder in respect of the Guarantor Percentage of such Guaranteed Obligations, subject to the Cap.


In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantor Percentage of the Guaranteed Obligations (in an aggregate amount not to exceed the Cap), regardless of whether any such action is brought against Parent or whether Parent is joined in any such action or actions.

Notwithstanding anything to the contrary contained in this Limited Guarantee or those certain Limited Guarantees, dated as of the date hereof, by Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership, and TPG Healthcare Partners, L.P., a Delaware limited partnership (together, the “Other Investors”) in favor of the Guaranteed Party (the “Other Investors Limited Guarantees”), to the extent Parent is relieved of all or any portion of the Guaranteed Obligations in accordance with the Transaction Agreement, the Guarantor and Other Investors shall be similarly relieved of their corresponding payment obligations under this Limited Guarantee and the Other Investors Limited Guarantees on a proportional basis; provided that no such relief shall reduce the payment obligation under this Limited Guarantee and the Other Investors Limited Guarantees to below the Guarantee Obligations.

2. NATURE OF GUARANTEE. The Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification, amendment or waiver of or any consent to departure from the Transaction Agreement or the equity commitment letter by and between Guarantor and Parent, dated as of the date hereof (the “Equity Commitment Letter”), those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”) and those certain limited guarantees, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Limited Guarantees”) that may be agreed to by Parent. Without limiting the foregoing, the Guaranteed Party shall not be obligated to file any claim relating to the Guaranteed Obligations in the event that Parent becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantor’s obligations hereunder. In the event that any payment hereunder is rescinded or must otherwise be, and is, returned to the Guarantor for any reason whatsoever, the Guarantor shall remain liable hereunder as if such payment had not been made. This Limited Guarantee is a primary obligation of the Guarantor and is an unconditional guarantee of payment and not of collection.

3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the Guaranteed Party may, in its sole discretion, at any time and from time to time, without notice to or further consent of the Guarantor, extend the time of payment of any of the Guaranteed Obligations, and may also make any agreement with Parent, Merger Sub or any other Person (including the Guarantor) liable with respect to the Guaranteed Obligation for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party and Parent, without in any way impairing or affecting the Guarantor’s obligations under this Limited Guarantee or affecting the validity or enforceability of this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, and shall not be conditioned upon or otherwise affected by (whether or not the Guarantor has any knowledge or notice thereof and without further consent of the Guarantor): (a) the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to

 

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enforce any right or remedy against Parent, Merger Sub or the Guarantor; (b) any change in the time, place, manner or terms of payment or performance of any of the Guaranteed Obligations, or any waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Transaction Agreement, the Equity Commitment Letter or the Other Investors Equity Commitment Letters, in each case, that are made in accordance with the terms thereof; (c) any renewal, rescission, waiver, compromise or other amendment or modification of any terms or provisions of the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations, in each case, that are made in accordance with the terms thereof; (d) any change in the legal existence, structure or ownership of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any release or discharge of any obligation of Parent contained in the Transaction Agreement resulting therefrom; (e) any insolvency, bankruptcy, liquidation, dissolution, reorganization, sale or other similar proceeding affecting Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any disposition of all or substantially all of the assets, marshalling of the assets and liabilities, receivership, assignment for the benefit of creditors, arrangement, composition with creditors or readjustment or other similar proceeding affecting Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation; (f) the addition, substitution or release of any Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement; (g) the adequacy of any other means the Guaranteed Party may have of obtaining payment related to the Guaranteed Obligations; (h) the existence of any claim, set-off or other right that the Guarantor may have at any time against Parent, Merger Sub or the Guaranteed Party, whether in connection with the Guaranteed Obligations or otherwise; or (i) any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a matter of law or equity, all of which may be done without notice to Guarantor (except for notices required hereunder or under the Transaction Agreement). To the fullest extent permitted by Law, the Guarantor hereby irrevocably and expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor hereby irrevocably waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of any Guaranteed Obligations incurred and all other notices of any kind (other than notices required to be issued to Parent pursuant to the Transaction Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect or any right to require the marshalling of assets of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, and all suretyship defenses generally. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Transaction Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.

 

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The Guarantor hereby unconditionally and irrevocably waives any rights that it may now have or hereafter acquire against Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation that arise from the existence, payment, performance, or enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against Parent, Merger Sub or such other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common Law, including, without limitation, the right to take or receive from Parent, Merger Sub or such other Persons, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, and the Guarantor shall not exercise any such rights unless and until all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap) shall have been indefeasibly paid in full in immediately available funds. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in immediately available funds of all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap), such amount shall be received and held in trust for the benefit of the Guaranteed Party, shall be segregated from other property and funds of the Guarantor and shall forthwith be promptly paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to all amounts payable by the Guarantor under this Limited Guarantee, whether matured or unmatured, or to be held as collateral for the amounts payable under this Limited Guarantee thereafter arising.

Notwithstanding anything to the contrary contained in this Limited Guarantee or otherwise, other than as set forth in clause (e) of the second sentence of this Section 3, the Guaranteed Party hereby agrees that the defense to the payment of the Guarantor’s obligations under this Limited Guarantee (which in any event shall be subject to the Cap) that the Guaranteed Obligations are not due and owing under and pursuant to the express terms of the Transaction Agreement shall be available to the Guarantor, to the extent available to Parent under the Transaction Agreement with respect to the Guaranteed Obligations.

No failure on the part of the Guaranteed Party, to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver hereof, nor shall any single or partial exercise by the Guaranteed Party, of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power (subject to the Cap). Without limiting the express limitations set forth hereunder in this Limited Guarantee, each and every right, remedy and power hereby granted to the Guaranteed Party, or allowed to it by Law, in equity or by other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party, at any time or from time to time. Subject to the Cap and the other terms and conditions hereof, the Guaranteed Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Guaranteed Party’s rights against, Parent or any other person liable for the Guaranteed Obligations or any portion of the Guaranteed Obligations, prior to proceeding against Guarantor.

 

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4. REPRESENTATIONS AND WARRANTIES.

The Guarantor hereby represents and warrants that:

(a) it is a duly organized and validly existing limited partnership in good standing under the laws of the jurisdiction of its organization (in each case, to the extent applicable) and has all requisite limited partnership or other power and authority to execute, deliver and perform this Limited Guarantee and the execution, delivery and performance of this Limited Guarantee have been duly and validly authorized by all necessary action and do not and will not conflict with or result in any default, breach, violation or infringement (with or without notice or lapse of time or both) of or contravene any provision of the Guarantor’s partnership agreement or any Law, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;

(b) all consents, approvals, authorizations, permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Limited Guarantee;

(c) this Limited Guarantee has been duly and validly executed by the Guarantor and, assuming due execution and delivery of the Transaction Agreement by all parties thereto, this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (but without limiting the effect of clause (e) of the second sentence of Section 3): (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations (including the Guaranteed Obligations) under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill the Guaranteed Obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 7 hereof.

5. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign or delegate its rights, interests or obligations hereunder to any other Person (except by operation of Law) without the prior written consent of the Guaranteed Party (in the case of an assignment or delegation by the Guarantor) or the Guarantor (in the case of an assignment or delegation by the Guaranteed Party); provided, however, that the Guarantor may assign or delegate all or part of its rights, interests and obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) any other Person to which it has allocated all or a portion of its investment commitment to Parent or (ii) an entity managed or advised by an Affiliate of the Guarantor, so long as, in the case of each of clauses (i) and (ii), (a) such assignee is financially capable of fulfilling the assumed obligations and assigned rights hereunder and (b) such assignment does not, in and of itself, prevent, impair or delay the consummation of the Merger or the transactions contemplated by the Transaction Agreement; provided, further, that (1) no such assignment or delegation shall relieve the Guarantor of (or otherwise effect) its liability or obligations hereunder as a primary obligor and (2) the consent of the Guaranteed Party shall be required for such assignment if the assignee is tax resident in a jurisdiction other than the United, States, any State thereof (or the District of Columbia) or the Cayman Islands and such assignment causes a payment hereunder to be subject to additional withholding taxes.

 

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6. NOTICES. Any notice, request, instruction or other document to be given hereunder by any party hereto to the other shall be in writing and delivered personally or sent by overnight courier, delivery fees prepaid, or by e-mail, or by facsimile:

if to the Guarantor:

 

c/o TPG Global, LLC

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Attention:

  

Office of General Counsel

  

c/o Deirdre Harding

Email:

  

officeofgeneralcounsel@tpg.com

  

cc: dharding@tpg.com

with a copy (which shall not constitute notice) to:

 

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111

Attention:

  

Jason Freedman

  

Minh-Chau Le

Email:

  

jason.freedman@ropesgray.com

  

minh-chau.le@ropesgray.com

if to the Guaranteed Party, as provided in the Transaction Agreement, or, in each case, to such other Persons or addresses as may be designated in writing by the party hereto to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party (a) upon actual receipt, if delivered personally, (b) on the next Business Day after deposit with an overnight courier, if sent by an overnight courier, delivery fees prepaid, (c) upon transmission if sent by e-mail on a Business Day during normal business hours (and otherwise on the next Business Day), or (d) upon confirmation of successful transmission if sent by facsimile on a Business Day during normal business hours (and otherwise on the next Business Day) (provided, that, if given by e-mail or facsimile, such notice, request, instruction or other document shall be followed up within one (1) Business Day by dispatch pursuant to one of the other methods described in clause (a) or clause (b) above).

7. CONTINUING GUARANTEE. Unless terminated pursuant to this Section 7, this Limited Guarantee may not be revoked or terminated and shall remain in full force and effect and shall be binding until the Guaranteed Obligations have been indefeasibly paid in full, and shall inure to the benefit of, and be enforceable by, the Guaranteed Party and its permitted successors, transferees and assigns. Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, this Limited Guarantee shall terminate and the Guarantor shall have no further obligations under or in connection with this Limited Guarantee

 

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as of the earliest of: (a) the consummation of the Closing, if the Closing occurs and the amounts required to in order to fund the Merger Consideration and the other required payments under the Transaction Agreement have been funded; (b) the payment in full of the Guarantor Percentage of the Guaranteed Obligations; (c) termination of the Transaction Agreement in accordance with its terms by mutual consent of the parties thereto or in circumstances where the Parent is not obligated to pay the Parent Termination Fee or any of the Guaranteed Obligations; and (d) the six (6) month anniversary after the Termination Date (unless, in the case of clauses (c) and (d) above, the Guaranteed Party shall have commenced litigation against the Guarantor under and pursuant to this Limited Guarantee prior to such termination, in which case this Limited Guarantee shall terminate upon the final, non-appealable resolution of such action, either by judicial determination or pursuant to an agreement between the Guaranteed Party and the Guarantor and satisfaction by the Guarantor of any obligations finally determined or agreed to be owed by the Guarantor, consistent with the terms hereof). Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s liability to the Cap or the provisions of this Section 7 or Section 8 hereof are illegal, invalid or unenforceable in whole or in part, asserts that the Guarantor is liable in respect of Guaranteed Obligations, in the aggregate, in excess of or to a greater extent than the Cap, or asserts any theory of liability against any Non-Recourse Party (as defined in Section 8 hereof) with respect to this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement or the transactions contemplated hereby or thereby, in each case, other than Retained Claims (as defined in Section 8 hereof), then: (i) the obligations of the Guarantor under or in connection with this Limited Guarantee shall terminate ab initio and be null and void; (ii) if the Guarantor has previously made any payments under or in connection with this Limited Guarantee, it shall be entitled to recover and retain such payments; and (iii) neither the Guarantor nor any other Non-Recourse Parties shall have any liability whatsoever (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) to the Guaranteed Party or any other Person in any way under or in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement or the transactions contemplated hereby or thereby, other than in respect of a Retained Claim described in clause (v) of the definition thereof.

8. NO RECOURSE. The Guaranteed Party acknowledges the separate corporate existence of Parent. The Guaranteed Party acknowledges and agrees that the sole asset of Parent is cash in a de minimis amount (less than $1,000) and that no additional funds are expected to be contributed to Parent except as may be required under the Equity Commitment Letter, the Other Equity Commitment Letter and the Transaction Agreement. Notwithstanding anything that may be expressed or implied in this Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Confidentiality Agreement or in any agreement or instrument delivered or contemplated thereby (collectively, the “Transaction Documents”) or statement made or action taken in connection with, or that otherwise in any manner relates to, the transactions

 

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contemplated by any of the Transaction Documents or the negotiation, execution, performance or breach of any Transaction Document (this Limited Guarantee, the other Transaction Documents and such agreements, instruments, statements and actions collectively, “Transaction-Related Matters”), and notwithstanding any equitable, common law or statutory right or claim that may be available to the Guaranteed Party or any of its Affiliates, and notwithstanding the fact that the Guarantor is a limited partnership, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, acknowledges and agrees, on behalf of itself and its Affiliates, that:

(a) None of the Non-Recourse Parties has or shall have any obligations (whether of an equitable, contractual, tort, statutory or other nature) under, in connection with or in any manner related to any Transaction-Related Matter, other than (i) Parent’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of Section 3.2(a) of the Transaction Agreement, and, without duplication, the Guarantor’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of this Limited Guarantee (subject to the Cap) and to otherwise comply with the terms of this Limited Guarantee and the Other Investors’ obligations to make a cash payment to the Guaranteed Party under and pursuant to the terms of the Other Investors Limited Guarantees (subject to the “Cap” set forth in the Other Investors Limited Guarantees) and to otherwise comply with the terms of the Other Investors Limited Guarantees, (ii) Parent’s obligation to cause the equity financing to be funded in accordance with the terms of the Equity Commitment Letter and the Other Investors Equity Commitment Letters when and if the Guaranteed Party seeks specific performance of such obligation pursuant to, in accordance with, and subject to the limitations set forth in, Section 9.13(b) of the Transaction Agreement, (iii) the Guarantor’s obligation to specifically perform its obligation to make an equity contribution to Parent pursuant to the Equity Commitment Letter in accordance with the terms of such letter and the Other Investors’ obligations to specifically perform its obligation to make an equity contribution to Parent pursuant to the Other Investors Equity Commitment Letters when and if the conditions thereto have been satisfied and Parent seeks specific performance of such obligation pursuant to, and subject to the limitations set forth in, Section 5 of each of the Equity Commitment Letter and the Other Investors Equity Commitment Letters and Section 9.13 of the Transaction Agreement, (iv) Parent’s obligation to make payment of the Merger Consideration under the Transaction Agreement and its and Merger Sub’s obligations to otherwise comply with the terms of the Transaction Agreement and any other transaction documents subject to the terms and conditions therein and (v) certain Non-Recourse Parties’ obligations under, and pursuant to the terms of, the Confidentiality Agreement (the claims described in clauses (i) through (v) against any of the Persons specified in clauses (i) through (v) or any of their respective permitted successors or assigns, collectively, the “Retained Claims”);

(b) no recourse (whether under an equitable, contractual, tort, statutory or other claim or theory) under, in connection with or in any manner related to, any Transaction-Related Matter shall be sought or had against (and, without limiting the generality of the foregoing, no liability shall attach to) any Non-Recourse Party, whether through Parent or any other Person interested in the transactions contemplated by any Transaction Document or otherwise, whether by or through theories of equity, agency,

 

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control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or any other attempt to avoid or disregard the entity form of any Non-Recourse Party, by or through a claim by or on behalf of the Guaranteed Party or any of its Affiliates, Parent or any other Person against any Non-Recourse Party, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except, in each case, for Retained Claims; and

(c) neither the Guaranteed Party nor any of its Affiliates has relied on any statement, representation or warranty or assurance made by, or any action taken by, any Person in connection with or in any manner related to a Transaction-Related Matter, other than those made by (i) the Guarantor in this Limited Guarantee and the Equity Commitment Letter, (ii) Parent in the Transaction Documents and (iii) the Other Investors in the Other Investors Equity Commitment Letters and the Other Investors Limited Guarantees.

The Retained Claims shall be the sole and exclusive remedy (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) of the Guaranteed Party, all of its controlled Affiliates and any Person purporting to claim by or through any of them or for the benefit of any of them against any or all of the Non-Recourse Parties, in respect of any claims, liabilities or obligations arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. To the fullest extent permitted by Law, the Guaranteed Party, on behalf of itself and its controlled Affiliates, hereby releases, remises and forever discharges all claims (other than Retained Claims) that the Guaranteed Party, any of its security holders or any of its Affiliates has had, now has or might in the future have against any Non-Recourse Party arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. The Guaranteed Party hereby covenants and agrees that, other than with respect to the Retained Claims, it shall not, and it shall cause its controlled Affiliates not to, institute any proceeding or bring any claim in any way under, in connection with or in any manner related to any Transaction-Related Matter (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) against any Non-Recourse Party. Other than the Non-Recourse Parties, no Person other than the Guarantor and the Guaranteed Party shall have any rights or remedies under, in connection with or in any manner related to this Limited Guarantee or the transactions contemplated hereby.

As used herein, the term “Non-Recourse Parties” means the Guarantor and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of the Guarantor (including but not limited to Parent and Merger Sub) and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of any of the foregoing, and any and all former, current or future direct or indirect heirs, executors, administrators, trustees, representatives, successors or assigns of any of the foregoing, and the providers or potential

 

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providers of any equity or debt financing in connection with the Transaction (in each case, other than Parent); provided that, notwithstanding the foregoing, such defined term shall exclude Parent and Merger Sub and any Person to which Parent or Merger Sub has validly assigned its respective rights or obligations under the Transaction Agreement.

9. GOVERNING LAW; JURISDICTION. This Limited Guarantee, the rights of the parties under or in connection herewith or the transactions contemplated hereby, and all actions or proceedings arising out of or related to any of the foregoing, shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to principles of conflicts of law. Each party hereto agrees that it shall bring, maintain and defend any such action or proceeding exclusively in the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware (as just described, the “Chosen Courts”), and solely in connection with such actions or proceedings: (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto; and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if effected pursuant to the Laws of the State of Delaware or in accordance with Section 6 hereof (other than by facsimile or e-mail transmission).

10. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY ACTION OR PROCEEDING CONTEMPLATED BY SECTION 9 HEREOF IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) IT MAKES THIS WAIVER VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS LIMITED GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.

11. COUNTERPARTS. This Limited Guarantee shall not be effective until it has been executed and delivered by all parties hereto. This Limited Guarantee may be executed by facsimile or electronic transmission in pdf format, and in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

12. THIRD PARTY BENEFICIARIES. This Limited Guarantee shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, and nothing express or implied in this Limited Guarantee is intended to, or shall, confer upon any other Person any benefits, rights or remedies under or by reason of, or any rights to enforce or cause the Guaranteed Party to enforce, the obligations set forth herein; except that as a material aspect of this Limited Guarantee the parties intend that all Non-Recourse Parties other than the Guarantor shall be, and such Non-Recourse Parties are, intended third party beneficiaries of this Limited Guarantee who may rely on and enforce the provisions of this Limited Guarantee that bar the liability, or otherwise protect the interests, of such Non-Recourse Parties.

 

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13. CONFIDENTIALITY. This Limited Guarantee shall be treated as confidential and is being provided to the Guaranteed Party and its Representatives solely in connection with the transactions contemplated by the Transaction Documents. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Equity Commitment Letter, the Other Equity Commitment Letter, the Other Investors Limited Guarantees and any other documents entered into in connection with the consummation of the Merger and the other transactions contemplated by the Transaction Documents or required to be disclosed in connection therewith), except with the written consent of the Guarantor; provided that no such written consent is required for any disclosure of the existence or content of this Limited Guarantee by the Guaranteed Party: (i) to its Affiliates and its representatives who need to know of the existence or terms of this Limited Guarantee (so long as such Affiliates and representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Limited Guarantee confidential); or (ii) to the extent required by applicable Law, the applicable rules of any national securities exchange or in connection with any securities regulatory agency filings related to the Transaction (provided, that the Guaranteed Party will provide the Guarantor an opportunity to review such required disclosure in advance of such disclosure being made); or pursuant to any litigation relating to the Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or the transactions contemplated hereby or thereby.

14. MISCELLANEOUS.

(a) This Limited Guarantee, the Transaction Agreement, the Confidentiality Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees and any other agreements executed in connection with the Transaction Agreement constitute the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among the Guarantor or any of its Affiliates, on the one hand, and the Guaranteed Party or any of its Affiliates, on the other hand. No amendment, supplementation, modification or waiver of this Limited Guarantee or any provision hereof shall be enforceable unless approved by the Guaranteed Party and the Guarantor in writing. The Guaranteed Party and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guarantor or any other Non-Recourse Party in connection with the subject matter hereof except as expressly set forth herein by the Guarantor. The Guarantor and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guaranteed Party in connection with the subject matter hereof except as expressly set forth herein by the Guaranteed Party.

 

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(b) Any term or provision of this Limited Guarantee that is invalid or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective solely to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided, however, that this Limited Guarantee may not be enforced without giving effect to the limitation of the amount payable by the Guarantor hereunder to the Cap provided in Section 1 hereof and to the provisions of Sections 7 and 8 hereof. Each party hereto covenants and agrees that it shall not assert, and shall cause its respective Affiliates and representatives not to assert, that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable.

(c) The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Limited Guarantee.

(d) All parties acknowledge that each party and its counsel have reviewed this Limited Guarantee and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Limited Guarantee.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer or representative thereunto duly authorized.

 

TPG PARTNERS VIII, L.P.
By: TPG GenPar VIII, L.P. its general partner
By: TPG GenPar VIII Advisors, LLC its general partner
By:   /s/ Ken Murphy
Name: Ken Murphy
Title: Chief Operating Officer

 

[LIMITED GUARANTEE SIGNATURE PAGE]


IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

COVETRUS, INC.

By:

 

/s/ Benjamin Wolin

Name: Benjamin Wolin

Title: President and Chief Executive Officer

 

[LIMITED GUARANTEE SIGNATURE PAGE]

EX-99.(d)(4)

Exhibit (d)(4)

Execution Version

LIMITED GUARANTEE

LIMITED GUARANTEE, dated as of May 24, 2022 (this “Limited Guarantee”), by TPG Healthcare Partners, L.P., a Delaware limited partnership (the “Guarantor”), in favor of Covetrus, Inc., a Delaware corporation (the “Guaranteed Party”).

1. GUARANTEE. To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Transaction Agreement;” capitalized terms used but not defined herein shall have the meanings given to such terms in the Transaction Agreement) among Corgi Bidco, Inc., a Delaware corporation (“Parent”), Corgi Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of Parent (“Merger Sub”), and the Guaranteed Party, pursuant to which Merger Sub will merge with and into the Guaranteed Party and the separate corporate existence of Merger Sub shall thereupon cease with the Guaranteed Party being the surviving corporation of such merger and the direct wholly-owned subsidiary of Parent (the “Transaction”), the Guarantor, intending to be legally bound, hereby absolutely, irrevocably and unconditionally guarantees to the Guaranteed Party the due and punctual performance and discharge of 17.1% (the “Guarantor Percentage”) of the payment obligations of Parent to the Guaranteed Party under (a) Section 8.5(d) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Parent Fee Obligations”) and (b) Sections 6.10(a)(i), 6.10(a)(ii) and 8.5(f) of the Transaction Agreement, if, as and when those obligations become payable under the Transaction Agreement (the “Expense Obligations” and, together with the Parent Fee Obligations, the “Guaranteed Obligations”); provided, that in no event shall the Guarantor’s aggregate liability for the Guaranteed Obligations exceed $34,802,004.00 (such limitation on the liability the Guarantor may have for the Guaranteed Obligations being herein referred to as the “Cap”), and this Limited Guarantee may not be enforced against the Guarantor without giving effect to the Cap (and to the provisions of Sections 7 and 8 hereof); provided further that the foregoing shall not limit the Guaranteed Party’s rights under the Equity Commitment Letter (defined below), subject to the limitations set forth therein. This Limited Guarantee may be enforced for the payment of money only. All payments hereunder shall be made in lawful money of the United States, in immediately available funds. The Guarantor acknowledges that the Guaranteed Party entered into the transactions contemplated by the Transaction Agreement in reliance upon the execution of this Limited Guarantee. The Guaranteed Party hereby agrees that in no event shall the Guarantor be required to pay any amount to the Guaranteed Party under, in respect of, or in connection with this Limited Guarantee or by the Transaction Agreement other than as expressly set forth herein or therein.

If Parent fails to discharge any Guaranteed Obligations when due, then the Guarantor shall forthwith pay to the Guaranteed Party the Guarantor Percentage of the Guaranteed Obligations (up to the Cap), and the Guaranteed Party may at any time and from time to time, at the Guaranteed Party’s option, and so long as Parent has failed to discharge the Guaranteed Obligations, take any and all actions available hereunder or under applicable Law to collect the Guarantor’s liabilities hereunder in respect of the Guarantor Percentage of such Guaranteed Obligations, subject to the Cap.


In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantor Percentage of the Guaranteed Obligations (in an aggregate amount not to exceed the Cap), regardless of whether any such action is brought against Parent or whether Parent is joined in any such action or actions.

Notwithstanding anything to the contrary contained in this Limited Guarantee or those certain Limited Guarantees, dated as of the date hereof, by Clayton, Dubilier & Rice Fund XI, L.P., a Cayman Islands exempted limited partnership, and TPG Partners VIII, L.P., a Delaware limited partnership (together, the “Other Investors”) in favor of the Guaranteed Party (the “Other Investors Limited Guarantees”), to the extent Parent is relieved of all or any portion of the Guaranteed Obligations in accordance with the Transaction Agreement, the Guarantor and Other Investors shall be similarly relieved of their corresponding payment obligations under this Limited Guarantee and the Other Investors Limited Guarantees on a proportional basis; provided that no such relief shall reduce the payment obligation under this Limited Guarantee and the Other Investors Limited Guarantees to below the Guarantee Obligations.

2. NATURE OF GUARANTEE. The Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification, amendment or waiver of or any consent to departure from the Transaction Agreement or the equity commitment letter by and between Guarantor and Parent, dated as of the date hereof (the “Equity Commitment Letter”), those certain letter agreements, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Equity Commitment Letters”) and those certain limited guarantees, dated as of the date hereof, executed by the Other Investors in favor of Parent (the “Other Investors Limited Guarantees”) that may be agreed to by Parent. Without limiting the foregoing, the Guaranteed Party shall not be obligated to file any claim relating to the Guaranteed Obligations in the event that Parent becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantor’s obligations hereunder. In the event that any payment hereunder is rescinded or must otherwise be, and is, returned to the Guarantor for any reason whatsoever, the Guarantor shall remain liable hereunder as if such payment had not been made. This Limited Guarantee is a primary obligation of the Guarantor and is an unconditional guarantee of payment and not of collection.

3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the Guaranteed Party may, in its sole discretion, at any time and from time to time, without notice to or further consent of the Guarantor, extend the time of payment of any of the Guaranteed Obligations, and may also make any agreement with Parent, Merger Sub or any other Person (including the Guarantor) liable with respect to the Guaranteed Obligation for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party and Parent, without in any way impairing or affecting the Guarantor’s obligations under this Limited Guarantee or affecting the validity or enforceability of this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, and shall not be conditioned upon or otherwise affected by (whether or not the Guarantor has any knowledge or notice thereof and without further consent of the Guarantor): (a) the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to

 

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enforce any right or remedy against Parent, Merger Sub or the Guarantor; (b) any change in the time, place, manner or terms of payment or performance of any of the Guaranteed Obligations, or any waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Transaction Agreement, the Equity Commitment Letter or the Other Investors Equity Commitment Letters, in each case, that are made in accordance with the terms thereof; (c) any renewal, rescission, waiver, compromise or other amendment or modification of any terms or provisions of the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations, in each case, that are made in accordance with the terms thereof; (d) any change in the legal existence, structure or ownership of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any release or discharge of any obligation of Parent contained in the Transaction Agreement resulting therefrom; (e) any insolvency, bankruptcy, liquidation, dissolution, reorganization, sale or other similar proceeding affecting Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, or any disposition of all or substantially all of the assets, marshalling of the assets and liabilities, receivership, assignment for the benefit of creditors, arrangement, composition with creditors or readjustment or other similar proceeding affecting Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation; (f) the addition, substitution or release of any Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement; (g) the adequacy of any other means the Guaranteed Party may have of obtaining payment related to the Guaranteed Obligations; (h) the existence of any claim, set-off or other right that the Guarantor may have at any time against Parent, Merger Sub or the Guaranteed Party, whether in connection with the Guaranteed Obligations or otherwise; or (i) any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a matter of law or equity, all of which may be done without notice to Guarantor (except for notices required hereunder or under the Transaction Agreement). To the fullest extent permitted by Law, the Guarantor hereby irrevocably and expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor hereby irrevocably waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of any Guaranteed Obligations incurred and all other notices of any kind (other than notices required to be issued to Parent pursuant to the Transaction Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect or any right to require the marshalling of assets of Parent or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Transaction Agreement, and all suretyship defenses generally. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Transaction Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.

 

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The Guarantor hereby unconditionally and irrevocably waives any rights that it may now have or hereafter acquire against Parent, Merger Sub or any other Person liable with respect to the Guaranteed Obligation that arise from the existence, payment, performance, or enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against Parent, Merger Sub or such other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common Law, including, without limitation, the right to take or receive from Parent, Merger Sub or such other Persons, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, and the Guarantor shall not exercise any such rights unless and until all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap) shall have been indefeasibly paid in full in immediately available funds. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in immediately available funds of all amounts payable by the Guarantor under this Limited Guarantee (which shall be subject to the Cap), such amount shall be received and held in trust for the benefit of the Guaranteed Party, shall be segregated from other property and funds of the Guarantor and shall forthwith be promptly paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to all amounts payable by the Guarantor under this Limited Guarantee, whether matured or unmatured, or to be held as collateral for the amounts payable under this Limited Guarantee thereafter arising.

Notwithstanding anything to the contrary contained in this Limited Guarantee or otherwise, other than as set forth in clause (e) of the second sentence of this Section 3, the Guaranteed Party hereby agrees that the defense to the payment of the Guarantor’s obligations under this Limited Guarantee (which in any event shall be subject to the Cap) that the Guaranteed Obligations are not due and owing under and pursuant to the express terms of the Transaction Agreement shall be available to the Guarantor, to the extent available to Parent under the Transaction Agreement with respect to the Guaranteed Obligations.

No failure on the part of the Guaranteed Party, to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver hereof, nor shall any single or partial exercise by the Guaranteed Party, of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power (subject to the Cap). Without limiting the express limitations set forth hereunder in this Limited Guarantee, each and every right, remedy and power hereby granted to the Guaranteed Party, or allowed to it by Law, in equity or by other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party, at any time or from time to time. Subject to the Cap and the other terms and conditions hereof, the Guaranteed Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Guaranteed Party’s rights against, Parent or any other person liable for the Guaranteed Obligations or any portion of the Guaranteed Obligations, prior to proceeding against Guarantor.

 

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4. REPRESENTATIONS AND WARRANTIES.

The Guarantor hereby represents and warrants that:

(a) it is a duly organized and validly existing limited partnership in good standing under the laws of the jurisdiction of its organization (in each case, to the extent applicable) and has all requisite limited partnership or other power and authority to execute, deliver and perform this Limited Guarantee and the execution, delivery and performance of this Limited Guarantee have been duly and validly authorized by all necessary action and do not and will not conflict with or result in any default, breach, violation or infringement (with or without notice or lapse of time or both) of or contravene any provision of the Guarantor’s partnership agreement or any Law, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;

(b) all consents, approvals, authorizations, permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental authority or regulatory body is required in connection with the execution, delivery or performance of this Limited Guarantee;

(c) this Limited Guarantee has been duly and validly executed by the Guarantor and, assuming due execution and delivery of the Transaction Agreement by all parties thereto, this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (but without limiting the effect of clause (e) of the second sentence of Section 3): (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations (including the Guaranteed Obligations) under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill the Guaranteed Obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 7 hereof.

5. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign or delegate its rights, interests or obligations hereunder to any other Person (except by operation of Law) without the prior written consent of the Guaranteed Party (in the case of an assignment or delegation by the Guarantor) or the Guarantor (in the case of an assignment or delegation by the Guaranteed Party); provided, however, that the Guarantor may assign or delegate all or part of its rights, interests and obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) any other Person to which it has allocated all or a portion of its investment commitment to Parent or (ii) an entity managed or advised by an Affiliate of the Guarantor, so long as, in the case of each of clauses (i) and (ii), (a) such assignee is financially capable of fulfilling the assumed obligations and assigned rights hereunder and (b) such assignment does not, in and of itself, prevent, impair or delay the consummation of the Merger or the transactions contemplated by the Transaction Agreement; provided, further, that (1) no such assignment or delegation shall relieve the Guarantor of (or otherwise effect) its liability or obligations hereunder as a primary obligor and (2) the consent of the Guaranteed Party shall be required for such assignment if the assignee is tax resident in a jurisdiction other than the United, States, any State thereof (or the District of Columbia) or the Cayman Islands and such assignment causes a payment hereunder to be subject to additional withholding taxes.

 

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6. NOTICES. Any notice, request, instruction or other document to be given hereunder by any party hereto to the other shall be in writing and delivered personally or sent by overnight courier, delivery fees prepaid, or by e-mail, or by facsimile:

 

if to the Guarantor:

  

c/o TPG Global, LLC

301 Commerce Street, Suite 3300

  
Fort Worth, TX 76102   
Attention:    Office of General Counsel
   c/o Deirdre Harding
Email:    officeofgeneralcounsel@tpg.com
   cc: dharding@tpg.com

 

with a copy (which shall not constitute notice) to:

  
Ropes & Gray LLP   
Three Embarcadero Center   
San Francisco, CA 94111   
Attention:    Jason Freedman
   Minh-Chau Le
Email:    jason.freedman@ropesgray.com
   minh-chau.le@ropesgray.com

if to the Guaranteed Party, as provided in the Transaction Agreement, or, in each case, to such other Persons or addresses as may be designated in writing by the party hereto to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party (a) upon actual receipt, if delivered personally, (b) on the next Business Day after deposit with an overnight courier, if sent by an overnight courier, delivery fees prepaid, (c) upon transmission if sent by e-mail on a Business Day during normal business hours (and otherwise on the next Business Day), or (d) upon confirmation of successful transmission if sent by facsimile on a Business Day during normal business hours (and otherwise on the next Business Day) (provided, that, if given by e-mail or facsimile, such notice, request, instruction or other document shall be followed up within one (1) Business Day by dispatch pursuant to one of the other methods described in clause (a) or clause (b)  above).

7. CONTINUING GUARANTEE. Unless terminated pursuant to this Section 7, this Limited Guarantee may not be revoked or terminated and shall remain in full force and effect and shall be binding until the Guaranteed Obligations have been indefeasibly paid in full, and shall inure to the benefit of, and be enforceable by, the Guaranteed Party and its permitted successors, transferees and assigns. Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, this Limited Guarantee shall terminate and the Guarantor shall have no further obligations under or in connection with this Limited Guarantee

 

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as of the earliest of: (a) the consummation of the Closing, if the Closing occurs and the amounts required to in order to fund the Merger Consideration and the other required payments under the Transaction Agreement have been funded; (b) the payment in full of the Guarantor Percentage of the Guaranteed Obligations; (c) termination of the Transaction Agreement in accordance with its terms by mutual consent of the parties thereto or in circumstances where the Parent is not obligated to pay the Parent Termination Fee or any of the Guaranteed Obligations; and (d) the six (6) month anniversary after the Termination Date (unless, in the case of clauses (c) and (d) above, the Guaranteed Party shall have commenced litigation against the Guarantor under and pursuant to this Limited Guarantee prior to such termination, in which case this Limited Guarantee shall terminate upon the final, non-appealable resolution of such action, either by judicial determination or pursuant to an agreement between the Guaranteed Party and the Guarantor and satisfaction by the Guarantor of any obligations finally determined or agreed to be owed by the Guarantor, consistent with the terms hereof). Notwithstanding the foregoing, or anything express or implied in this Limited Guarantee or otherwise, in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s liability to the Cap or the provisions of this Section 7 or Section 8 hereof are illegal, invalid or unenforceable in whole or in part, asserts that the Guarantor is liable in respect of Guaranteed Obligations, in the aggregate, in excess of or to a greater extent than the Cap, or asserts any theory of liability against any Non-Recourse Party (as defined in Section 8 hereof) with respect to this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees, the Transaction Agreement or the transactions contemplated hereby or thereby, in each case, other than Retained Claims (as defined in Section 8 hereof), then: (i) the obligations of the Guarantor under or in connection with this Limited Guarantee shall terminate ab initio and be null and void; (ii) if the Guarantor has previously made any payments under or in connection with this Limited Guarantee, it shall be entitled to recover and retain such payments; and (iii) neither the Guarantor nor any other Non-Recourse Parties shall have any liability whatsoever (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) to the Guaranteed Party or any other Person in any way under or in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement, any other agreement or instrument delivered in connection with this Limited Guarantee, the Equity Commitment Letter, the Transaction Agreement or the transactions contemplated hereby or thereby, other than in respect of a Retained Claim described in clause (v) of the definition thereof.

8. NO RECOURSE. The Guaranteed Party acknowledges the separate corporate existence of Parent. The Guaranteed Party acknowledges and agrees that the sole asset of Parent is cash in a de minimis amount (less than $1,000) and that no additional funds are expected to be contributed to Parent except as may be required under the Equity Commitment Letter, the Other Equity Commitment Letter and the Transaction Agreement. Notwithstanding anything that may be expressed or implied in this Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Confidentiality Agreement or in any agreement or instrument delivered or contemplated thereby (collectively, the “Transaction Documents”) or statement made or action taken in connection with, or that otherwise in any manner relates to, the transactions

 

7


contemplated by any of the Transaction Documents or the negotiation, execution, performance or breach of any Transaction Document (this Limited Guarantee, the other Transaction Documents and such agreements, instruments, statements and actions collectively, “Transaction-Related Matters”), and notwithstanding any equitable, common law or statutory right or claim that may be available to the Guaranteed Party or any of its Affiliates, and notwithstanding the fact that the Guarantor is a limited partnership, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, acknowledges and agrees, on behalf of itself and its Affiliates, that:

(a) None of the Non-Recourse Parties has or shall have any obligations (whether of an equitable, contractual, tort, statutory or other nature) under, in connection with or in any manner related to any Transaction-Related Matter, other than (i) Parent’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of Section 3.2(a) of the Transaction Agreement, and, without duplication, the Guarantor’s obligation to make a cash payment to the Guaranteed Party under and pursuant to the terms of this Limited Guarantee (subject to the Cap) and to otherwise comply with the terms of this Limited Guarantee and the Other Investors’ obligations to make a cash payment to the Guaranteed Party under and pursuant to the terms of the Other Investors Limited Guarantees (subject to the “Cap” set forth in the Other Investors Limited Guarantees) and to otherwise comply with the terms of the Other Investors Limited Guarantees, (ii) Parent’s obligation to cause the equity financing to be funded in accordance with the terms of the Equity Commitment Letter and the Other Investors Equity Commitment Letters when and if the Guaranteed Party seeks specific performance of such obligation pursuant to, in accordance with, and subject to the limitations set forth in, Section 9.13(b) of the Transaction Agreement, (iii) the Guarantor’s obligation to specifically perform its obligation to make an equity contribution to Parent pursuant to the Equity Commitment Letter in accordance with the terms of such letter and the Other Investors’ obligations to specifically perform its obligation to make an equity contribution to Parent pursuant to the Other Investors Equity Commitment Letters when and if the conditions thereto have been satisfied and Parent seeks specific performance of such obligation pursuant to, and subject to the limitations set forth in, Section 5 of each of the Equity Commitment Letter and the Other Investors Equity Commitment Letters and Section 9.13 of the Transaction Agreement, (iv) Parent’s obligation to make payment of the Merger Consideration under the Transaction Agreement and its and Merger Sub’s obligations to otherwise comply with the terms of the Transaction Agreement and any other transaction documents subject to the terms and conditions therein and (v) certain Non-Recourse Parties’ obligations under, and pursuant to the terms of, the Confidentiality Agreement (the claims described in clauses (i) through (v) against any of the Persons specified in clauses (i) through (v) or any of their respective permitted successors or assigns, collectively, the “Retained Claims”);

(b) no recourse (whether under an equitable, contractual, tort, statutory or other claim or theory) under, in connection with or in any manner related to, any Transaction-Related Matter shall be sought or had against (and, without limiting the generality of the foregoing, no liability shall attach to) any Non-Recourse Party, whether through Parent or any other Person interested in the transactions contemplated by any Transaction Document or otherwise, whether by or through theories of equity, agency,

 

8


control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or any other attempt to avoid or disregard the entity form of any Non-Recourse Party, by or through a claim by or on behalf of the Guaranteed Party or any of its Affiliates, Parent or any other Person against any Non-Recourse Party, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except, in each case, for Retained Claims; and

(c) neither the Guaranteed Party nor any of its Affiliates has relied on any statement, representation or warranty or assurance made by, or any action taken by, any Person in connection with or in any manner related to a Transaction-Related Matter, other than those made by (i) the Guarantor in this Limited Guarantee and the Equity Commitment Letter, (ii) Parent in the Transaction Documents and (iii) the Other Investors in the Other Investors Equity Commitment Letters and the Other Investors Limited Guarantees.

The Retained Claims shall be the sole and exclusive remedy (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) of the Guaranteed Party, all of its controlled Affiliates and any Person purporting to claim by or through any of them or for the benefit of any of them against any or all of the Non-Recourse Parties, in respect of any claims, liabilities or obligations arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. To the fullest extent permitted by Law, the Guaranteed Party, on behalf of itself and its controlled Affiliates, hereby releases, remises and forever discharges all claims (other than Retained Claims) that the Guaranteed Party, any of its security holders or any of its Affiliates has had, now has or might in the future have against any Non-Recourse Party arising in any way under, in connection with or in any manner related to any Transaction-Related Matter. The Guaranteed Party hereby covenants and agrees that, other than with respect to the Retained Claims, it shall not, and it shall cause its controlled Affiliates not to, institute any proceeding or bring any claim in any way under, in connection with or in any manner related to any Transaction-Related Matter (whether at law or in equity, whether sounding in contract, tort, statute or otherwise) against any Non-Recourse Party. Other than the Non-Recourse Parties, no Person other than the Guarantor and the Guaranteed Party shall have any rights or remedies under, in connection with or in any manner related to this Limited Guarantee or the transactions contemplated hereby.

As used herein, the term “Non-Recourse Parties” means the Guarantor and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of the Guarantor (including but not limited to Parent and Merger Sub) and any and all former, current or future direct or indirect holders of any equity, general or limited partnership or limited liability company interests, controlling persons, incorporators, directors, officers, employees, agents, attorneys, members, managers, management companies, portfolio companies, general or limited partners, stockholders, representatives, assignees or Affiliates of any of the foregoing, and any and all former, current or future direct or indirect heirs, executors, administrators, trustees, representatives, successors or assigns of any of the foregoing, and the providers or potential

 

9


providers of any equity or debt financing in connection with the Transaction (in each case, other than Parent); provided that, notwithstanding the foregoing, such defined term shall exclude Parent and Merger Sub and any Person to which Parent or Merger Sub has validly assigned its respective rights or obligations under the Transaction Agreement.

9. GOVERNING LAW; JURISDICTION. This Limited Guarantee, the rights of the parties under or in connection herewith or the transactions contemplated hereby, and all actions or proceedings arising out of or related to any of the foregoing, shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to principles of conflicts of law. Each party hereto agrees that it shall bring, maintain and defend any such action or proceeding exclusively in the state courts located in Wilmington, Delaware or the courts of the United States located in Wilmington, Delaware (as just described, the “Chosen Courts”), and solely in connection with such actions or proceedings: (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto; and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if effected pursuant to the Laws of the State of Delaware or in accordance with Section 6 hereof (other than by facsimile or e-mail transmission).

10. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY ACTION OR PROCEEDING CONTEMPLATED BY SECTION 9 HEREOF IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) IT MAKES THIS WAIVER VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS LIMITED GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.

11. COUNTERPARTS. This Limited Guarantee shall not be effective until it has been executed and delivered by all parties hereto. This Limited Guarantee may be executed by facsimile or electronic transmission in pdf format, and in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

12. THIRD PARTY BENEFICIARIES. This Limited Guarantee shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, and nothing express or implied in this Limited Guarantee is intended to, or shall, confer upon any other Person any benefits, rights or remedies under or by reason of, or any rights to enforce or cause the Guaranteed Party to enforce, the obligations set forth herein; except that as a material aspect of this Limited Guarantee the parties intend that all Non-Recourse Parties other than the Guarantor shall be, and such Non-Recourse Parties are, intended third party beneficiaries of this Limited Guarantee who may rely on and enforce the provisions of this Limited Guarantee that bar the liability, or otherwise protect the interests, of such Non-Recourse Parties.

 

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13. CONFIDENTIALITY. This Limited Guarantee shall be treated as confidential and is being provided to the Guaranteed Party and its Representatives solely in connection with the transactions contemplated by the Transaction Documents. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document (other than the Transaction Agreement, the Equity Commitment Letter, the Other Equity Commitment Letter, the Other Investors Limited Guarantees and any other documents entered into in connection with the consummation of the Merger and the other transactions contemplated by the Transaction Documents or required to be disclosed in connection therewith), except with the written consent of the Guarantor; provided that no such written consent is required for any disclosure of the existence or content of this Limited Guarantee by the Guaranteed Party: (i) to its Affiliates and its representatives who need to know of the existence or terms of this Limited Guarantee (so long as such Affiliates and representatives agree to keep, and agrees to cause their directors, officers, employees and partners, this Limited Guarantee confidential); or (ii) to the extent required by applicable Law, the applicable rules of any national securities exchange or in connection with any securities regulatory agency filings related to the Transaction (provided, that the Guaranteed Party will provide the Guarantor an opportunity to review such required disclosure in advance of such disclosure being made); or pursuant to any litigation relating to the Limited Guarantee, the Transaction Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees or the transactions contemplated hereby or thereby.

14. MISCELLANEOUS.

(a) This Limited Guarantee, the Transaction Agreement, the Confidentiality Agreement, the Equity Commitment Letter, the Other Investors Equity Commitment Letters, the Other Investors Limited Guarantees and any other agreements executed in connection with the Transaction Agreement constitute the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among the Guarantor or any of its Affiliates, on the one hand, and the Guaranteed Party or any of its Affiliates, on the other hand. No amendment, supplementation, modification or waiver of this Limited Guarantee or any provision hereof shall be enforceable unless approved by the Guaranteed Party and the Guarantor in writing. The Guaranteed Party and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guarantor or any other Non-Recourse Party in connection with the subject matter hereof except as expressly set forth herein by the Guarantor. The Guarantor and its Affiliates are not relying upon any prior or contemporaneous statement, undertaking, understanding, agreement, representation or warranty, whether written or oral, made by or on behalf of the Guaranteed Party in connection with the subject matter hereof except as expressly set forth herein by the Guaranteed Party.

 

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(b) Any term or provision of this Limited Guarantee that is invalid or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective solely to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided, however, that this Limited Guarantee may not be enforced without giving effect to the limitation of the amount payable by the Guarantor hereunder to the Cap provided in Section 1 hereof and to the provisions of Sections 7 and 8 hereof. Each party hereto covenants and agrees that it shall not assert, and shall cause its respective Affiliates and representatives not to assert, that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable.

(c) The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Limited Guarantee.

(d) All parties acknowledge that each party and its counsel have reviewed this Limited Guarantee and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Limited Guarantee.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer or representative thereunto duly authorized.

 

TPG HEALTHCARE PARTNERS, L.P.
By: TPG Healthcare Partners GenPar, L.P. its general partner
By: TPG Healthcare Partners GenPar Advisors, LLC its general partner

By:

 

/s/ Ken Murphy

Name:

 

Ken Murphy

Title:

 

Chief Operating Officer

[LIMITED GUARANTEE SIGNATURE PAGE]


IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

 

COVETRUS, INC.
By:   /s/ Benjamin Wolin
Name:   Benjamin Wolin
Title:   President and Chief Executive Officer

[LIMITED GUARANTEE SIGNATURE PAGE]

EX-FILING FEES

Exhibit 107

Calculation of Filing Fee Table

Table 1 – Transaction Valuation

 

       
    

    Transaction    

valuation

 

Fee

    Rate    

 

    Amount of    

Filing Fee

       

Total Transaction Valuation

  $3,045,288,412(1)   0.0000927   $282,298.24(2)
       

Fees Previously Paid

  $3,045,288,412     $282,298.24(3)
       

Total Transaction Valuation

  $3,045,288,412      
       

Total Fees Due for Filing

      $0
       

Total Fees Previously Paid

      $282,298.24
       

Total Fee Offsets

      $282,298.24
       

Net Fee Due

          $0

Table 2 – Fee Offset Claims and Sources

 

               
     Registrant or Filer
Name
  Form or Filing
Type
  File  Number    Initial Filing Date   Filing Date   Fee Offset
Claimed
  Fee Paid with
Fee Offset
Source
               
Fee Offset Claims     PREM 14A   001-38794   June 30, 2022     $282,298.24    
               
Fee Offset Sources   Covetrus, Inc.   PREM 14A   001-38794       June 30, 2022       $282,298.24(3)

 

(1)

For purposes of calculating the fee only, this amount, as of June 17, 2022, is based upon the sum of (a) 139,825,101 shares of common stock of Covetrus, Inc., par value $0.01 per share (the “Shares”), outstanding multiplied by $21.00 per Share, (b) stock options to purchase 843,454 Shares multiplied by $11.15 per Share (which is the difference between $21.00 and the weighted average exercise price of the outstanding options as of June 17, 2022 of $9.85 for such Shares), (c) 3,780,018 Shares underlying restricted stock units multiplied by $21.00 per Share and (d) 960,781 Shares underlying performance restricted stock units multiplied by $21.00 per Share (which assumes the target level of performance that may be entitled to receive the per Share merger consideration of $21.00).

(2)

The amount of the filing fee, calculated in accordance with Exchange Act Rule 0-11(b)(1) and the Securities and Exchange Commission Fee Rate Advisory #1 for Fiscal Year 2022, was calculated by multiplying $3,045,288,412 by 0.0000927.

(3)

The Company previously paid $282,298.24 upon the filing of its Preliminary Proxy Statement on Schedule 14A on June 30, 2022 in connection with the transaction reported hereby.